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XO Communications Leads Competitive Carrier Upsurge in Business Ethernet Services


Business customers are buying Ethernet services from legacy and competitive carriers as well as from MSOs.  Cost effective performance, simplicity of operations, scalability and the ability to use the same access technology as in the enterprise LAN are somme of the reasons for this uptake.  In addition to the extra bandwidth and the variety of services Ethernet supports, small- and medium-sized businesses appreciate Ethernet’s flexibility and lower cost.  Carriers and their customers like the fact that Ethernet adapts to their premises based (switch/router) equipment, which helps them to grow their businesses quickly. Wholesalers are doing the same things as their retail counterparts.

Why Business Ethernet?

The top three reasons carriers are deploying Business Ethernet are to transport mobile backhaul traffic, to meet the needs of high-end enterprises and to serve businesses with multiple locations.  For many years, Frame Relay service was used for the latter, but being almost 20 years old, Frame Relay has been replaced by “Metro Ethernet” which also goes by the monickers “Carrier Ethernet” and “Business Ethernet.”  Note that Carrier Ethernet is also used by many carriers (e.g. AT&T U-Verse) to transparently deliver IP-TV services to residential customers.  However, that is not the focus of this article.

Ethernet over Fiber or Copper depends on Bandwidth Requirements

To truly realize the potential and power of Metro Ethernet, carriers need to build-out fiber infrastructures closer and closer to their customers.  Optical Ethernet from the customer premises to the carrier’s POP is the best, because it facilitates “liquid bandwidth.”  That means that a business customer can automatically request his Ethernet speed to be increased or decreased without having to add or remove a physical line.  The addition of a new facility involves a truck roll and may take significant time.  This is not necessary with FTTP because of the much higher access bandwidth of fiber, when compared to a repeatered 4 wire copper circuit (e.g. T1/DS1 or T3/DS3) or bonded (2 wire) DSL.

When fiber to commercial buildings is not available or possible,  the fiber is terminated in a network node close to business customers and then extended by copper tail circuits -either bonded DSL or n x T1/DS1.  The Metro Ethernet sweet spot today is somewhere between 10M b/sec and 100 M b/sec- much lower than what many pundits were predicting for 2000 and 2001 – just before the telecom crash.  Those speeds can effectively be met with Ethernet over Copper, which provides reasonably good scalability from 3 – 20 M b/sec.

According to Erin Dunne, Director of Research Services for Vertical Systems Group, just over half of U.S. business Ethernet installations are delivered over Direct Fiber.  Ms Dunne states that “SONET/DWDM is the second most prevalent Ethernet access technology.  Other technology alternatives include TDM, bonded copper, Coax/HFC, FWL and others.  While fiber is the access technology of choice for Ethernet service delivery, alternatives to fill gaps in fiber coverage will be required for many years.  This is good news for vendors of equipment that addresses the flexible access requirements service providers are demanding.”

XO Communications Business Ethernet Services

A survivor of the dot com bust and telecom crash of 2001-2002, XO Communications is quietly making a name for itself in delivering Ethernet services to business customers.  While AT&T, Verizon, and TW Telecom are still the U.S. leaders, according to Vertical Systems Group Mid Year 2011 Leaderboard, XO is in 7th place and moving up fast.  The company sells voice and data services to SMBs and also offers wholesale facilities to other carriers/re-sellers.

The Ethernet services XO offers to business customers include:

  • Ethernet Private Line – Point-to-point Ethernet connectivity ideal for businesses looking for dedicated bandwidth between office locations
  • Ethernet Hub (previously called Ethernet Virtual Private Line)– Point-to-multipoint Ethernet solution ideal for connecting branches or offices to centralized headquarters or data center
  • Ethernet VPLS (previously called Ethernet Private LAN) – Multipoint-to-multipoint Ethernet WAN ideal for enterprises to connect key locations, transport special applications with protocol transparency, and maintain separation of different network domains
  • Ethernet Access (to an IP WAN) – affordable, scalable Ethernet access to deliver Dedicated Internet Access, VoIP and MPLS IP-VPN services across your enterprise

A complete description of XOs Ethernet Services is described in their  Ethernet Services Overview document.  The company also provides an informative podcast describing why business customers are interested in Ethernet services and how XO meets that need.  Click here to watch that video.

According to Don MacNeil, vice president of Carrier Services for XO Communications, Ethernet has been key to the company’s strong growth since its founding in 1996, a trend he foresees continuing in the future.  The XO network can provide Ethernet services to over 10 million U.S. businesses in the metro areas the company serves. This represents the majority of all U.S. businesses and the XO network is present in all top 25 metro markets. XO’s Ethernet-over copper services are now available in 442 central offices in 40 metro markets reaching 1.5 million U.S. businesses.  Read more at:

For more information on XO’s Business Ethernet offerings as well as other XO telecom services for SMBs, please contact:

Michael E. Weiss attended the Oct 12th IEEE ComSocSCV meeting on cloud networking and talked with attendees during our networking reception.  He also attended ComSocSCV’s very successful August social event along with representatives from other telcos (e.g. Sprint), network equipment (Cisco, Huawei), software (Oracle) and semiconductor (Intel) companies.

Related Article on Sprint’s Business Class Ethernet Services:

Author Alan Weissberger

By Alan Weissberger

Alan Weissberger is a renowned researcher in the telecommunications field. Having consulted for telcos, equipment manufacturers, semiconductor companies, large end users, venture capitalists and market research firms, we are fortunate to have his critical eye examining new technologies.

