ITPRC NEWS - May 2001 - http://www.itprc.com/

Given all the recent woes in the networking and telecommunications industry, there is one area that still appears to be gathering steam, Metropolitan Ethernet-based services.  Companies such as Yipes, Telseon, and Cogent Communications continue to attract large amounts of funding as they build out their Gigabit-Ethernet based services in cities across the United States.

The value proposition of these services is clear, for the approximate price of a T-1 they will provide customers with 100 Mbps Internet connectivity.  Most of these services also offer transparent LAN services for connecting various locations within a metropolitan area together in a single broadcast domain.  In the future, these services will expand their ability to tie metropolitan area connections together via partnerships with traditional carriers until such time as their own nationwide, Ethernet-based infrastructures are in place.

Another value proposition of Ethernet-based services is the ability to buy bandwidth on demand.  Most Ethernet-based service providers are offering, or planning on offering, on-the fly bandwidth provisioning via a web interface.  This will allow customers to request additional bandwidth as they need it, generally in increments of 1 Mbps.  Compare that feature with the wait time to upgrade from a T-1 to a T-3 and the benefits are obvious.

Given current efforts at developing standards to allow MPLS to encapsulate legacy frame relay and ATM services, and it becomes feasible that Ethernet-based service providers may soon be able to provide frame relay and ATM services in addition to their Ethernet-based service offerings.

The biggest concern among these types of service providers is the lingering shock from the collapse of the DSL market.  Enterprises who saw lost connectivity when Northpoint closed up shop may be reluctant to subscribe to yet another startup service provider.  Ethernet service providers may get caught in the catch-22 of needing customers to generate revenue, but being unable to attract new clients unwilling to commit to a startup telecom provider

The next six to twelve months should demonstrate the viability of the business plans of these companies.  The long term promise is enticing: once the infrastructures are built, it shouldn't take much for Ethernet service providers to offer value ad services such as voice and storage.  Partnerships with hosting companies and service providers should allow the offering of a wider variety of wide area network services as well.

Those in metropolitan areas who are in need of high-speed networks would be wise to take a look at the service offerings of companies such as Yipes, Telseon and Cogent.  The bang for the buck is difficult, if not impossible to beat, if you are willing to take the risk.

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Irwin Lazar is a Senior Consultant for The Burton Group.  He focuses on strategic planning and network architecture for Fortune 500 enterprises as well as large service providers.  He is the conference director for MPLScon and runs The MPLS Resource Center  www.mplsrc.com and The Information Technology Professional's Resource Center  www.itprc.com.
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