• United States
by Jennifer Jones

Why old data services thrive while new ones wither

Dec 23, 20024 mins

Optical and Gigabit Ethernet services promise big bandwidth and performance boosts at great rates. So why aren’t they being used?

Optical and Gigabit Ethernet services, hailed during the telecom boom years as killer replacements for costly ATM, frame relay and leased-line options, have yet to materialize as significant enterprise alternatives – to the frustration of network executives shouldering bandwidth-heavy applications.

User organizations such as the Corporation for Education Network Initiatives in California (CENIC) complain of their inability to get carriers to make good on their new service promises. “We’ve had trouble getting [incumbent] carriers to adopt Gigabit Ethernet as a connection interface,” says David Reese, CTO for CENIC, in Los Alamitos.

But the incumbents point the finger back at their customer bases. Larger providers in particular blame their reluctance to embrace new optical and Gigabit Ethernet services on weak demand. They say the majority of corporate users aren’t too enthusiastic about these services.

The truth is, the reason many incumbent carriers have backed off such service plans might have more to do with a lack of competitive incentive than with slow user uptake. Incumbents had reluctantly moved into optical and Gigabit Ethernet primarily in reaction to specialty upstarts such as Broadwing Communications and Yipes Enterprise Services, says Tim Krasney, managing director of YankeeTek Ventures. When the small carriers started foundering financially, with a few ending in bankruptcy court, the competitive impetus faded fast.

Still, enterprise users have not pushed their incumbent carriers hard enough for these offers, industry watchers say. Absent such pressure, entrenched players naturally have chosen not to displace lucrative ATM, frame relay or private-line offerings with services that might reduce their revenue. “The move to Ethernet would mean swapping out accounts they’ve already got with something that could be as much as 30% cheaper,” notes Howard Anderson, senior managing director at YankeeTek and a Network World columnist.

Looking out to 2006

Despite the setbacks, nobody is writing off optical and Gigabit Ethernet services. RHK projects a $4 billion market will unfold around efforts to stretch LAN-based Ethernet technology into carrier networks, but it will take several years. By 2006, the firm says, enough large carriers will have embraced Gigabit Ethernet to bring services to almost 1 million potential customers. They’ll do this by building up their networks with Ethernet switches, optical edge devices or wave division multiplexing platforms, according to RHK.

Some users find the outlook disappointing. “We have been surprised that there has been such a great deal of inertia,” says Randy Anderson, director of network engineering and technology at George Mason University (GMU) in Fairfax, Va.

GMU constantly examines options for outfitting its student base with enough network power and routinely adds costly T-1 or DS-3 lines, Randy Anderson says. “We were looking at [Gigabit Ethernet] services when the market was better and the telecom industry was at its peak. We had a few nibbles. Some of the carriers we were talking to were promising 100-megabit Ethernet and 10-megabit Ethernet. But nothing ever really materialized,” he says.

Common carrier practice has been to “support Ethernet as loudly, but as little, as possible,” YankeeTek’s Krasney says. He says when customers inquire after Gigabit Ethernet, carriers tend to pull out literature on the services then shift them quickly toward private-line solutions. As a further discouragement, analysts say, incumbents haven’t been pricing Gigabit Ethernet services too attractively.

To spur Gigabit Ethernet, larger carriers must show more interest in generating offers with reduced rates and increased performance over ATM, frame-relay and leased-line services. “People don’t get excited about a change unless it will cost 20% less and has much more functionality,” Krasney says.

Perseverance pays off



Enterprise users await Gigabit Ethernet options, while large carriers linger on rollout efforts to protect precious ATM, frame relay and private-line revenue.


Major incumbent carriers and big corporate users.


Gigabit Ethernet adoption rates will increase, but slowly.

User impact:
The services hold potential for big cost savings and increased functionality.

Determined customers say they hold out hope for more Gigabit Ethernet options but realize it will take legwork to get them. “We are really pushing the carriers,” CENIC’s Reese says, noting that the organization has gotten Gigabit Ethernet services bids from Qwest, Level 3 Communications, Verio and Cable & Wireless.

GMU recently has been successful in getting Verizon to offer Gigabit Ethernet services through a modification to an existing state contract. During contract negotiations, Verizon executives were aware that GMU and other state universities were eager to get the services, Randy Anderson says. “This was a play by Verizon to head off competition.”

Jones is a freelance writer in Vienna, Va. She can reached at .