Channel Partners

July 1, 2000

11 Min Read
Ethernet's Star Rises Again

Posted: 07/2000

Ethernet’s Star Rises Again
By Charlotte Wolter

With its standard now a ripe 18 months old, gigabit Ethernet services are being launched in metropolitan areas nationwide by new network operators that provide no other service. Gigabit Ethernet lets these operators offer highly scalable and low-cost bandwidth almost on-demand, a service that is getting great interest from the “next-generation” school of providers, such as
ASPs, web hosting companies and data centers.

The fact that service providers show any interest at all in Ethernet reflects that a predilection for faster, cheaper,
get-it-done networking is replacing the costly, perfectionist and somewhat anal approaches of the past. And Ethernet, better than any other new wide area technology, is meeting the fast and cheap criteria of service providers.

Ethernet in the WAN

The two technologies moving into the WAN are gigabit Ethernet and 10-gigabit Ethernet. The first is a proven
standard, IEEE 802.3, about a year and a half old. The second is lurching toward standardization sometime later in 2000.

Gigabit Ethernet provides a 1gbps data stream directly on fiber without SONET framing, although it can be delivered within a SONET framing structure.

The equipment for gigabit Ethernet is generally much cheaper than alternatives, such as SONET, in part because of the great volumes of gigabit Ethernet already being produced for enterprise applications. Also, the technology’s processing requirements are much less than for SONET, and the equipment’s footprint is significantly smaller, further reducing costs.

The first gigabit Ethernet devices for carriers generally were available late in 1999. The first service providers have deployed them since early 2000, with real services
beginning in April.

Service providers realize several advantages besides cost.

“We have an outstanding performance advantage,
meaning twice the bandwidth at half the price compared to DS-3s,” says Mick Seaman, chief technology officer for Telseon
(, a gigabit Ethernet service provider. “Also, it is very easy for the customer to understand, and it is a familiar interface that they are already using” in their corporate LANs.

“If one compares the difficulty from a cost and operations point of view of an OC-3 service or a DS-3 service with a direct Ethernet patch, there is no comparison,” he says, adding that customers only need an Ethernet switch or a router with an Ethernet port on premises.

A typical gigabit Ethernet switch provides a number of ports–20 is a typical figure–each of which can scale from 1mbps to 100mbps, a feature that is key to gigabit Ethernet’s value.

“The key point is that we are providing … scalable bandwidth and turning control over to the customer,” says Seaman.

“High bandwidth that is highly available and scalable–that is even more important than the cost today. Just the fact that they can get it, and when they’ve got it, they can increase their use without having to project their needs out the next six months.”

Cost is definitely secondary, agrees Pete Daily, managing partner of Frost & Sullivan

“The major advantage to me seems to be a degree of scalability that allows them to offer a right-priced service to customers that is between the T1 and T3 zone. Anyone doing inverse multiplexing on a T1 is a perfect target.”

Gigabit Ethernet also eliminates several levels of network management because a wave is delivered all the way to the customer premises or to a building. A gigabit Ethernet router at a customer premises or in a building can be the sole demarcation between an enterprises and the WAN. The new equipment can be managed remotely, allowing service providers to turn up service nearly to real time.

The new standard for 10-gigabit Ethernet still has some hurdles to overcome before
ratification, but should be completed this year.

An industry group, the 10 Gigabit Ethernet Alliance (10GEA), was formed to promote 10-gigabit Ethernet for LANs and MANs and to support the IEEE 802.3
10-gigabit Ethernet standards process.

One issue it confronts is whether to accommodate SONET framing on all chip sets or only those destined for legacy SONET networks, a topic that has produced lively discussion within the 10-gigabit committee. Observers of the standard-setting process expect a final decision will be based mostly on whether a solution involves extra cost for non-legacy users.

10-gigabit Ethernet equipment today is mostly “PowerPoint networks and products,” says Daily.

The question is whether 10-gigabit Ethernet will extend further into WANs than gigabit Ethernet–perhaps even to the long haul. Companies such as Williams Communications
( and Level 3 Communications Inc.
( make no secret of their eagerness to replace SONET ring
infrastructure with mesh topologies and non-TDM transport.

