QoS is an essential element to create profitable Ethernet services

(Editor's note: This article is part of a new FierceTelecom eBook, Ethernet QoS: Trust, But Always Verify. Click here to get your copy today.)

Michael Kennedy, Network Strategy PartnersIP/Ethernet-based networks are the foundation upon which a new generation of services including enterprise IP and carrier Ethernet, broadband, 3/4G wireless, IP voice and video, and cloud computing services is built.  The services are highly successful.  Service providers report increasing service takeup rates, usage and overall expansion of their subscriber bases. Qwest, now CenturyLink (NYSE: CTL), reported broadband subscriber growth of 9 percent last year; Verizon's (NYSE: VZ) sales of security, IT solutions and strategic networking now represent 44 percent of global enterprise revenue; and AT&T's (NYSE: T) U-verse revenue was up 73 percent in the most recent quarter compared to the previous year.

Pricing for new IP/Ethernet-based service offerings is not as tightly linked to traffic and message volumes as legacy services were. Service revenue, consequently, lags behind message and traffic volumes. AT&T, for example, reported an annual increase of wireless text message volume of 29 percent and 75 percent for multimedia messages for its most recent quarter.

Ethernet's low cost and flexibility makes these new services attractive, as is confirmed by the usage and growth statistics. Ethernet QoS, however, is essential to supporting price levels and maintaining margins. Ethernet QoS is needed in all market segments--residential, enterprise, mobile backhaul, and wholesale. Subscribers' willingness to pay for services is conditioned upon their experiences with legacy services. Most legacy services were built upon TDM/SONET or analog circuits where there was no contention for bandwidth and high-quality was a byproduct of the cost-plus structure of rate-base regulated services. New services, therefore, must meet high quality expectations.

In the residential market flow-based services including voice and video dominate traffic.  Video and media applications require high bandwidth with low delay and jitter. Video sessions, in addition, are much longer than Web browsing sessions and are intolerant of session interruptions. Though voice does not require a great deal of bandwidth, two-way calls are intolerant to delay and call drops. These quality factors are one reason that most residential telephony services remain on the analog PSTN.

Enterprise network managers are risk adverse. Network managers' risk aversion is completely rational in that poor network performance hurts customer satisfaction and ultimately the success of the enterprise. High QoS, consequently, is essential. Transaction services such as those serving ERP applications are not bandwidth intensive but are highly intolerant of delay and jitter. Many of these services are used in environments where a service representative is speaking to a customer on a telephone.  The overall response time objective is usually under two seconds.  Out of this total delay budget the ERP application itself is allocated the majority of the delay-time. This leaves a delay budget for a roundtrip on the end-to-end network of a fraction of a second--e.g., 250 milliseconds. Delay and jitter requirements are even more stringent in cloud computing and Storage Area Network (SAN) applications where factors such as disk access time determine the maximum allowable delay. The highest QoS requirements are found in financial trading and some scientific applications where delays are limited to microseconds.

Consistent delivery of QoS standards across the entire enterprise also is essential. This has limited the development of enterprise carrier Ethernet services until recently because most enterprise operations extend beyond the reach of any one service provider. Furthermore, carrier Ethernet capabilities have had limited coverage within most service providers as compared to the coverage of TDM and Frame Relay services. Service providers now are able to offer standardized end-to-end services across multiple service provider territories through implementation of the Metro Ethernet Forum's Technical Specification 26--Ethernet Network to Network Interface (ENNI).  Equally important service providers including CENX, Telx, and Neutral Tandem provide Ethernet exchanges the bring together many sellers and buyers of Ethernet services to provide end-to-end carrier Ethernet services with uniform QoS standards. This is essential to the growth of the enterprise carrier Ethernet services in the same way that the TV industry's agreement on a HDTV standard accelerated the adoption of HDTV.

Deployment of Ethernet for mobile backhaul also is dependent on Ethernet QoS.  While much of the excitement in the mobile market is driven by the move to 4G wireless the majority of wireless revenue is from voice services. For example, Verizon Wireless reported that 63 percent of its revenue was from voice services in its most recent quarter. Currently all voice services are delivered using 2G or 3G technology. The QoS requirements for voice backhaul are linked to the performance of TDM/PDH technology. It is challenging for Ethernet to meet the required performance. MEF Technical Specification 22 lays out the implementation agreements needed to backhaul mobile voice traffic over Ethernet.

Current business development activity in the wholesale market is centered on content delivery and cloud computing services. High quality delivery of Over the Top (OTT) video and delivery of cloud computing services with low latency will help to assure the profitability of these services.

Profitable delivery of new IP/Ethernet-based services depends in part on effective implementation of Ethernet QoS. Improved QoS increases subscribers' willingness to pay because it helps new services meet subscribers' expectations conditioned by the high quality of legacy services.

Michael Kennedy is a FierceTelecom columnist and is the co-founder and Managing Partner of Network Strategy Partners, LLC (NSP), management consultants to the networking industry. He can be reached at [email protected].