Ethernet Business Services


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This is the slide deck from a July 2012 webinar co-hosted by Barry Zipp of Ciena, Alan Breznick of Heavy Reading, and Scott Cassell of Comcast Business.

You can watch the archived webinar at

Ethernet Business Services is a huge market, with Ovum Research forecasting the retail market for Ethernet Business Services (EBS) to hit $37.6 billion globally by 2014.

In this presentation, the panel explored the operational, technical, and financial benefits of deploying packet-based services in commercial locations.

Other topics included:
* The rise of EBS as an appealing alternative to traditional business services
* The evolving competitive landscape and the primary considerations for market entry
* Critical areas of strategic investment

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Ethernet Business Services

  1. 1. Ethernet Business Services Opportunity is No Joke The Evolution of Ethernet Business Services in Service Provider Networks© Ciena Confidential and Proprietary
  2. 2. Today’s Speakers Barry Zipp Director, Industry Marketing Ciena Alan Breznick Senior Analyst Heavy Reading Scott Cassell Senior Director, Ethernet Product Management Comcast Business2 © Ciena Confidential and Proprietary
  3. 3. Agenda3 © Ciena Confidential and Proprietary
  4. 4. The traffic-revenue growth conundrumNetwork expansion expenses squeezing profitability 35000 20% Traffic growth is 30000 15% accelerating while 25000 10% revenue growth is Revenue Growth (%) 5% Traffic (Pb/Month) 20000 slowing… 0% 15000 -5% Operating expenses 10000 -10% are outpacing 5000 -15% revenue growth and 0 -20% squeezing SP 2007 2008 2009 2010 2011 profitability. Internet Traffic SP Revenue Growth (%) Annual global IP traffic will surpass the zettabyte threshold by the end of 20164 © Ciena Confidential and Proprietary
  5. 5. Service Providers turning to Carrier Ethernet Higher revenue, new services Ethernet Rev ($M)• Robust revenue growth $40,000 10G 1G 100M 10M Sub 10M • Demand for high bandwidth services $30,000 (>1Gbps) growing faster than market • Price/bit is compressing, but still high- $20,000 value premium services $10,000• Increasingly popular choice for cloud $0 2008 2009 2010 2011 2012 2013 2014 2015 access • IT spend gradually shifting to cloud service providers Public Cloud Branch office Reg. HQ • Appealing service attributes including highly scalable bandwidth, service Private Cloud Carrier Ethernet differentiation, and resiliency • MEF defining Dynamic Responsive Ethernet (DRE) 5 © Ciena Confidential and Proprietary
  6. 6. N.A. enterprise Ethernet services market projected to reach $15B by 2016Market trends contributing to growth: Integration between cloud services and Ethernet infrastructure Broader adoption of higher capacity services (10GE+) Expansion of 3G/4G mobile networks 6 © Ciena Confidential and Proprietary
  7. 7. Agenda7 © Ciena Confidential and Proprietary
  8. 8. The Benefits of Ethernet Business Services for Cable Operators Alan Breznick Senior Analyst, Heavy Reading
  9. 9. Cable’s Business Services Opportunity • U.S. has more than 27 million companies of all shapes and sizes, the vast majority of them SMBs and SOHOs • U.S. businesses now spend an estimated $130 billion to $140 billion on telecom services annually • SMBs alone spend an estimated $50 billion to $70 billion annually on data, voice, and video services • Cable industry’s HFC lines already pass more than three quarters of SMBs in U.S. • Yet cable companies still take home only $6 billion or so of the overall haul, no more than 5 percent of total • Comcast, the MSO leader, reaped nearly $1.8 billion from commercial services in 2011, followed by Time Warner Cable and Cox Communications
