As suspected, the emerging Ethernet exchange market has of course various camps touting they have the best method to help carriers expand their respective Ethernet footprints.
While other players could emerge in the future, for now, there seems to be at least three camps chasing the Ethernet exchange concept:
- Standalone Ethernet exchanges: CENX, one of the earliest proponents of the Ethernet exchange concept, has created a purpose-built Ethernet exchange model that delivers a suite of services including physical and virtual interconnect, service alignment, and real-time service management in addition to its marketplace for buying and selling service providers. Thus far, CENX has been making a dent in the market with not only a number of major carriers, but also 10 million connections mark. Led by a management team that not only includes Ethernet expert Nan Chen, but former AT&T expert Sandy Brown, it has established a purpose-built Ethernet exchange network with three locations in Chicago, Los Angeles, and New York.
- Colocation/data center providers: Beginning their life as providers of carrier neutral colocation interconnection, the dominant players Equinix and TELX decided to enter into the Ethernet exchange market with a number of high profile members (including Level 3, etc). Already providing space/power in addition to interconnection for hundreds of carriers, these service providers are adding Ethernet interconnection capabilities to their respective product portfolios. Leveraging its existing assets, the Telx Ethernet Exchange, for example, will be available in seven interconnection data centers over the next nine months with initial customers being part of a charter program in Q3 2010.
- Internet/Voice Peering: Neutral Tandem (Nasdaq: TNDM) is the first of the IP voice peering group to launch an Ethernet exchange service. Having spent much of its life providing carrier neutral voice tandem switching to competitive carriers that need to exchange voice traffic. Already having built out a national network for tandem switching, Neutral Tandem is layering on Ethernet exchange capabilities that will allow carriers to interconnect with other Ethernet providers on its already built national network. Although Neutral Tandem has already garnered 10 Ethernet exchange charter customer partners, the company is not just going to be relegated to the U.S. Earlier this month, Neutral Tandem enhanced instantly gained an international Ethernet exchange footprint by acquiring Tinet it gains 15 E-NNI global arrangements.
Of course, the viability of the approaches is up for debate. Given that the market is still early, each domain already has staked their ground with their points of view.
While CENX's Nan Chen acknowledges that competition is heating up in the carrier Ethernet Exchange market, he's quick to point out that CENX's value is in providing various tools to manage and monitor the Ethernet connections they make with other providers in the exchange. In other words, CENX views Ethernet as an end-to-end service.
"The colocation guys that want to be in this space, their view is if provider A and provider B want to connect, we can connect A and B together virtually, and after that you work out what you want to do," Chen said. "We do that for sure, but the most important thing for us is we take a great deal of pain from the service provider and tools to do search, quotes, order the services, monitors the services and integrate their IP systems with us to make things a lot more seamless."
Gerard Laurain, senior director of product development, Neutral Tandem, said that adding Ethernet to their portfolio wasn't much of a stretch in that it could leverage its well-established national network and layer Ethernet on top of it.
But the company's movement into the Ethernet exchange market isn't solely about the U.S. market. Initially set on serving the U.S.-based market, the service provider instantly gained an international presence when it signed a deal to acquire Tinet.
"The concept of the Ethernet exchange arose last fall," he said. "While we're not the first to market on that front, we thought it was a space we could compete in the exchange trend that surfaced last fall."
And while Laurain recognizes the work by CENX and others, what Laurain says is different about Neutral Tandem already buys from various carriers already and has signed up various providers as charter members. These charter customers will then provide feedback and then go commercial when ready in other markets besides New York and Los Angeles.
"Where we see the opportunity is not what I'd call the second tier markets, but maybe the bottom half of the top 10 or top 20 markets," Laurain said. "We have already facilities-based switch presence in various markets such as Denver, Charlotte or Chicago so we don't have to go out and lease space from a third party so we can deploy the Ethernet exchange facilities today. Instead of an Ethernet exchange being in effect an island what you're seeing from Neutral Tandem is the extension of an Ethernet exchange to an Ethernet exchange network where each one of our Ethernet exchanges is interconnected via GigE facilities."