Ethernet over Copper - Top wireline technologies in 2013

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What is it? Fiber may be the best method to deliver Ethernet, but proving a business case and gaining the associated rights of way to build fiber to every location is unrealistic for even the largest service provider.

This has created what Vertical Systems Group calls a "fiber gap." At the end of 2011, fiber facilities still reached only 20.5 percent of commercial buildings in Europe and 31.8 percent in the United States, indicating a large contingency of businesses that have a near-term opportunity to be served by Ethernet over Copper (EoC), a method of delivering Ethernet over existing copper wiring.

While there are service providers experimenting with delivering 100 Mbps over bonded copper, EoC's sweet spot has been in the range of 2-20 Mbps.

Every competitive provider faces a common threat from the three RBOCs: AT&T (NYSE: T), CenturyLink, and Verizon (NYSE: VZ), all of which have a desire to replace their aging copper facilities with fiber and migrate from a TDM to an all-IP network.

Why is it important? EoC has benefits for both service providers and businesses.

Service providers can help bridge the fiber gap using EoC.  With the advent of Ethernet over Copper (EoC), small to medium businesses (SMBs), and smaller branch offices of large enterprises that have Ethernet needs that surpass what can be delivered over a fixed T1 line, can gain greater bandwidth and flexibility in order to support various IP-based applications, including disaster recovery, cloud and IP voice services.

A business can get a higher-speed data service that is less expensive than purchasing multiple T1 circuits, with the flexibility and speed of Ethernet to support higher bandwidth applicaitons like cloud services and disaster recovery.

EoC has become a flagship product for CLECs, including MegaPath and XO, which have been aggressively rolling out EoC in their respective markets. Last October, MegaPath extended its EoC service nationwide in the top 50 national U.S. markets, while XO provides EoC out of 447 Cos, including a higher speed 40 Mbps services to eligible customers.

However, traditional telcos, particularly CenturyLink (NYSE: CTL) and Consolidated Communications (Nasdaq: CNSL) are ramping up their EoC efforts. CenturyLink expanded its EoC footprint by over 80 percent in Q4 2012 to over 700 COs, while Consolidated plans to bring EoC to the Sacramento, Calif. market it entered via its acquisition of SureWest last July.