Posts Tagged ‘carrier ethernet’

$11.5 Billion Carrier Ethernet Services Revenue in 2015

Sunday, August 21st, 2011
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North American Carrier Ethernet services will grow grow from $4.3 billion in 2011 to at least $11.5 billion ($10.5 billion in the United States alone) by 2015, for about a 29 percent compound annual growth rate.

Transport and access revenue will increase less (at 28.8 percent CAGR), while management revenue associated with managed Ethernet products will grow far more (at a 30.6 percent CAGR over the same period). North American management revenue, which comprises just 5 percent of total Ethernet revenue today, will increase to 5.5 percent through 2015.

Ethernet service revenue from small and mid-sized businesses  (companies with up to 499 employees) in North America has grown from a relatively miniscule amount in the early 1990s to over $516 million in early 2011.

The Yankee Group expects SMB Ethernet services revenue to reach $3.47 billion by 2015, a 46.4 percent compount average growth rate.

Within North America, small businesses (those with up to 99 employees) accounted for about 25 percent of total SMB Ethernet revenue (or U.S.$130 million) in 2010. Yankee Group researchers forecast that increasing to over 31 percent ($1.08 billion) in 2015, for an approximate 53 percent CAGR.

Despite strong growth in the very small business segment (those with 1-49 employees), the bulk of actual revenue generated from small businesses will remain in the 50- to 99-employee small business segment by better than a 4-to-1 ratio through 2015.

Revenue from mid-size businesses (with 100 to 499 employees) will also grow from about U.S.$387 million to U.S.$2.39 billion (a 44 percent CAGR) during this same period.

Large businesses (those with more than 500 employees) comprise the bulk of Ethernet services market revenue and will exhibit strong growth, rising from $2.73 billion in 2010 to slightly over $8 billion in 2015, for a 24.2 percent CAGR.

Businesses (with 500 to 999 employees) will show the stronger growth at over 40 percent CAGR for the period, compared to only about 17 percent CAGR for the large enterprise space (firms with more than 1,000 employees).

Businesses with 500 to 999 employees will represent $3.37 billion of total large business revenue by the end of 2015. This discrepancy is more pronounced in Canada, where businesses are more concentrated in smaller business-size segments.


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A Hidden Cause of Network Latency – MTU Size Mismatches

Monday, July 11th, 2011
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Also in this issue: Interview: What’s up with Accedian? The Power of the Pink Dress!, Accedian Networks Joins Symmetricom’s SyncWorld, Mobile Backhaul Issues in AT&T – T-Mobile USA Buy

In the war against delay in Ethernet mobile backhaul networks, there is a new threat – Maximum Transfer Unit (MTU) size configuration mismatches. The MTU is a physical characteristic of the Ethernet port in a network element (NE). It defines the maximum size of an Ethernet frame (packet) that can be transmitted by the NE. If a frame exceeds the MTU size, it must then be fragmented into multiple smaller frames that are each equal to, or smaller than the MTU. As networks evolve and change, some of the NEs may not meet the MTU requirements of the network causing latency, dropped packets and other issues in network performance or even failure.

Each NE already adds some delay in the backhaul network. The amount varies by its type, and whether it’s forwarding traffic via hardware-based mechanisms vs. software-based, sometimes referred to as fast-path vs. slow-path. Most NEs forward traffic in fast-path using hardware-based switching and routing processors that are part of the Ethernet port and switching fabric hardware. All other processing including: fragmentation and re-assembly of frame fragments; application of bandwidth profiles; examining Quality of Service (QoS) markings; multi-cast traffic replication; and checking the packet against access-control lists (ACLs) is typically handled by software running on a CPU in the NE. This not only adds delay, but results in additional overhead as one frame is split into two or more frames, each with its own header overhead added to it!

Delay is a silent killer of Carrier Ethernet performance in mobile backhaul and enterprise networks. However, one of the easiest sources of delay to eliminate is the one caused by fragmentation due to MTU configuration errors. Most Ethernet frames can be transmitted without fragmentation by simply setting the MTU size to 2000 bytes—as recommended by the MEF—when configuring a Carrier Ethernet UNI or NNI on the NE port. This setting will usually remain persistent until the port is disabled or the UNI is moved to another NE, where it will once again need to be reset. Changes to the configuration in the network resulting from de-commissioning service ports or replacing equipment often results in this critical detail being overlooked and the port will be configured with the default MTU value of 1518 or 1522 causing fragmentation of Carrier Ethernet traffic.

In order to monitor and manage this potentially destructive network configuration, a device is needed at the cell site to verify that the MTU in the network path is sufficient to support Carrier Ethernet. Test equipment can inject a test frame of the desired size (e.g. 2000 bytes) using an OAM loopback message (LBM) to verify that the frame can pass—from source to destination—without being subjected to fragmentation. This test can be run manually using the CLI, GUI or from a network management interface to periodically verify that the network is properly configured so that all NEs can transmit traffic without fragmentation. Read More.

Light Reading Backhaul Summit: Craig Easley and Joe Braue—Light Reading Group Director & Senior VP—evaluate the Ether-zation of Mobile Backhaul, synch up on Packet Synchronization techniques and explore the top exports from Quebec – NIDs and Beauty! View Online. Also read The Power of the Pink Dress

SymmetricomAccedian is participating in Symmetricom’s SyncWorld™ Ecosystem Program, launched earlier this year to support precise timing and synchronization requirements for 4G LTE deployments that ensure seamless integration for service provider networks. “Accurate timing and precise synchronization in mobile backhaul networks is critical to measuring and maintaining QoS and performance as mobile users travel between cell sites,” said Craig Easley, V.P. of Marketing and Product Management at Accedian Networks. “By combining Symmetricom’s world-leading precision time and frequency technologies with Accedian’s Ethernet demarcation devices, we can jointly deliver a fully-interoperable solution that includes the timing and synchronization services required to support the rapid deployment of 4G LTE networks.” Read Press Release

magic ball
U.S. backhaul markets are now part of the regulatory review of the proposed AT&T purchase of T-Mobile USA. Specifically, the Federal Communications Commission is looking at potential harm to the market for supplying mobile backhaul connections. The FCC asked six of AT&T’s top competitors to answer questions on network coverage, backhaul, pricing and spectrum for its review of AT&T’s $39 billion takeover of T-Mobile USA.

