E-NNI's not going away

Ethernet exchangeFor all of the allure of the Ethernet exchanges, standard interconnection arrangements and specific External-Network to Network Interface (E-NNI) agreements aren't going to fall by the wayside anytime soon.

Prior to the advent of the Ethernet exchange or even the emergence of a global E-NNI standard concept, service providers have been crafting their own internal agreements with other carriers to extend their footprints for a number of years.

The more likely approach is that service providers will take is they'll continue to leverage a mix of E-NNI and Ethernet exchange where it makes sense.

In some cases, an operator could leverage an Ethernet exchange to complement or get to a particular location that a larger carrier partner does not serve. 

Take Neutral Tandem (Nasdaq: TNDM), which just gained 15 E-NNIs through its acquisition of Tinet, instantly establishing it as a global Ethernet player, said Ethernet exchanges will complement existing NNI arrangements.

Gerard Laurain, Neutral Tandem"You're not going to see a service provider rip out an existing 500 Mbps E-NNI and replace it with an exchange connection--that's not going to happen," said Laurain. "Part of what you will see with Ethernet exchanges there will be a stepladder growth with it just like you have with augments of DS3s."

Even the most vocal proponents agreed with that assessment, including Sandy Brown, CEO of CENX.

"My expectation here is that a very large amount of off-net traffic will go through an exchange because of old fashioned operational efficiency and manageability," he said. "When people do a side-by-side, they'll end up making that choice. The direct connect is a more mature arrangement, which I can tell you from my role at AT&T. The reality is the exchanges are newer."

Neutral Tandem Ethernet exchange

E-NNI's not going away