Some reports suggest that WorldCom Inc.
( has tested 10-gigabit in long-haul transmission.

“There are people who have done long-haul experiments up to 1,000 kilometers,” says Seaman.

Canadian networking research group CANARIE Inc.
( has set up a website,, to serve as a resource by providing research information and developmental updates.

A determining factor in whether 10-gigabit Ethernet will be a viable long-haul
technology is the reach of the optics. In long-haul optical systems, erbium-doped amplifiers gigabit Ethernet generally has a reach of 70 kilometers, but because it is deployed in metropolitan environments only, spans rarely exceed that distance. Each gigabit Ethernet switch regenerates signals, so amplification is not an issue. 10-gigabit Ethernet may also have a reach of 70 kilometers, after which amplifiers and ultimately regeneration will be needed, but its potential to beat SONET in costs in the long haul remains an open question.

Even without added distance, “the 10-gigabit solution in a metro environment with 70 kilometers of reach would be very useful for the foreseeable future, at least 24 to 36 months,” says Kamran
Sistanizadeh, vice president of network architecture for Yipes Communications Inc.
(, a gigabit Ethernet service provider.

Broadcom Corp.
( introduced a 10-gigabit physical layer chip in early May that could be the basis of future devices. But the process of integrating a chip into a device and having it ready for sale to service operators, then signing on customers, takes at least 18 months–which means 18 months until deployment.

Waiting for 10-gigabit equipment is not the only way to upgrade a network for more traffic, says Sistanizadeh. The other solution involves using coarse WDM, usually eight channels, each carrying gigabit Ethernet.

The two methods “are not mutually exclusive,” says Sistanizadeh. “We plan to follow both paths because we can use each lambda for different gigabit speeds.”

The 10-gigabit Ethernet impact for the service provider will be improvements in flexibility and cost.

“For an upgrade, rather than putting in new fiber, one IEEE Ethernet transceiver can provide the equivalent of a 10-gigabit solution,” says Sistanizadeh. “Obviously, that is very cost-effective.”

For private customers, some of whom already require more than one gigabit for high-end transfer to a storage area or for video streaming, “you need high-end capacity. To upgrade those from 500mbps to 1 gigabit to more than one, 10-gigabit Ethernet gives a lot of flexibility.”

Diagram: End-to-End Optical Ethernet Connectivity

He adds, “With the combination of 10-gigabit Ethernet and WDM, we can do in order of 100 gigabits very easily.”

The optical interfaces on the switches give a reach of 70 kilometers to gigabit Ethernet transmission, though the distances between switches are usually much less. The signal “gets regenerated when it hits one
of our boxes,” says Sistanizadeh. He adds that, although Yipes now uses only equipment by Extreme Networks Inc.
(, it expects to have a multivendor network in the future.

The Providers

The first two service providers to base their businesses solely on gigabit Ethernet are Yipes and
Telseon, both based in the San Francisco Bay area where they have access to Ethernet-savvy technologists. Yipes plans services in more than 45 cities, and
has signed on customers, such as ISPs, medical facilities and law firms, in the Bay area and Boston.

Yipes provides connectivity on a wholesale and retail basis. In its retail business, mostly to enterprises, the company typically places a gigabit Ethernet switcher or router in a multitenant office building that is served by fiber. Tenants who sign up for service can receive bandwidth in any increment from 1mbps up to 100mbps. Bandwidth can be increased or decreased on demand in a few hours because Yipes controls the switches remotely.

The company also provides gigabit Ethernet connectivity on a wholesale basis to ISPs, ASPs, and to building owners, who can resell the capacity to customers or tenants.

Telseon provides its services almost exclusively on a wholesale basis for resale by service providers that deal with customers with bandwidth-intensive applications, such as ISPs, ASPs and data centers. It provides bandwidth that can be increased and decreased rapidly between 1mbps and 100mbps, usually by the customers themselves.

