As carriers step up the pressure on their corporate customers to migrate off older frame relay, ATM and private-line technologies and adopt IP networks, companies that make the switch are reaping the rewards of instant savings and improved service.
Verizon made headlines over the summer when it announced that its frame relay and ATM customers have three years to migrate to modern IP services. Efforts like these by top-tier carriers are driving up sales of Ethernet among an array of service providers.
Companies that invest in these network upgrades -- particularly those that purchase Ethernet services ranging from 10Mbps to 10Gbps -- say they are getting more bandwidth for less money as well as improved scalability and reliability.
Sarris Candies, a Canonsburg, Pa., maker of fine chocolates, is paying $300 less per month for more than twice the bandwidth since it switched from Earthlink's T-1 service to Ethernet service from Comcast Business Services.
"Everything we do is across the Internet," says Norm Candalore, IT manager at Sarris Candies. "We are online 24/7. It's very important that we're up and running. It's very important that we're stable, and it's very important that we are secure."
Sarris switched from a 4.5Mbps service -- or three T-1 lines -- from Earthlink to a 10Mbps Ethernet service from Comcast. Comcast provides fiber-optic connectivity to Sarris' main office and its warehouse a half-mile down the road.
Comcast's Internet service "has been flawless since we had it installed in June 2011," Candalore says.
Indeed, the reliability of the Comcast Ethernet service has already come in handy for Sarris, which suffered from a major fire in February 2012.
"A third of our buildings were up in flames. I went across the street to our warehouse and within 15 minutes we were up and running. We never missed a beat because we run system backups every five minutes, which we weren't able to do on our old network," Candalore says.
The 400-employee chocolate company, which sells through retail outlets such as Rite-Aid and CVS stores, needs robust Internet service during its seasonal peaks at Christmas and Easter. It also has an email marketing campaign that involves sending 18 million emails a year, as well as social networking outreach. Other applications that run on the network include accounting, billing, ordering and supply chain interaction.
Sarris has enough demand for additional bandwidth that it's considering upgrading to 32Mbps connectivity after Easter 2013. "Our Internet service is 100% better than it used to be," Candalore says.
Sarris Candies is not alone. A growing number of midsize and enterprise U.S. companies are moving off legacy network technologies such as T-1s, frame relay and ATM and embracing Ethernet.
The U.S. Ethernet services market topped $6 billion in 2011, according to Vertical Systems Group, which estimates that enterprise port demand is growing at a rate of around 30%.
Erin Dunne, director of research at Vertical Systems Group, says companies migrating from frame relay and ATM are moving to Ethernet faster than those using private lines, including T-1s and higher. Indeed, she says, the T-1 market is flat and the T-3, OC-3 and OC-13 market is growing.
"It's a very small percentage of frame relay and ATM users that plan to retain those network technologies in five years. That market is dropping at significant double-digit rates," Dunne says. "However, T-1s and above are still being used ... because they work and the pricing is dropping over time. Private lines are still a viable networking option for enterprises that need to point-to-point connectivity."
Dunne says most enterprises are migrating off legacy technologies to Ethernet when their telecom contracts expire. Indeed, some carriers such as Verizon are encouraging their customers to move off their frame relay and ATM networks within the next three years.
"This is the natural course of events," Dunne says. "In most cases, companies have been preparing to move off of these legacy technologies anyway. Companies that move to Ethernet access have lower prices immediately."
A Verizon spokesman says the company began grandfathering frame relay and ATM services in 2009 and that while the majority of its enterprise and midsize businesses have adopted Ethernet or Private IP services, a few customers are still using the older network technologies. In July, Verizon began notifying customers of its frame relay and ATM services in writing and through account teams about plans to terminate these services in 2015.
Broadband ISPs like Comcast -- which don't have customers using older network technologies -- are hoping to take advantage of this situation and lure new customers to their Ethernet services. Comcast has been targeting healthcare companies, local government agencies and educational institutions that are upgrading their networks from frame relay and ATM to encourage them to switch from a top-tier carrier like Verizon to Comcast's Ethernet service.
"We've been making contact so businesses are aware that we have an alternative," says Karen Schmidt, executive director, enterprise product marketing, Comcast Business Services. "We have companies that need a big pipe to get to their data center. ... Others need backup. Those are a good opportunity for us to get in the door. ... When companies are making a change, we see it as a door opener.''
Schmidt says that while the shift from frame relay and ATM has been going on for several years, it is accelerating this year. "Companies are moving data to the cloud, they have more video applications. ... Customers have more and more bandwidth needs, and the older technologies are not keeping up with them," she adds.