  10. 10. MSO Commercial Market OpportunityMSO Number of Firms in Region Market OpportunityComcast 5.2M – very small (<20 workers) $11.5B – very small 5.6M – total $49.8B – totalTime Warner 2.3M-2.7M – very small $6.3B – very smallCable 2.5M-3.0M – all SMBs $17B-$21B – all SMBs 3.0M – total $21B-$25B – totalCox 820,000 – very small $6.2B – wirelineCommunications 1.3M – total $4B – wirelessCharter 1M – total $5.5B -- totalCommunicationsCablevision 685,000 -- very small & small $3.0B – very small &Systems (< 100 workers) small firms 50,000-60,000 -- midsized & $3.0B-$3.5B – midsized larger firms & larger firms *Heavy Reading estimate
  11. 11. Key Vertical Markets for Cable Health Care EducationFinancial Services Government
  12. 12. MSO Business Services Revenues 2007-2011MSO 2007 2008 2009 2010 2011Comcast $394 million $558 million $828 million $1.3 billion $1.8 billionTime Warner $660 million $775 $915 million $1.1 billion $1.5 billionCable million*Cox $740 million $853 million $985 million $1.1 billion $1.3 billionCommunicationsCablevision $215 $249 $256 $284 $311Systems million+ million+ million+ million+ million+(OptimumLightpath)Charter $341 million $392 million $446 million $494 million $583 millionCommunications
  13. 13. Top U.S. Business Ethernet Services Players Rank Ethernet Provider 1 AT&T 2 Verizon 3 tw telecom 4 Cox 5 XO 6 CenturyLink 7 Time Warner Cable 8 Level 3 9 Cogent Source: Vertical Systems Group
  14. 14. U.S. MSO Ethernet Services ActivityCable Operator Ethernet Service DeploymentsCox Communications Offers P2P E-line, EVPL & multipoint E-LAN services at speeds from under 1 Mbit/s to 10 Gbit/sCablevision Systems Offers P2P EPL, EVPL, multipoint E-LAN, DIA & OTS services at(Optimum Lightpath) speeds from under 50 Mbit/s to 10 Gbit/sTime Warner Cable Offers EPL, EVPL, multipoint E-LAN & DIA services at speeds from 2 Mbit/s to 10 Gbit/sComcast Launched Metro Ethernet service in 20+ markets in spring 2011; Offers EPL, EVPL, ENS/E-LAN & DIA services at speeds from 1 Mbit/s to 10 Gbit/sCharter Communications Offers P2P EPL, EVPL & multipoint E-LAN services at speeds from 10 Mbit/s to 10 Gbit/s, plus Ethernet-based Internet accessBright House Networks Offers P2P EPL, EVPL & multipoint E-LAN services at speeds from 2 to 10 Gbit/sSureWest Offers P2P, E-LAN & DIA services at speeds from 1 Mbit/s to 10 Gbit/s Source: Heavy Reading’s Cable Industry Insider, 2011
  15. 15. U.S. MSO Ethernet Services RevenueCable Operator Ethernet Service Revenues 2011Cox Communications $250 millionCablevision Systems $225 million(Optimum Lightpath)Time Warner Cable $150 million+Comcast $75 million+Charter Communications $75 millionBright House Networks $50-$75 millionSureWest $25 millionCommunicationsTOTAL $850-$875 million Source: Heavy Reading’s Cable Industry Insider, 2011
  16. 16. U.S. MSO Mobile Backhaul ActivityMSO Number of Cell Towers Annual Revenues 2011Cox Communications Serves over 2,000 towers $50 million*Cablevision Systems Serves up to 1,000 towers $20 million*(Optimum Lightpath)Time Warner Cable Wired over 7,600 towers $154 millionComcast Serves up to 6,000 towers $120 million*Charter Communications Serves 1,400 towers; another $30 million* 300+ under contractBright House Networks Serves 600 towers $10 million*TOTAL. 20,000 towers $400 million* Source: Heavy Reading’s Cable Industry Insider, MSO earnings reports, & Heavy Reading estimates*
  17. 17. Poll Question #1:Which factor will be most critical to the growth of EBS over thenext five years?a) Increasing sophistication of the services – OAM tools, technical specifications, client devices, etc.b) Greater reach – more locations of a business can be connected.c) Growing demand for high-bandwidth applications (cloud services, multimedia collaboration, data center connectivity, etc.)d) The influence of the Metro Ethernet Forum in promoting EBS adoptione) Promise of cost reduction relative to legacy services17 © Ciena Confidential and Proprietary
