Metro Ethernet Getting to be a Bigger Deal

As wider adoption of IP phone systems spurs buying of SIP trunks, so IP itself drives demand for Ethernet access. The Yankee Group sees spending by enterprises in the Asia-Pacific markets doubling in four years, for example. "Year over year we see metro Ethernet becoming a greater percentage of our sales," says David Rusin, American Fiber Systems CEO.

The demand is "steady" at about 40 percent growth this year, Rusin says. And Rusin is very clear about how this market needs to be attacked. "After 10 years and billions of dollars of wasted capital we now know you must have your own network."

Needless to say, Rusin isn't a big fan of mandated wholesale access to high-bandwidth facilities. In the U.S. market, mandatory unbundled network element access should go away, maybe over a five-year period. If all competitors understand that they must have their own facilities to compete in the access market, that is what they will do, or they will do something else. "Then capital will come back in to the market," Rusin says. "The incentives need to be there."

In a market as competitive as the metro Ethernet space, how does Rusin answer the objection that there already is too much competition? Simple. "We don't build where there already is capacity," he says. In other words, if there is any existing fiber or capacity in place, AFS simply leases the capacity. The only time it will swing an optical lateral is when there is no other alternative. "If you aren't operating off your own network, IRU or capacity, I don't see how in the long run that's a sustainable business," he simply says. Lots of other providers would say the same thing.