8 replies on “XO Communications Leads Competitive Carrier Upsurge in Business Ethernet Services”

What’s so amazing to me is that it took over 8 years for the Business Ethernet/ Metro Ethernet market to take off. The IEEE 802.3 Ethernet First Mile Standard was completed in 2003, many MEF specs were solid at that time and the ITU-T had started a massive effort to standardize end-to-end “Carrier Ethernet,” including OA&M as well as Performance Monitoring and Protection Switching.

Many “new age” Ethernet carriers and start up Ethernet network equipment vendors went bankrupt or were acquired for a fraction of what VC investors thought they were worth.

Now – 8 years later- the volume of Ethernet bandwidth purchased by enterprises in the U.S. has surpassed the aggregate bandwidth for legacy circuits, according to new research from Vertical Systems Group.

2011 marks the tipping point of a surge in the installation of Ethernet connections. Looking ahead to 2015, Ethernet bandwidth is projected to more than double based on Vertical’s latest analysis of enterprise requirements.

“Boosted by a 10x surge in the past five years, Ethernet bandwidth has overtaken legacy bandwidth in the U.S. market,” said Erin Dunne, director of research services at Vertical Systems Group. “This milestone fittingly coincides with the ten year anniversary of the MEF – an organization that has successfully fostered the deployment of carrier-class Ethernet services throughout the world.”

Excellent summary article on Business Ethernet market. For a long time TW Telecom has led competitive carriers in this area. Vertical Systems Leader Board ranks them #3 in the U.S. However, there’s no breakdown of Ethernet carrier position by type of service offering, e.g. Private Line, Virtual Private Line, VPLS, access to IP VPN, etc. Can you provide that missing piece?

Sorry, I don’t have any info on TW Telecom or Business Ethernet carriers by service category/type.

There are many competitive carriers and MSOs selling Business Ethernet services and I’m not sure Vertical Systems LeaderBoard is accurate. For example, Comcast is not in the top 10, but the company claims they’re one of the U.S. leaders!

Great article with a lot of keen observations about the Metro Ethernet market.

Vertical Systems US Business Ethernet rankings list TW Telecom, Cox and TW Cable ahead of XO. Moreover, Comcast isn’t even listed despite their aggressive Metro Ethernet push to SMB customers.

Here’s a Business Ethernet comparison tool that can help locate service providers:

Participating Metro Ethernet Service Providers include: ACC Business, AireSpring, AT&T, Broadview Networks, CenturyLink, Earthlink Business, Integra Telecom, Level 3, Megapath, NetWolves, Nitel, PAETEC (Cavalier Footprint), Telnes Broadband, TelePacific, Windstream, and XO Communications.

Thanks for the complementary article about XO’s Business Ethernet services. If anyone has any questions or requests for additional information, please contact me at (510) 580-6380 on my Fremont XO office line or via email at [email protected]

I plan to attend the Nov 9 IEEE ComSocSCV networking session if you’d like to talk in person.

XO Ethernet services have earned Metro Ethernet Forum (MEF) certifications:

— XO Point-to-Point Ethernet – conforming to MEF Ethernet Private Line
— XO Ethernet Hub Service – conforming to MEF Ethernet Virtual Private
Line (EVPL)
— XO Ethernet VPLS – conforming to MEF Ethernet LAN Service (ELAN)

XO answers reader’s question:
Could you kindly rank XO’s Business Ethernet services by category, e.g. in order of popularity/ sales to SMBs

And which is more popular- Dedicated private line (e.g. T1, nx T1, T3) or Ethernet Private Line (over fiber or copper)?

Answer from XO Communications:

I will break down our Ethernet services into two categories:

Inter-city (Long Haul) or Regional, greater than 100 Megs is nearly all Ethernet based ( note: for 10G Ethernet, LAN PHY is preferred over WAN PHY).

For the broad category of access services ( this includes Private line and access circuits in support of voice and data services) in the SMB space we are still about equally split T1s to Ethernet, but the momentum for Ethernet access is building. With regard to access mechanism – we have differentiated ourselves in the mid-band space using copper ( although we also support fiber and Microwave as well), so our greatest growth is using Ethernet over copper in the last mile.

Don MacNeil

Scott Stewart, Director, Sales, Major Competitive Service Providers, ADTRAN Inc. recently wrote:

“The carrier Ethernet market has been one of the exciting segments in the networking gear market, and continues to outpace that of other telecom equipment. So much so, surprised by the robust growth, Infonetics Research upped its forecasts for 2015 to $40.2 billion, from $37.5 billion.

Reasons for the buoyant market are not far to seek. Some are as follows:

In an increasingly networked world, demand for bandwidth is soaring on account of rapidly increasing use of cell phones and other mobile devices, popularity of social networking, cloud computing and data storage, and proliferation of videos.
Another key driver in this new dynamic is the growing pervasiveness of carrier Ethernet. The technology is a critical part of network convergence and is useful to address both tough enterprise requirements and residential triple-play offerings, besides enabling integration with wireline networks to address 3G/UMTS wireless backhaul needs.
Carrier Ethernet also has made inroads into every part of the metro and access network infrastructure, fueling its adoption at the expense of legacy services.
Also, Ethernet can combine exceptionally well with wavelength technologies to offer lower-cost alternatives.”

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