  18. 18. Agenda18 © Ciena Confidential and Proprietary
  19. 19. MEF Carrier Ethernet Service TypesConstruct for standardized business services E-Line Service Type for • Ethernet Private Lines (EPL) • Virtual Private Lines (EVPL) • Dedicated Internet Access (DIA) E-LAN Service Type for • Multi-point L2 VPN • Transparent LAN Service • Multicast Networks E-Tree Service Type for • Rooted Multi-point L2 VPNs • Broadcast Networks • Telemetry Networks E-Access Service Type for • Wholesale Access Services • Access EPL • Access EVPL19 © Ciena Confidential and Proprietary
  20. 20. Which companies use Ethernet Business Services?The financial services industry leads the way Vertical Most Used Top verticals share key Finance 33% characteristics Medical 15%  Locations concentrated in Education 6% major metros (fiber available)  Bandwidth heavy apps (data Data Center / Storage/ IT 9% center backup, multimedia Real Estate 9% collaboration, etc.) Legal 6%  Industry/government regulation with specific security Retail 9% requirements Wholesale Telecom 9% Media 6% Source: Metro Ethernet Forum (based on actual case studies)20 © Ciena Confidential and Proprietary
  21. 21. One-third of Ethernet connections come from IP-VPNCoupled with steady transition from narrowband private lines Global Wholesale/Retail Business Services Revenue ($B) $120 $100 $80 $60 $40 $20 $- 2010 2011 2012 2013 2014 Narrowband (ATM/FR/T1/OC3/12/48) Why Ethernet rather than IP-VPN? IP VPN  Simplicity/Familiarity HiCap PL (λ, OC192)  Service Flexibility and Control Ethernet PL Ethernet (EVPL & EVPLAN) Source: Ciena  Cost Reduction 21 © Ciena Confidential and Proprietary
  22. 22. What factors do enterprises most value? Top decision factors (excluding price) % OF ENTERPRISE CUSTOMERS • Velocity/Automation • Predictable Service Delivery • Service Assurance • ResiliencySource: Vertical Systems Group - ENS 22 © Ciena Confidential and Proprietary
  23. 23. EBS offers a host of attributes that enable service providers to meet the needs of enterprisesSERVICE ATTRIBUTES SP BENEFITS • Point-to-point, multipoint-to-multipoint, and rooted multipoint service types • 1 Mbps-10Gbps; bandwidth requirements specified for CIR and EIR • Controlled and measurable for predictable QoS • Point-to-point or ring configurations for sub-50 ms protection (e.g., link aggregation, G.8032 ring protection switching) • Plug-and-play automation yielding 75% shorter installation and configuration times • Ability to prioritize enterprise traffic (e.g., real-time/premium, business/priority, basic/best effort)AUTOMATED, ENHANCED • Based on Ethernet OAM, including IETF RFCSERVICE DIAGNOSTICS 2544, ITU-T Y.1731, IEEE 802.1ag • Proactive SLA monitoring and reporting to deliver advanced levels of service guarantees 23 © Ciena Confidential and Proprietary
  24. 24. These benefits extend to the enterprise Users get the same kind of plug-and-play simplicity as in the LAN. Network security and control over routing information and security and encryption techniques are determined by the enterprise. Superior scalability with lowest cost-per-bit and pay-as-you-use model; enterprise only pays for bandwidth required. Ideally suited for mission-critical applications involving streaming video, data center connectivity, BC/DR, etc. Rapid industry innovation and standardization in network management and visibility; greater levels of service turn-up & change automation.24 © Ciena Confidential and Proprietary
