Corporate - Ethernet services

Survey: Enterprise Ethernet Services Are Hot
see also Heavy Reading

A new survey of 90 enterprises by Heavy Reading suggests there's going to be an increased demand for more robust Ethernet service offerings in the next few years, which will present a big opportunity for carriers.

"We've all known that enterprises are turning to Ethernet for service convergence," says Stan Hubbard, senior analyst with Heavy Reading and author of the report, "Carrier Ethernet Services: The View From the Enterprise." "But the key thing here is that the number of applications they're looking to support is pretty big."

The enterprises surveyed were asked about 11 key service areas that they had an interest in, such as high-speed Internet, VOIP, VPN, video streaming, T1/E1 circuit emulation services, and others. The report found strong demand across all 11 services.

Even expensive luxury-type services such as telepresence saw strong demand, with only 21 percent of all enterprises surveyed saying that they had no plans to use the service and the rest either already using it or planning to before 2010.

The demand for such a complex offering of services presents a big opportunity for carriers. "Relatively few operators can support this," says Hubbard. "So you're going to see more and more service providers rolling out more services in the coming years. The data really suggests that if they don't support a wide variety of applications, they're really missing an opportunity."

In addition to a complex portfolio of services, enterprises -- especially the larger ones -- more and more are demanding higher quality of service (QOS) levels. "For most of the customers, four levels are adequate, but for some of the larger enterprises they're asking for six and even custom agreements," says Hubbard. And, of course, as services and QOS become more complicated, the need for more advanced traffic management arises as well.

It should come as no surprise that most enterprises are shifting resources away from legacy services like Frame Relay, ATM, and TDM private-line services. Eighty percent of all enterprises in the report said that they'd either spend nothing, less, or the same amount of money in the coming years on these services in favor of a migration towards Ethernet.

So where will most of the money on Ethernet connectivity be spent? The private lines within metro markets have traditionally been the most popular types of services, but now the trend looks to be leaning towards growth across intercity connections and international services, with more than half of all enterprises saying that intercity connections now make up more than 30 percent of their Ethernet connectivity spending.