Metro Ethernet Market Appears Robust

Growth rates for metro Ethernet services are 40 percent and higher annually, says ANDA Networks Tony Tran, senior product manager. Some of that growth is coming at the expense of traditional T1 and DS3 services, and much of the growth rides on copper access rather than optical facilities.

Dedicated access services (T1, DS3 and other private line) represented about $16 billion in revenues for the largest incumbent telcos in 2005, says the Government Accounting Office. Some of that was DS3 and higher rate access, but more than $8 billion was comprised of T1 services.

And as is always the case, few actual business locations are directly served by optical access from any provider, much less multiple providers. In the 16 major metropolitan areas the Government Accounting Office examined, competitors to the incumbent telco are serving, on average, less than 6 percent of the buildings with demand for dedicated access in these areas. For buildings with higher levels of demand, facilities-based competition is more moderate, with 15 to 25 percent of buildings showing competitive alternatives.

"Obviously, fiber reaches only about 10 percent of all business sites," says ANDA Networks Tony Tran, senior product manager. "So reach is really the problem." The immediate problem is that many, if not most business customers require access bandwidth in excess of T1, with 6 Mbps being common, says Tran. Hence the growing popularity of Ethernet-over-copper access. By bonding multiple T1 pairs, service providers can emulate 10 to 100 Mbps access services, without ripping out the copper and without disturbing the SONET infrastructure already in place.