Ethernet over WDM: Getting LAN-in-the-MAN performance

Carriers are claiming new revenues by introducing fully managed Ethernet services over optical networks to enterprises. Enterprises are now finding that their LAN, predominantly Ethernet, deployment can be easily extended across a metro area, enabling them to connect multiple sites seamlessly, cost-effectively and, most importantly, at LAN speeds.

As companies are running more diverse and bandwidth-intensive applications, they are finding the traditional T1/E1 connections externally are a big source of bottleneck. With managed Ethernet services delivered over an optical infrastructure, enterprise customers are avoiding these bottlenecks and experiencing full, native-speed performance for all applications "LAN-in-the-MAN performance" at a fraction of the cost per bit of the legacy services. And, carriers are realizing this new revenue opportunity without significant new capital or operational expenses.

Metro carriers today are offering a richer array of Ethernet connectivity offerings, proving compelling to more enterprises than ever before. IDC reported that Gigabit Ethernet port shipments were up 23% in 2002, to 7.2 million. Including revenues from both consumer and business users, IDC forecasted a 123% compounded annual growth rate for Ethernet services through 2006, eventually reaching more than $26 billion.

Over the last few decades, Ethernet has emerged as the dominant local networking technology for connecting computers, printers, servers and other devices within one enterprise location. However, interconnecting LANs across a MAN and a WAN has relied on the traditional voice-oriented public network.

Synchronous Optical Network/Synchronous Digital Hierarchy (Sonet/SDH) infrastructures have remained the preeminent solution for interlinking multiple enterprise sites within a metro area. Carriers have offered T1/E1 services in which packet-based data traffic from one enterprise building is routed to the circuit-based, Sonet/SDH voice infrastructure and then converted back to packets at the destination enterprise LAN. Because Sonet/SDH is voice-optimized, it is not ideally suited for the high-bandwidth, bursty data traffic transferred among LANs across a metro area.

Sonet/SDH infrastructures have imposed additional limits. Carriers find it costly and complex to scale for inevitable increases in their customers' bandwidth needs and to expand architectures to new enterprise sites. Sonet/SDH networks are renown for substantial ongoing operational costs because each node must be manually upgraded for bandwidth increases. The capital expenditures can also prove considerable because Sonet/SDH networks demand dedicated protection links and equipment. In a data-oriented world, these features become expensive overhead that add little value for either enterprise customers or carriers.

As more bandwidth-intensive applications are being implemented each day, from standard business applications to consumer-oriented entertainment offerings, enterprises are demanding a simpler, less expensive way of interconnecting LANs or getting Internet access. Carriers have discovered that Ethernet/LANs can be easily extended over a fiber infrastructure without having to endure the overhead of Sonet/SDH, at much more attractive costs for both themselves and their enterprise customers. This win-all proposition is why the customer demand is growing at unprecedented rates and carriers are eager to meet this demand and get higher margins.

With the breakthrough of Wave Division Multiplexing (WDM), carriers are able to multiplex and extend a broad range of services across a single fiber pair at a fraction of the cost of legacy solutions. WDM is protocol-independent. Any application or protocol — Ethernet 10/100/1000/10G, Enterprise System Connection (ESCON), Fiber Connection (FICON), Fibre Channel (1 and 2G), Coupling Link, Sysplex Timer, Asynchronous Transfer Mode (ATM) and Sonet/SDH (OC-3/-12/-48/-192 and STM-1/-4/-16/-64) — can be transferred over a fiber pair without performance degradation.

Leveraging WDM

With large banking and financial institutions leading the way, enterprises have privately relied on optical networking for enabling mission-critical data applications since the early 1990s. Then, larger enterprises began to adopt WDM to extend and aggregate multiple applications on a limited private fiber infrastructure.

Today, metro carriers are leveraging WDM to offer enterprise customers a range of fully managed Ethernet services, including LAN interconnection, transparent LANs and Internet access. Carriers are deploying Coarse WDM (CWDM) for smaller deployments and Dense WDM (DWDM) for customers with tremendous bandwidth needs.

WDM also enables carriers to generate new service revenues from their installed base of Sonet/SDH customers. With WDM solutions enhanced with built-in Sonet/SDH framing and the emerging Generalized Framing Procedure (GFP), metro carriers can deploy and manage 10 and 100 Mbit/sec Ethernet services for enterprise customers who must be accessed via legacy transport networks or to provide cost-effective path protection links for metro enterprises on the fiber plant. For Gigabit and 10G Ethernet services, though, optical networking delivers the optimal value proposition.

