Ethernet exchanges have been transformed from just an idea and concept to a more widely accepted solution to enable a globally distributed ethernet network, writes Ilissa Miller 
                             
                        

                        
Research suggests the global ethernet market will be worth
$40 billion in five years 
                        
                        
While you might have been following intently or in passing, the basics of what is an ethernet exchange should be understood.
According to Vertical Systems research group, a research firm that focuses on ethernet services, IP VPNs, frame relay, private lines, ATM, DSL, MPLS, VPLS and internet access, defines an ethernet exchange as “an open marketplace solution for the interconnection of Ethernet services among multiple providers”.
It is not peering, in that you don’t have to agree to buy or sell to any other carrier on the exchange; rather it’s an ethernet network to network (E-NNI) platform that provides you with the ability to leverage another member’s network without any additional engineering hurdles.
Each ethernet exchange platform has standardized the interconnection to enable each participant the ability to quickly transact a sale across their own ethernet network. The only hurdles you must overcome are the commercial arrangements with each carrier member. 
                        
                        
Ethernet exchanges in motion 
                        
The concept of an ethernet exchange and the idea of a globally distributed ethernet network are not new. It has been explored and envisioned for years. However, without standardization of ethernet class of service and SLAs it was challenging to envision a universally accepted solution.
In 2008, the Metro Ethernet Forum began to survey its association of members about the hurdles and potential benefits of an ethernet exchange.
MEF members seemed excited about the potential benefits of a globally scalable NNI model. They realized quickly that this could streamline their interconnections and processes, while gaining access to a broader network footprint, while saving costs on end-to-end ethernet delivery.
But the hurdle to overcome still remained the standardization of ethernet delivery. The MEF was a leading driver of ethernet standardization that enabled the ethernet exchange network concept to become the reality it is today. 
                        
                        
The reality 
                        
This business model is real. We know this due to the numbers of ethernet exchanges available today. As of January 2011, there are four providers offering their own ethernet exchange platform; CENX, Equinix, Neutral Tandem and Telx.
Each provider offers their own version of an ethernet exchange using different technologies. For instance Equinix, the first provider to announce an ethernet exchange in October 2009, which uses equipment by Alcatel-Lucent, has announced it will deploy its exchange in 19 markets.
CENX, the next provider that came on the scene, and the only provider whose sole business model is a carrier ethernet exchange network, has not announced its equipment vendors, but is expecting to provide services in 23 markets.
Neutral Tandem, which acquired Tinet, a global IP/MPLS service provider and tier one internet provider, has selected Cisco to power its exchange and has partnered with Telx, which also uses Cisco to power its platform.
Neutral Tandem’s acquisition of Tinet has propelled the company into the international network market. Now with an extensive global reach, coupled with over 100 points of presence, Neutral Tandem has quickly become a leading player in this space.
Furthermore, its partnership with Telx enables them to reach more markets and carrier networks as this collaboration leverages markets that the others are not present.
It is no surprise that Cisco is the leading vendor in the ethernet switch market. According to Infonetics Research, in 2010 Cisco dominated with a 72% market share. Furthermore, Cisco enables its customers to deploy an easy-to-use web interface portal of which members of the exchange can access to view inventory, availability and place orders. 
                        
                        
The concept in action 
                        
“Ethernet exchanges have quickly moved from the concept stage to a viable market for many players and continues to contribute to the evolution of the ethernet market,” says Erin Dunne, director of research services for the Vertical Systems group.
Now with four players vying for their fair share of the market, more network providers are adopting the concept and joining not just one, but multiple exchanges. Each of the four ethernet exchanges continue to announce new provider networks available through their platform, but who’s buying?
As the ethernet exchange concept continues to morph into a viable platform to augment global Ethernet network deliver, and as the service delivery of the platforms are proven, the opportunities that emerge are seemingly endless.
It is hard to quantify the number of providers actually exchanging ethernet connectivity, but this too will take flight; it has to.
According to Dunne, “Over the next five years, the majority of new ethernet connections installed by enterprise customers will be delivered directly by ethernet providers using their on-net infrastructures. Ethernet exchanges and bilateral partnerships will be used to deliver the remaining off-net connections to customers.”
Analyst firm Ovum projects that the overall global ethernet market will grow at a CAGR of 14% to $40 billion over the next five years. That’s a lot of ethernet network to deliver. 
                        
                        
What’s next? 
                        
Last year saw the introduction of a real game changer to the ethernet services market. With any new business model, it has its naysayers and sceptics looking for other solutions or content to stay with their one-off NNI partners.
As more enterprise businesses adopt virtualization across their networks, their ability to expand into new markets becomes a more attractive business opportunity. Over the next five years more companies expanding globally, because service providers will be able to offer ubiquitous global end to end network solutions more cost effectively and efficiently.
So the market opportunities are there. Ethernet network solutions will continue to rise in demand, and ethernet exchanges are well positioned to play a key role.
But the challenge, according to Dunne, is that ethernet exchanges must offer a compelling marketplace so service providers opt for an exchange solution to enable their off-net service connections.
And 2011 will be the year ethernet converges with the cloud. GTB