The best Ethernet-based wide area network (WAN) service is only as good as its geographic reach. Enterprise WAN managers are increasingly interested in Ethernet WAN connectivity,
"If the enterprise needs to extend an existing network into a new office and their existing provider does not have network coverage to that office, it may be easier and faster to use an Ethernet exchange," said Munch, who recently published the research note, “Ethernet Exchanges Improve Service Coverage, But There Are Risks.”
Today, Ethernet exchanges are a domain exclusive to the service provider market. Carriers use them to buy, sell and provision Ethernet connectivity among themselves, often for wholesaling capacity to each other for mobile backhaul. But as Ethernet WAN adoption grows and more carriers join these exchanges—many Ethernet exchanges are only a year or two old—enterprise WAN pros will enjoy broader geographic support for Ethernet services and potentially shorter lead times for provisioning them, Munch said.
Munch expects enterprises to "routinely" source Ethernet WAN interconnection services directly from these exchanges by 2013.
Bob Primavera, vice president and manager of network engineering at Boston-based Eastern Bank Corp., who uses Ethernet WAN connectivity from Comcast Corp. and Verizon Business, said sourcing interconnection services directly from an Ethernet exchange would be an attractive option for bringing more branch offices onto Ethernet.
"The problem that we face is not every area has Comcast or Verizon," Primavera said. "We would definitely be interested in working with someone who's carrier neutral because then we wouldn't have to worry about what carriers are in our areas."
Ethernet exchange gets branches online easier, faster
Ethernet exchanges share the same principles as Internet exchanges: They are centralized hubs where network operators interconnect and exchange Ethernet traffic with each other. Exchange providers facilitate these interconnections faster and more easily for carriers than the rigid way carriers have traditionally peered Ethernet traffic through network-to-network interfaces (NNIs), Munch said.
"An NNI is typically very time-consuming and thus expensive to establish," he said. "A Tier 1 carrier will generally have very stringent requirements of their partner as well as test cases to run through, and on top of that obviously they need to negotiate the commercial details of the contract. Thus, most large carriers have such arrangements established on a more permanent basis."
The "stringent" vetting process for NNIs ensures carriers maintain service-level agreements (SLAs) across the partner's network, Munch said. The "key advantage of the Ethernet exchange is if a carrier needs to 'urgently' establish a few connections for a customer they can do so," which subsequently makes it easier for a WAN manager to purchase ad hoc connectivity, Munch said.
Although working directly with an Ethernet exchange for interconnections may not immediately save enterprises money—in fact, the associated fees can make it more expensive than working with a single provider—they enable WAN managers to be shrewder in contract negotiations with the carriers they ultimately choose for WAN connectivity, Munch said.
"The enterprise will be in a better purchasing position," he said. "This purchasing position is created by the increased visibility into various providers' network availability and thus an improved negotiation position."
Ethernet exchange carries monitoring, management risks
WAN managers must weigh the benefits of working with an Ethernet exchange against several risks, Munch cautioned.
"It could mean using several 'last mile' providers from the Ethernet exchange to each office, which will increase both the service and provider management burden," he said. "If the enterprise needs to connect a larger number of offices, it will be easier to use one provider. [And] if the enterprise already has a relationship with this provider, it will make [contract] management easier."
WAN monitoring and SLA enforcement are also risky, as Ethernet exchanges do not monitor connectivity end-to-end, Munch said. WAN pros must demand transparent performance guarantees—whether those guarantees come from the Ethernet WAN provider that passes through an exchange, or from the Ethernet exchange itself if interconnectivity is sourced directly from there, he said.
Given the immaturity of the Ethernet exchange market today, WAN managers may have to use their own in-house monitoring tools to ensure performance, he said. As a result, enterprises should only source interconnection services directly from an Ethernet exchange for "less critical needs, such as ad hoc connectivity into new or highly-dispersed global locations," as opposed to business-critical connectivity to a data center or regional office, Munch said.
Colocation and data center services provider Telx, which launched its Ethernet Exchange service last year, will match or surpass a carrier's SLA inside its data centers but cannot guarantee performance outside of them, according to Glenn Calafati, vice president and general manager of interconnection services at Telx.
"I'm not in the transport or network business, so I'm not going to [be able to ensure] service levels on that long loop. I'm going to provide you service levels inside the Ethernet exchange," Calafati said.
Let us know what you think about the story; email: Jessica Scarpati, Senior News Writer.