CENX, Equinix and Neutral Tandem all now have ethernet
services in London
Since the world’s first carrier ethernet exchange started operations earlier this year, the first signs of competition have arisen in this new market.
The first off the mark was CENX, set up by Nan Chen, president of the Metro Ethernet Forum, with the advice of Bob Metcalfe, the person who invented the concept of ethernet back in 1973.
But in the few short months since CENX — pronounced “see-nix” — started up, two rivals, Equinix and Neutral Tandem, have also started offering ethernet exchange services.
The logic is the same. Carriers are starting to see the logic of extending ethernet technology from the office — for which is was invented by Metcalfe and his colleagues 37 years ago — into the metropolitan area and then out into national and international networks.
“Ethernet is generally cheaper, more cost effective in equipment terms and cheaper in cost per bit transmitted,” says Sandy Brown, CEO of CENX, speaking to Global Telecoms Business a few months ago. “And it has better scaling.” You can go from 10 megabits a second to one gigabit a second “with typically no hardware changes”, he says.
Since then CENX has been setting up alliances with a number of operators from around the world. Verizon was one of the first — indeed, Verizon and CENX won an innovation award from Global Telecoms Business for their project in June 2010.
Other partners to declare themselves early include Interxion, which provides co-location data centre services in Europe, RCN Metro Optical Networks, a US carrier, Optimum Lightpath — a metropolitan New York carrier — as well as Level 3, XO and others.
In November Colt, a European business carrier, said that it now offers high-quality carrier ethernet services via CENX’s exchanges in London and New York.
Lutz Blank, Colt’s director of wholesale marketing, commented: “With many operators and end-customers having migrated to ethernet services, these new connections with CENX open up a significant new level of connectivity for our business. They bring seamless interconnection with Colt’s information delivery platform from and to worldwide locations.”
The London base for CENX was itself new, and Chen welcomed Colt’s move to connect. “With our CENX market, members can instantly confirm service availability at the vast number of locations served by Colt across its extensive European network. Once connected, CENX’s service integration, translation and monitoring provide a seamless on-net experience for its members and their end-users.”
At about the same time, US carrier AboveNet, which also has a connection across the Atlantic to London, also announced a link to CENX — and to a rival service, Equinix — for its new Ethernet eXchange Hub service. The new service will be available first to customers operating in select CENX and Equinix carrier ethernet exchanges.
The eXchange Hub service acts as the hub or central connectivity port and carrier customers can then use AboveNet’s network for ethernet connectivity to enterprise locations, carrier hotels and data centres.
Ethernet services are available at bandwidth levels from 100 megabits a second to 5 gigabits a second, said AboveNet.
Equinix’s general manager of global networks, mobility and content, Jim Poole, welcomed the move, saying that it helped to expand service availability.
Equinix, set up to run an internet business exchange, in the late 1990s and a survivor of the dotcom crash a few years later, expanded its own ethernet exchange business in October 2010. It now operates in 10 markets — Amsterdam, Chicago, Frankfurt, London, Los Angeles, New York, Paris, Silicon Valley, Tokyo and Washington — and plans to add 10 before the end of June 2011: five US locations plus Hong Kong, Singapore, Sydney, Toronto and Zurich.
Equinix says it has 38 customers for its carrier ethernet exchange, including Pacnet in Europe and 2Connect from Bahrain.
Chris van Zinnicq Bergmann, managing director of Pacnet Europe, said: “There is a significant opportunity to extend Pacnet’s reach through local providers, allowing us to deliver more scalable, flexible and cost effective solutions.”
Buyers and sellers
Rick Hillson, managing director of 2Connect’s European office, also welcomed the move: “Connecting to Equinix’s carrier ethernet exchanges provides 2Connect access to a wide variety of buyers and sellers of ethernet services as well as extending our reach into new markets.”
Another carrier ethernet company, Neutral Tandem, has also been announcing a series of relationships with global carriers.
Until now, says the Chicago-based company, ethernet service providers have engaged in complex, one-off interconnects with a number of different carriers in an effort to provide seamless service to their customers. Neutral Tandem’s ethernet exchange aims to be a connecting point for ethernet providers, by enabling them to interconnect with one another in a more efficient, simplified manner to accelerate revenue.
In early November the company announced that a broadband company, Business Only Broadband, with services in the New York and New Jersey area plus Chicago, was to be the first wireless operator to connect.
Alan Rosenberg, CEO of BOB, commented: “We are uniquely positioned to offer extended reach, quick installation, and network diversity for customers that have immediate and mission critical networking needs. The ethernet exchange allows us to better serve our customers while giving the other exchange participants the opportunity to take full advantage of our flexibility, network diversity and speed to market.”
Ethernet service providers can virtually connect to many different access providers in several markets through a single connection to the Neutral Tandem ethernet exchange, said Neutral Tandem’s president and COO, Surendra Saboo. “Since we’re also a customer of BOB, we have experienced the value of their solution first hand.”
The company has taken a step further, by agreeing in September to buy Tinet, the former wholesale arm of European operator Tiscali, from the private equity companies that owned it, for €74 million.
Tinet already had a global ethernet network, and this is being integrated into Neutral Tandem’s networks, so that the integrated networks can carry voice, video and data traffic worldwide, while operating as what the new owner calls the largest ethernet exchange in the world.
“This represents the first major milestone tied to our integration efforts with Tinet,” said Saboo, adding that the deal “significantly enhances the value proposition of our global ethernet exchange service offering”.
He noted that Neutral Tandem plans to link its 14 sites in the US with Tinet’s 99 ethernet-enabled points of presence. “Neutral Tandem now offers the most accessible and robust ethernet exchange in the world with over 100 locations spread across three continents,” said Saboo.
The deal means that, with one connection to its ethernet exchange, customers can buy and sell to every other member connected to any of its exchange points of presence, whether in San Francisco, Singapore or any of its other locations across the world.
Paolo Gambini, head of sales and marketing at Tinet, who stays with the merged company, said: “Tinet has been selling ethernet connectivity in the wholesale market since its inception, and its backbone currently carries about 100 gigabits a second of point-to-point and point-to-multi-point ethernet traffic on behalf of over 100 customers.”
CENX also says it plans expansion plans. It started with hubs in New York, Los Angeles and Chicago, and after London has places such as Hong Kong and Miami on its list. The company plans to grow to 20 locations by the end of 2011, Brown told Global Telecoms Business recently. “We are driven by our carrier customers.”
CENX is aiming at “the major European telecoms areas and the Asia Pacific region”, he said.
CENX and Verizon have worked closely with several large service providers to create what is aimed to be a scalable growth plan for carrier ethernet.
Brown is one of those who believes that ethernet is the way forward for most operators worldwide. He expects 80-85% of new circuits to be ethernet end-to-end in the next five years.
The different between CENX and the others is that it is carrier neutral, not providing telecoms services itself but simply a carrier-neutral interchange hub. CENX does not provide its own long-distance services, Brown told GTB recently: it does not compete with the companies that connect to it.
Analysts expect the carrier ethernet market to grow rapidly: some suggest it will be worth $40 billion in three years. If that’s true, the business for ethernet exchanges, whether carrier-neutral like CENX or allied to a carrier like Neutral Tandem, stands to be huge. GTB