  25. 25. Use Case #1 for Banking: Video ConferencingMarket research points to growing demand Possible Video Applications:  53% of U.S. Gen Y consumers use desktop video, and  Remote Advisors: offer high-end services to more 41% use mobile video clients; improve advisor productivity 44% of U.S. private-banking clients said they were  Remote Private Banking: connect clients to “interested” or “very interested” in using HD video in specialists and advisors in other offices banking offices to meet with multiple experts located elsewhere  Virtual Concierge: interact with bank tellers or contact center agents for simple inquiries 63% of private-banking clients under age 50 said they were “interested” or “very interested” in using HD video  B2B Meetings: conduct video conferences with in banking offices to meet with multiple experts other company locations, partners, etc. Remote office 1GbE Service Main bank office Enterprise Value Eliminate multiple networks to transport data Increase application performance without significant cost increase Generate immediate, measurable cost benefits *Source: Cisco IBSG, 2011 25 © Ciena Confidential and Proprietary
  26. 26. Use Case #2 for Banking: Connectivity to Cloud Services Reg. HQ Public Cloud Data flow Private Cloud Carrier Ethernet Branch office Advantages of Ethernet for Cloud Connectivity Bandwidth flexibility: use only what you Scalability: 1 Mbps to 10 Gbps (evolving to need, when you need it 100 Gbps) QoS performance: low latency (<15ms), packet Multiple connectivity options: point-to-point, loss (<0.001%) point to multipoint, etc. Using cloud services, banks can provide a variety of innovative services ranging from mobile device support, online credit services, and the ability to provide streamlined business processes as a service. 26 © Ciena Confidential and Proprietary
  27. 27. Ethernet Business Services MarketTypical Metro Example Source: Ciena SMBs make up the majority of the EBS market.27 © Ciena Confidential and Proprietary
  28. 28. Extending EBS with Geo-Analytics Supply Demand Competition Geo-analytics Go- to-Market ModelGeo-Analytics can help build profitable GTM plans, validate market demand28 © Ciena Confidential and Proprietary
  29. 29. Opportunity for Growth of EBS in Northern VA The Key Issue: How to profitably target & reach businesses?29 © Ciena Confidential and Proprietary
  30. 30. Agenda30 © Ciena Confidential and Proprietary
  31. 31. Ethernet Business Services … a Service Provider Perspective
  32. 32. Agenda • Comcast Business Evolution & The Rise of Ethernet Services • Applications Enablement and the Proliferation of Bandwidth Consumption • Ethernet and the Cloud • Ethernet Footprint Considerations32 Comcast Internal Confidential
  33. 33. Comcast Business Evolution & The Rise of Ethernet Services • Market Leadership in SMB Marketplace ‒ The Fastest Internet ‒ Full Featured Voice Services 41.4% ‒ Public & Private View Television Services • Technology Leadership ‒ Industry Leading IP Backbone $1.8B ‒ Rich Networking Experience in • Robust Fiber & Hybrid Fiber Networks • Extensive Cell Back Haul Delivery 2011 • Massive Ethernet Market Growth • Comcast Launches Metro Ethernet Services 33 Comcast Internal Confidential
  35. 35. Applications Enablement and the Proliferation of Bandwidth Consumption Distance Learning, Video to Medical Image File Transfer, the Classroom Telemedicine Public Safety, Disaster Cloud Based and High Recovery, Improved Services Bandwidth Applications Budgets are not increasing at the same speed35 Comcast Internal Confidential
  36. 36. Network choice is critically important in cloud environmentsKey decision criteria: Network reliability Traffic separation / security Absolute speed Scalability (efficiently add applications, sites, users) Application-specific bandwidth control Customer-centric experience Exploiting the Cloud requires you select: 1) The Right Network Technology 2) The Right Network Provider 36 Comcast Internal Confidential