The agency sent 37-page letters with a list of nine questions to Verizon Wireless, Sprint Nextel, U.S. Cellular, MetroPCS, Cellular South and Cricket Communications parent Leap Wireless International, asking for detailed information about the companies’ operations.

Citing a new business arrangement between AT&T and Verizon, Lynn Refer, president and CEO of Telecom Transport Management, a small wireless backhaul provider, says the future of the independent backhaul business may be at risk.

Under the pact, Refer and others in the industry said, the two largest wireless companies have a reciprocal arrangement to provide infrastructure to connect each other’s wireless data traffic. Read more

Those sorts of questions never quite go away in the telecom access and wholesale business. Similar concerns have been raised in the past about interconnection agreements between AT&T and Verizon in other instances. Consider the matter of how carriers interconnect with each other, specifically in terms of the business arrangements.

Historically, networks have used two dominant mechanisms. Networks that estimate they will typically exchange equal amounts of traffic will negotiate “settlement-free” peering agreements, whereby the carriers agree to exchange traffic without payments to the other provider. This is based on the theory that, when traffic exchanged between the networks is roughly equal, there is no reason to conduct detailed billing operations that would result in a net zero effect in any case.

That typically is not the case for networks of unequal size, though. A smaller network with fewer users, typically will originate much more traffic for the exchanging networks than it will ever terminate on behalf of any other large carrier. In such cases, the larger carriers will negotiate “transit” agreements to account for the unequal traffic flows.

Basically, the smaller network pays the bigger network for the excess traffic being delivered. In a business with huge network effects, that might be expected.

In such cases, smaller networks and backhaul providers will always fear that the top two U.S. companies with the largest networks, will use their leverage to raise rates for smaller carriers who need to buy backhaul services from either AT&T or Verizon. Though a conceptually different issue from competitive impact on the broader mobile market, because of the AT&T purchase of T-Mobile USA, potential impact on U.S. backhaul rates has now become an issue in the merger approval process.

The concern always exists in every segment of the market where smaller networks and service providers compete with AT&T and Verizon, of course. But one might argue the “problem” is self correcting. Were AT&T and Verizon to raise rates too much, incentives would be created for third-party backhaul providers to get into the business.

Some would argue that the backhaul doesn’t have as much to do with any actual potential harm, but simply is a way policy advocates can continue to argue for more regulation of special access pricing in general.

Washington lobbyists generally in the pay of smaller carriers and service providers have for years been trying to get the FCC to dictate terms in this market, without success. There are obvious reasons. A small carrier does not have the money to build a significant amount of special access capacity most places it is needed, and must buy from other carriers. A competitive market for access circuits, where rates reflect demand, will tend to benefit those who own the assets, especially where there aren’t so many other providers.

“Market power” tests never go away. But the success many firms have had in providing competitive backhaul services, precisely because an AT&T or Verizon is the only other alternative, has generally created opportunity for competitors to jump in and provide options for buyers. Oddly enough, “higher prices” are the magnet to attract new competitors. Lower prices will keep them away. Some might argue that so long as competitors are free to enter markets, neither AT&T nor Verizon will have the ability to harm other providers by maintaining excessively high prices.

In fact, given the general and legitimate concern within the global industry about bandwidth pricing, deals that might lead to marginally higher prices might be exactly what is needed to encourage all providers to invest more in facilities. In a competitive market, high prices fix themselves. Mobile backhaul won’t be any different.

In fact, lots of firms have built businesses supplying backhaul connections in competition with AT&T and Verizon. Higher prices by the two dominant firms would actually increase demand for service provided by the new competitors.

Thanks for reading the EtherNews Blog, and for more information about Accedian Networks solutions, please visit our document library on Accedian.com


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Carrier Ethernet Equipment Sales Grow 19% in 2010

Tuesday, June 14th, 2011
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ADVA Optical Networking says it has retained its number one position in the Ethernet Access Device market for the fifth consecutive year.

Figures from Infonetics Research show that ADVA Optical Networking’s FSP 150 family, featuring Etherjack and Syncjack technology, accounted for 16 percent of worldwide EAD revenue in 2010.

The “Carrier Ethernet Equipment” report from Infonetics Research shows that worldwide EAD revenue reached $667 million in 2010, an increase of 19 percent  from 2009.

Infonetics Research expects revenues to reach $1.5 billion by 2015 with a Compound Annual Growth Rate of 18 percent from 2010 to 2015.

This growth rate is significantly higher than the seven percent CAGR for the overall carrier Ethernet market.

“The demand for EADs continues to grow at a rapid pace and shows no signs of slowing,” said Stephan Rettenberger, vice president, marketing at ADVA Optical Networking. “This growth is driven by several key applications, including strong demand for mobile backhaul applications and business Ethernet services.”

“The growth in service provider investments in carrier Ethernet equipment continues to outpace that of other telecom equipment, with annual spending expected to reach $37.5 billion in 2015,” said Michael Howard, co-founder and principal analyst for carrier networks at Infonetics Research.

See http://www.noodls.com/view/0905A95CBEE912371FCDD400BAFDE80C7507B00E.


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