This scalability is extremely important to the typical Telseon customer, says Telseon’s Seaman, because “the thing that dominates customers’ minds in this area is the simple inability of existing service providers to
provide enough bandwidth quickly enough. They can wait up to six months to get a DS-3.”

An important wholesale customer for Telseon is a new class of carrier called an undernet provider.

“They provide services to connect web hosting farms,” says Seaman. “They take
big bandwidth, and they want it turned up really quickly.”

Chart: IEEE 802.3 ae 10 Gigabyte Ethernet Worldwide Revenue

Telseon also provides a security technology that is tailored uniquely to its services. It checks and authenticates the sending and receiving addresses of packets on its network. Unless a connection has been set up explicitly between those two points, the packets are not delivered.

The Telseon and Yipes strategies “play very well into both the enterprise and service provider spaces,” says Tom Jenkins, an analyst for TeleChoice Inc.

“Enterprises are looking to push out the management and technology [to service providers]. They say, ‘I have a local area network [LAN] connect, so give me LAN.’ With the ASP movement, which needs hosting centers and collocation centers, it makes sense to connect them via gigabit Ethernet to hosting centers downtown and to customers’ offices in the suburbs.”

A strong wholesale play for both
companies, particularly Telseon, is virtual collocation, Jenkins says. Besides connecting to the Internet and to long-haul carriers,
service providers responding to the demand for outsourcing need to connect to a wide range of service providers, such as data
centers, ASPs, ISPs, voice providers, call centers and web hosting centers. It is unlikely they will all be in the same collocation facility. Using traditional infrastructure, these providers would all have to run T1s or DS-3s to each other, which is a prohibitively expensive approach.

However, if they all have some kind of fiber connectivity, “a collocation company can say, we will give you an Ethernet connection that acts like you are in the same building, but it is really from your PoP to someone else’s PoP,” says Jenkins. “It is like being in the same collocation space, but they are in actuality all across the metro.”

“We are providing the underpinning of what has to happen to make the outsourcing world possible,” Seaman says.

Another potential metro application, says Jenkins’ TeleChoice colleague Scott Williams, senior consultant, is redundancy for critical functions. If a business or network operator has an operations center in one location and a backup in another, gigabit Ethernet can substitute for the SONET connections that would be used at a much lower cost.

An issue Telseon and Yipes face is that most fiber is centralized in business areas. That is not a limiting factor early on, says Frost & Sullivan’s Dailey. “It is a restraint, but not a disadvantage,” he says. Customers without fiber access simply won’t be served, at least early on, but “there are more than enough customers that are on-net to keep Yipes humming along.”

Both companies have leased metro fiber capacity from Level 3. In buildings, Yipes is using gigabit Ethernet equipment by Extreme, including their Alpine service-provisioning switches. These switches aggregate traffic and send it to the company’s
PoPs, where it is switched by a larger device from Extreme, its Black Diamond product. If traffic needs to be routed off-net, such as to the Internet or to long-haul
networks, Juniper Networks Inc. ( routers provide high-speed interfaces to those networks.

The network itself is relatively simple, says Sistanizadeh. “This is the beauty of Ethernet. It allows the network to have a very flat architecture.”

At this point, gigabit Ethernet is available in only about a half dozen markets. By the end of the year, that number could be from 20 to 40. “It will be extremely limited for quite some time,” says Jenkins.

For those to whom the service is accessible, “a lot of their problems and issues as service providers and even as end users could be alleviated by this service and this technology.”

Two well-known vendors of gigabit Ethernet equipment are Extreme and Foundry Networks Inc.
( Other vendors are 3Com Corp.
(, Alteon WebSystems Inc. (, Anritsu Corp.
(, Cisco Systems Inc. (, EtherWAN Systems Inc.
(, Lucent Technologies Inc.
( through its acquisition of
Prominet, Nortel Networks Corp. (, Packet Engines
(, now part of Alcatel Internetworking,, Riverstone Networks Inc.
( and Synernetics Inc.

Charlotte Wolter is infrastructure editor for PHONE+ magazine.

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