COMPTEL PLUS Scorecard: Ethernet services

Whose profile is rising? Ethernet services

Even if you just talked to one service provider during the recent COMPTEL PLUS show about retail or wholesale services, chances are much of the conversation centered around Ethernet-based services.

Take Verizon, for one. The service provider plans to expand its Ethernet footprint for both retail enterprises and wholesale customers throughout 2010.

On the wholesale side, Ethernet is becoming the choice for wireless backhaul and for business services. Traditionally dominated by legacy T1 circuits, it was hard not to find an incumbent or wholesale service provider   

And their timing couldn't be any better as Verizon's wireless brother one week later announced its wireless backhaul partners, a list that included not only Verizon Communications but a host of competitive regional wholesalers.

But Ethernet is not just about wireless backhaul alone. Both large and small businesses continually are adopting Ethernet services. Once out of the hands of smaller businesses, service, Verizon Global Wholesale introduced a wholesale integrated voice/data service with Ethernet-based Direct Internet Access (DIA) service for CLECs targeting business customers.

Traditional operators aren't the only ones seeing Ethernet momentum. Other notable moves on the Ethernet side during came from competitive wholesaler (Level 3) and New York-based Broadview Communications. Level 3 announced that it would upgrade its switched Ethernet infrastructure by 400 percent, while Broadview expanded its Ethernet over Copper reach.

These trends should not be all that surprising. As pointed out in Vertical Systems Group's 2009 U.S. Business Ethernet Leaderboard, incumbent carriers (AT&T, Qwest and Verizon) competitive carriers (Level 3, tw telecom and XO) and cable operators (Cox and Time Warner Cable) have all been upping their Ethernet game over the past year. 

Whose profile is falling: TDM-based voice services

Okay, the continual decline of TDM-based voice on both the retail and wholesale sides of the major wholesale operators really should not come as much of a surprise to anyone, really.

In addition to just ditching their landline phones for wireless, consumers can purchase any number of broadband phone packages from the likes of 8x8, Packet 8 and Vonage with unlimited local and long distance calling for under $20-a price that will likely continue to decline.

The biggest affect of this decline obviously is hitting the incumbent wholesale carriers who have over the years built a cash cow business selling TDM-based voice to competitive carriers.    

And it's not hard to see that trend if you take a quick look at the recent earnings of some of the major network wholesale operators.  

Qwest Wholesale's Q4 revenue declined 14 percent compared to the prior year mainly due to lower long-distance revenue.

And wholesale operators are not denying this. "I am continuing to see the erosion of our voice products," said Roland Thornton, Roland Thornton, EVP of Wholesale Markets, Qwest. "The trajectory may bend slightly, but it's an industry trend that's just going to continue. Our goal is to outperform the industry trend, but that trend will continue to manifest itself.

At the same time Thornton added that "what we're most excited about is the growth opportunities emerging in the data/IP space."      

COMPTEL PLUS Scorecard: Ethernet services