WDM provides carriers with the network scalability and flexibility to cost-effectively accommodate inevitable evolution in their metro enterprise customers' networking needs. Integrating new protocols and provisioning bandwidth upgrades frequently require only a few mouse clicks at a management interface. And, concentrating traffic on leaner Ethernet infrastructures results in significant operational and capital expense reductions for metro carriers, allowing them to price Ethernet-over-WDM connectivity offerings at levels that meet the needs of enterprises of any size.

However, the low price isn't the only reason that Ethernet-over-WDM services are appealing to enterprise customers: Enterprises experience full, native-speed performance for all applications up to 10 Gbit/sec: The metro carrier makes the full range of an enterprise's network resources available in a secure and reliable manner across all of the company's metropolitan facilities. Also the transmission rates are predefined and guaranteed.

Many enterprises are realizing the unprecedented productivity benefits of LAN-in-the-MAN performance; colleagues separated by up to hundreds of miles collaborate and communicate as though located in the same building. This enables enterprises to more strategically locate equipment and personnel, moving back-office resources, for example, outside a city's high-rent financial district to the lower-cost suburbs with no discernible impact on operations. Also, enterprises spend less time and money training and deploying Information Technology (IT) personnel and more concentrating on their core businesses. The responsibilities for implementation and maintenance of the system stay with the carrier, not the enterprise. And, concerns over equipment depreciation are eliminated. It is easy to see why network outsourcing is a notion of increasing popularity in today's business climate.

Finally, afforded native-speed performance for services of any protocol requiring up to 10 Gbit/sec, enterprises contracting for Ethernet-over-WDM services from their metro carriers future-proof for continuing expansion in interoffice bandwidth demands and evolution in applications.

Some carriers fear cannibalization of long-standing revenue streams and remain reluctant to roll out fully managed Ethernet-over-optical packages. Others are, however, moving aggressively to stake a claim in a promising, high-margin arena.

Small businesses, healthcare providers, manufacturers, schools, governments and financial institutions are among the enterprises enjoying the LAN-in-the-MAN performance and other benefits delivered by fully managed Ethernet-over-WDM services from metro carriers. Recognizing the mutual benefits for themselves and their customers, especially in the prevailing economic environment, carriers such as BellSouth and British Telecom (BT) are at the forefront of offering managed Ethernet services.

BellSouth is deploying WDM solutions to support 100 Mbit/sec and Gigabit Ethernet business services across nine U.S. states. BellSouth's Gigabit Ethernet services are priced at around the same level and deliver about 50 times more bandwidth of standard T3 offerings.

Sharing CAD

For example, enterprise customers are using BellSouth's Ethernet services to cost-effectively support large-scale government design projects. For the first time, high-resolution CAD drawings can be shared in real time across a metropolitan area. Project management among geographically dispersed engineering teams has been rendered more efficient, and time cycles have been compressed. Consequently, the enterprise customers have become more productive.

BT has deployed more than 30,000 Ethernet connections over dedicated optical links to support a wide variety of applications. BT has successfully targeted manufacturers, hospitals and educational institutions for its fully managed Ethernet-over-WDM offering.

Primary and secondary school systems and universities, for example, have leveraged BT's services to cost-effectively extend high-speed performance to all of their facilities across districts or campuses. Student records are more quickly shared among academic buildings and administrative offices. Classrooms connect to the Internet at higher speeds. Firewall protection and network-usage monitoring are more easily administered across the network. BT's Ethernet-over-WDM services have enabled the school systems to improve performance and still reduce communication costs.

Enterprise customers are finding that interconnecting Ethernet networks over a carrier's metro optical infrastructure for the first time cost-effectively enables a variety of valuable applications, including Ethernet extension, Virtual Private Networks (VPNs), storage, fiber relief, distributed work-sharing, supply-chain management, distributed databases and distributed processing.

Carriers are seizing the opportunity. Some leading European and North American carriers, in turn, are experiencing return on investment (ROI) of as short as six months in carrier-class optical solutions delivering low total cost of ownership. Ethernet over WDM has, indeed, emerged as a powerful new revenue source for carriers.