Nan Chen, Metro Ethernet Forum
The year 2011 marks the tenth anniversary of the MEF, and what a whirlwind decade it has been for global business and telecommunications. Ten years of economic ups and downs, of soaring bandwidth demands, increasing competition and downward price pressures--but through it all, Carrier Ethernet services and equipment sales continue to forge ahead.
For service providers, in particular, this has been more than just a piece of good news in a drab economic outlook--because the growth in Carrier Ethernet promises a much-needed tonic for the telecom industry and significant new opportunities. The benefits offered by a vigorous market in Carrier Ethernet services can accelerate the whole of global business.
Driven largely by the 180+ members of the MEF (Metro Ethernet Forum), and the technical standards and implementation agreements it has developed over the past 10 years, Carrier Ethernet services are now a $20 billion market and is set to grow to between $40-$50 billion by 2014--according to industry analysts like Infonetics and Ovum.
From the beginning Carrier Ethernet has looked like "the right technology arriving at the right time". It first established itself during the 2008 economic downturn when budgets were cut and Carrier Ethernet clearly offered a better value proposition than legacy WAN technologies. Its easily scalable bandwidth meant that customers could focus on agile "just in time" opex instead of capex "just in case" network provisioning--with greater flexibility for seizing business opportunities.
According to Infonetics Research, the biggest current growth driver for Ethernet is in mobile backhaul. Mobile carriers are facing a combination of downward price pressure and a surge in data traffic fueled by the popularity of smart phones. Carrier Ethernet has come to the rescue as an all-IP backhaul solution that can be rapidly scaled in 1 Mbps increments.
With Netflix (Nasdaq: NFLX) on-demand video now dominating North American bandwidth figures, and smartphones driving mobile video uptake, the industry faces a bandwidth tsunami, and this too, according to Michael Howard, Infonetics co-founder, has been the major driver for Carrier Ethernet equipment sales in recent years.
So, what's next? Michael Howard went on to say "in the future we see the Cloud as a big driver." This promises a fantastic opportunity for the telecoms industry, because the ubiquity of Carrier Ethernet is fundamental to the delivery of Cloud services to the full spread of consumers. Although still in the early stages, Cloud computing and virtualization are top CIO priorities in an otherwise flat IT market, according to Gartner's January CIO survey.
Ethernet wholesale services present yet another great business opportunity for providers. The Yankee Group expects mobile backhaul to account for half the $4 billion wholesale Ethernet market and suggests that new types of collaboration largely offset the limitations of fibre access and service availability.
Enterprise users are no longer focused entirely on Carrier Ethernet's cost savings, because they are beginning to realize its importance for next-generation business applications such as cloud computing, interactive services, voice and high-definition videoconferencing. The MEF's global interoperability initiative has made it much simpler to deliver standardise services across multiple provider networks. This plus the arrival of Ethernet exchanges means that smaller providers can offer fast and easy service links. This will do a lot to raise the popularity of Ethernet services with the lucrative Small to Medium Enterprise (SME) market.
The truth is that Carrier Ethernet is on a roll. It is more than just a solution for today's problems; it offers real growth opportunities for service providers and the telecoms industry. So let us all celebrate the tenth anniversary of the MEF and Carrier Ethernet.
Nan Chen, President of CENX, is the MEF President and Board Director.