  37. 37. Ethernet Footprint Considerations Demand Supply• Customers ready to replace • Fiber network penetration legacy networks remains below 50% for US  Upgrade from local DS1 and businesses DS3 private line services • Construction economics  Migrate from legacy ATM/frame challenging for sub-10Mb relay networks market• Customers require higher • Resellers/CLEC’s looking for bandwidth connections for both cost-effective way to compete host and remote locations against large facilities-based• The market has chosen providers Ethernet37 Comcast Internal Confidential
  38. 38. The Largest Facilities-based Alternative to thePhone Companies for First & Last Mile Connectivity Service in 20 of Top 25 Metro Areas Unsurpassed Reach Within Markets • 39 States & Washington, DC • 600,000+ plant route miles • Fiber deep and fiber rich • 147,000 fiber route miles • Physically diverse path • 122,000 Optical nodes • High-bandwidth hybrid fiber/coax access network to serve millions of businesses38 Comcast Internal Confidential
  39. 39. Thank You
  40. 40. Poll Question #2:Excluding price, which is the most important factor in anenterprise’s decision to deploy Ethernet Business Services?a) Speed of service turn-upb) Service performance visibilityc) Customer portals to modify service parametersd) Service resiliency characteristics and optionse) Fit with cloud service delivery40 © Ciena Confidential and Proprietary
  41. 41. Agenda41 © Ciena Confidential and Proprietary
  42. 42. Ciena’s True Carrier Ethernet™Building on the MEF Foundation • MEF Carrier Ethernet Ciena’s True Carrier Ethernet™ with Value-Added Enhancements • Best in breed scalability, resilience, QoS enforcement and MEF Carrier service management Ethernet • Deterministic traffic routing with connection oriented technologies LAN Ethernet • Interoperable with a variety of MPLS/VPLS architectures42 © Ciena Confidential and Proprietary
  43. 43. Ciena CES Portfolio Evolution Access Aggregation/Metro Core 10T 12T 4TFull Duplex Capacity Software 1T 1T 100G 240G 88G 60G 10G 48G 28G 1G 10G 100G Max Port Speed 43 © Ciena Confidential and Proprietary
  44. 44. Service Differentiation enabled by Ciena Efficiency Velocity Performance Fit-to-purpose access and Automated service creation, Premium service offerings w/aggregation devices (MBH, EBS, activation, and management features above and beyond MEFetc) with common service-aware software architecture Scripted customizations for ease Best in breed scalability, of deployment and changes resilience, QoS enforcement, Multiple configurations for and service management enhanced resilience, service Deterministic traffic routing with flexibility connection-oriented Service benchmarking for SLA technologies guaranteesExtensive bandwidth granularity, scalability44 © Ciena Confidential and Proprietary
  45. 45. Comcast Business Metro Ethernet Network Powered by Ciena True Carrier Ethernet® service delivery switches Ethernet Aggregation 1GE 10GE v Ciena Attribute Customer AdvantageStandards-based, interoperable Ethernet solutions Delivers service differentiation, creates competitive barriersHigh-velocity and automated service creation, activation, mgmt Faster time-to-market, revenue, and profitabilityIntegrates Carrier Ethernet Quality-of-Service (QoS) Predictable service delivery, assurance, and resilienceCommon service-oriented architecture (SAOS) Consistency across all Ethernet access and aggregation apps 45 © Ciena Confidential and Proprietary
  46. 46. Summary Explosive growth in offered data-rates, with flat per-bit revenues Cost-effective, flexible, reliable, deterministic Business services, mobile backhaul, cloud/data center connectivity Deployments with the largest global carriers, 4G operators, MSOs; 55 patents and patents pending; standards-based solutions and interoperability46 © Ciena Confidential and Proprietary
  47. 47. Please visit to view previous events on demand Thank You!© Ciena Confidential and Proprietary