Metro Ethernet is getting increased interest lately, perhaps becoming a big-growth area for telecom spending.

Recently, the MPLS/Frame Relay Alliance set better interworking among frame relay, ATM and Ethernet as a priority for its Applications and Deployment working group, which sets recommendations for reaching interoperability.

The alliance consists mainly of either carriers or companies that make carrier equipment, with academics and consultants mixed in, so their interest is a good gauge of what spending might be coming down the pike.

A survey of 245 members of the alliance broke down the respondents into two groups: service provider and everybody else. Both groups listed this interworking number one among six choices that included interworking frame relay with MPLS and voice over MPLS. The survey describes the Ethernet capabilities as: “Implementation agreement on ATM, Ethernet and frame relay service interworking over MPLS networks, providing any-to-any connectivity when different access protocols are used to (connect) with an MPLS-based network backbone.”

That means customers that connect to the network via ATM, frame relay and Ethernet will be able to connect any of their sites to any other of their sites using the meshing capabilities of MPLS. Desire for this functionality indicate that service providers are looking for a graceful way to add Ethernet services to existing services without forcing customers to overhaul their networks.

This interest seems to be borne out by a recent market survey by the research firm Infonetics that says that spending on equipment to provide metro Ethernet services will reach $2.9 billion this year - up from  $2.5 billion worldwide last year. The study cites the push for standards as well as public demonstrations of the technology have heightened interest in metro Ethernet services, according to Michael Howard, the author of the survey report called “Metro Ethernet Equipment.”

When broken down by global regions, the biggest chunk of the money, 42%, is being spent in Asia, with the next largest amount, 35%, being spent in North America, according to the report. The survey includes six technologies used for metro Ethernet services: Ethernet on fiber, Ethernet over SONET or SDH; resilient packet ring over fiber; Ethernet on wavelengths using wave division multiplexing; Ethernet over DSL and cable wiring; and Ethernet-based passive optical networking.

A separate study by International Orange Strategies says metro Ethernet services will become attractive to current DS-3 customers who already have fiber connections to their sites. For a minimal upgrade the fiber can support Ethernet that offers more bandwidth, and that bandwidth can be sold at a lower cost per bit than a DS-3, says Michael Disini, the author of the report. “New Ethernet services can complement existing frame relay, ATM and private line and encourage customers to switch to these services,” he says in the study, called “New Carrier Ethernet Services.”

“Carrier Ethernet services can be deployed using next-generation SONET platforms and carrier-grade Layer 2/3 Ethernet over MPLS switches. This offers an evolutionary approach to buildign a network that keeps capital expenditures in check while simultaneously growing revenue,” the study says.

If providers can make more money per customer with these services and customers can get a better price per bit at the same time, investments in this technology should continue to rise.