Fiber is and will remain the ultimate medium for Ethernet, but in places where a service provider can't immediately prove a business case to lay fiber, many incumbent carriers are either considering or are expanding their Ethernet footprint over their existing copper network via Ethernet over Copper (EoC).
As a follow up to our previous report on competitive providers pursuing Ethernet over Copper, we're taking a look at how incumbent carriers are taking on EoC and their respective strategies for delivery.
"Longer-term, end-to-end Ethernet service delivered over fiber is clearly the end-game, as scalability demands and required speeds trend rapidly higher," said Roopashree Honnachari, Program Manager, Business Communication Services Frost and Sullivan in its Mid-Band Ethernet Services: Next New Thing in Business Last-Mile Connectivity study. "However, EoC will be both economical and performance-viable for many years to come; and even competitive at significantly higher speeds in selected short distance situations."
EoC is part of the larger mid-band Ethernet segment, which includes other delivery mechanisms (i.e. EoFiber, EoHFC, EoTDM, and Ethernet over PON)--one that Frost and Sullivan forecasts exceeded $1 billion in revenues in 2011.
The U.S.-based Tier 1 and Tier 2 providers we profiled in this report each have their own point of view on the importance of EoC in their respective Ethernet portfolios.
Of course, no two service providers are delivering it in the same way. The top three service providers--AT&T (NYSE: T), Verizon (NYSE: VZ), and CenturyLink (NYSE: CTL)--remain divided on using EoC.
AT&T entered the EoC market via its acquisition of BellSouth, but has not been actively marketing the service apart from delivering to customers where it can't initially serve with fiber.
Verizon has been more focused on using fiber for larger customers in its own ILEC territory. At the same time, Verizon is leveraging its service provider partners' EoC services as an off-net solution to connect Ethernet customers outside of its traditional regions.
CenturyLink has been more aggressive with EoC. Since purchasing the former Qwest, the service provider expanded the service into an additional 334 COs to target more SMB opportunities that wanted Ethernet connectivity by the end of Q3 2011.
Alternatively, Tier 2 carriers like FairPoint (Nasdaq: FRP), Frontier (NYSE: FTR), Hawaiian Telcom (Nasdaq: HCOM), SureWest (Nasdaq: SURW) and Windstream (Nasdaq: WIN), have all been keen on using EoC to retain SMB customers that have perhaps outgrown their T1 connection.
Windstream sees EoC as a quick time-to-market tool to drive higher speed connections to a business customer.
"In our ILEC territory, there are times when bonded or sometimes dry pair we want to get fiber out to a business, but you can't justify a fiber build because cost or you just can't get to them," said Bill Bellando, vice president of network services for Windstream. "If the customer says it wants 10, 20 or even 50 Mbps we can go out there with a copper solution and it's quick-to-market so you get them turned up fast and they're happy."
Given the competitive pressures traditional telcos are facing in the business area from an aggressive group of cable operators that are not only laying their own fiber but are also delivering speeds of 50 and even 100 Mbps over their existing HFC-based DOCSIS networks, getting business customers hooked on copper-based Ethernet as an introduction to higher speed services beyond T1 is a sound tool to create stickiness.
Take a look at our EoC provider profiles and let us know what you think.--Sean