Why Ethernet is Replacing ATM in Carrier Networks

ATM deployments in most carriers these days are in “maintenance mode,” while the top equipment suppliers have halted further research and development in the technology. Indeed, port shipments have been flat over the past two years, according to data from Synergy Research Group (Figure A).

MPLS has emerged as the transport alternais live to ATM, starting at the network core. It offers a smooth migration path towards IP- based infrastructures, where development is taking place. Moreover, carriers can implement MPLS without having to take current ATM implementations off-line. This is important to carriers from a profitability standpoint.

Adding MPLS at the core also opens the door to more IP equipment in service provider networks, a move most expect will reduce both capital and operating expenditures by consolidating all traffic onto a single network.

Among the lowest-hanging fruit in this architectural consolidation is the use of lowcost Ethernet switches for various levels of traffic aggregation. They have proven reliability, with many years of carrying traffic in the largest enterprises around the globe. Economies of scale, competition, and many generations of development for the components that go into the devices mean that prices will continue to fall.

Also, substantial innovations in software have brought to Ethernet switches many of the same features that customers appreciate in ATM, such as traffic prioritization. The newest versions also offer features to support committed information rates, dynamic bandwidth utilization, ring-based resiliency, and other features meant to ease implementation with SONET/SDH networks and preserve bandwidth when linking them with Ethernet networks.

However, to leverage these inexpensive switches for traffic aggregation, customer-facing access devices also need to add IP- based uplinks. This is driving the demise of ATM-based broadband aggregators, and the rise of Gigabit Ethernet-powered, IP-based DSLAMs and to some degree, IP-based cable head-ends.

Increased investment in 3G wireless infrastructure from carriers also points to an increase in IP-based equipment deployments, where, until recently, wireless backhaul had been one of the last strongholds for ATM in service provider networks. Surely, without that wireless application, Figure A might show a strong decline in ATM port shipments rather than flatness.

That said, 3G networks also need specialized IP routers, called Gateway GPRS Support Nodes, where there were none previously, in order to deliver additional data services. These new gateways help pave the way for packet-voice, as opposed to today’s circuit-based connections, and are expected to reduce carrier costs in the long run. Moreover, the IP routers preferred here signal that future development for IP, MPLS and Ethernet is again clearer than it is for ATM.

New Service Possibilities

The idea of using Ethernet as a last-mile access technology for offering new services to business and residences is quickly gaining popularity across Europe, Asia and in random pockets of North America. For enterprise customers, the chance to do away with E1/T1 access lines, and the expensive routers that convert Ethernet packets to and from TDM-plus the order-of-magnitude increase in access speeds that Ethernet promises-combine for a very compelling solution. The corresponding opportunity for carriers extends beyond simplifying their networks to offering additional, Ethernet-based services such as toll bypass, voice conferencing, videoconferencing, bandwidth-ondemand and storage.

FIGURE A ATM To IP Transition

For residential customers, a higher-bandwidth connection can mean a chance to use third party Voice over IP (VOIP) services and see tremendous savings on long distance expenses, and to get broadcast video or video-on-demand. Along with these potentially strong offerings, carriers also get the opportunity to sell other new services-or repackage older ones witli fresh price points. New additions to carrier portfolios could include gaming, parental controls and other previously business-only services like anti- spam, anti-virus, backup and storage.

Most of the new services that carriers want to offer business or residential customers will require Ethernet for access, edge and aggregation. For the carriers, the alternative is bleak: without unique services or features, there may be little to draw customers away from their connectivity status quo.

In fact, the large number of Metro Ethernetbased announcements and deployments are fueling port shipments, as seen in the figure. And for all the applications mentioned, Metro Ethernet stands to become a decent-sized market in short order

Joshua Johnson and (Stan) Zhiyong Zou are industry analysts with Synergy Research Group. Josh’s primary focus is on Ethernet LAN switching, metro Ethernet, and larger trends in the communications market, while Stem ‘s primary focus is on DSL, cable, multi-service switch, WiMax, and FTTP. They can be reached at 602/287-9097, or at www.srgresearch.com.

Copyright Business Communications Review Jun 2004