Hatteras: Mid-band Ethernet launches gear up

As the carrier Ethernet boom continues, mid-band Ethernet services such as Ethernet over T-1, are allowing carriers to reach segments of smaller business customers with inexpensive Ethernet over existing network infrastructure.

Kevin Sheehan, CEO of Hatteras Networks, a vendor of mid-band Ethernet gear, talked to FierceMarkets recently about the tipping point for mid-band Ethernet and the evolving market for Ethernet in general.

FierceTelecom: BellSouth (before the AT&T acquisition was finalized) announced a deployment mid-band Ethernet deployment in the summer of 2006 using Hatteras gear. Was that the first big break for this technology?

Kevin Sheehan: We had some early adopters out there for mid-band Ethernet, not only in 2006, but even before that. We saw some of the competitive carriers deploying earlier. But, in 2007, we saw a boom in mid-band Ethernet. The tipping point for any technology is when the biggest carriers get involved, and right now they are excited in general about Ethernet, just giddy about it, and they are looking for ways to deploy it where the business case makes sense.

FT: Are carriers being cautious about new Ethernet deployments?

KS: You always see earl y adopters take a foothold in the market with success-based marketing-installing the equipment as they get the orders. That's what we saw 2005 through 2007, but now we're seeing operators like XO go national and plan it through all of their central offices. Typically an early adopter comes in and causes some pain for the ILEC, and the ILECs looks at the services and says, "Why aren't we doing that?" We have seen that in spades. In the last half of 2007, we saw the market go beyond success-based marketing. There are no conservative approaches now. We are seeing carriers build the technology into their central offices first in anticipation of big orders. Then, they order the demarcation equipment later when they get the orders.

FT: Is the new exuberance a good or bad thing for an industry that has witnessed sudden downturns?

KS: Service launches and the way carriers go about them were what was most affected. The word "launch" lost some of its power for a few years, and it was a result of telecom nuclear winter. It was no longer launch with a capital "L." There were no big service launches with a lot of marketing. You saw carriers dipping their toes in the water rather than jumping in, and ultimately that isn't good for carriers or the rest of the industry. Now, some of the confidence is coming back.

FT: What do you see as the top application for mid-band Ethernet?

KS: One of the most-talked-about applications is mobile backhaul. You see devices these days that are so much better, and create a backhaul challenge for the network. A lot of the problems you saw with the iPhone were mostly related to backhaul bandwidth. The end game with backhaul is clearly fiber, but it's not clear how or when the business case will work.

FT: Has your relationship with BellSouth translated into more business at AT&T?

KS: What I can tell you is that we deliver equipment into AT&T all the time. We are doing business with them. Right now, that equipment is deployed in the former BellSouth region.