Tier 1 service providers AT&T (NYSE: T) and Verizon (NYSE: VZ) may continue to hold the top spots on Vertical System Group's Ethernet Leaderboard, but it's hard not to notice the gains competitive providers and cable made in the first half of this year in the U.S. Ethernet market.
"There was a kind of surge of competitive service providers and cable MSOs gaining Ethernet share in the first half of this year," said Rosemary Cochran, Principal of Vertical Systems Group in an interview with FierceTelecom. "That was the same trend you saw at the end of 2009 when it looked like that was picking up. The competitive providers and cable MSOs that are on the Leaderboard as well as the ones that didn't make the cut based on share presence in the Ethernet market is growing. There's a broadening of the market rather than the incumbents not gaining share it's that there's a lot more players."
Overall, VSG's Mid-2010 U.S. Business Ethernet Services Leaderboard, which ranks every player in port share order, remained relatively unchanged from its year-end report in 2009. In the new report the ranking of the U.S. Ethernet providers went in the following order: AT&T, Verizon, tw telecom (Nasdaq: TWTC), Cox, Qwest (NYSE: Q), XO, Time Warner Cable (NYSE: TWC-WI), Cogent and Level 3 (Nasdaq: LVLT). Every carrier on the Leaderboard holds four percent or more of the Ethernet market based on retail port installations.
Driven by the ongoing deployment of Ethernet over TDM (EoTDM) and Ethernet over Copper (EoC), XO Communications (OTC BB: XOHO.OB) saw continued growth in the first half of this year and held onto the sixth spot on Vertical's Leaderboard. While XO has a strong fiber-based Ethernet presence it has been using EoC and EoTDM to fill in speed and fiber gaps.
"XO had the largest gain on the Leaderboard," Cochran said. "XO had the most port gain as a percentage. I think that was a function of their active deployments of both EoTDM and EoC-type solutions. They have been pretty active in doing that which has allowed them to spread out beyond their fiber base."
No less aggressive were the cable MSOs. In particular, Comcast (Nasdaq: CMCSA) , Cox and Time Warner Cable all saw continued gains in the Ethernet market in the past half of this year.
"We've also seen cable MSOs becoming more active," Cochran said. "Cox Business and Time Warner Cable are on the list, but Comcast is getting more active in the business market."
While Comcast has built a sizeable presence in the small to medium business (SMB) market over their existing HFC networks, a previous report in FierceCable revealed that Comcast is going to build fiber links to buildings within city and suburban sites via point-to-point Ethernet.
In addition to the greater presence of competitive providers, the emergence of the Ethernet exchange became a factor in the past half of this year. Led mainly by both new players (CENX) and existing data center and peering providers (Equinix, Neutral Tandem and TELX), both incumbent and competitive service providers are increasingly working with Ethernet exchanges to expand their respective service footprints.
However compelling the Ethernet exchange market is, Cochran points out that it's still a relatively nascent market. "It's like a teenage party where everyone is waiting to see who else will go," she said. "You still need enough buyers and sellers to make it a party."
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