Carl Weinschenk spoke to Rosemary Cochran, a co-founder and principal of Vertical Systems Group. Vertical extended the @Fiber research track of its ENS (Emerging Networks Servicers) on March 12.
These are good days for fiber. Rosemary Cochran says that the need for speed and greater reach is driving growth. She told IT Business Edge blogger Carl Weinschenk that the increases will continue as carriers begin to be certified under the Metro Ethernet Forum’s recently established Carrier Ethernet 2.0 standards.
Weinschenk: What did the research look at?
Cochran: These are numbers we’ve been tracking since 2004 that detail fiber penetration in the business environment. It is important because it is a significant indicator of the ability to deliver high bandwidth apps and services. When we started tracking fiber, in particular carrier Ethernet services, it was more of a nascent market. Now higher bandwidth is important for things such as data center connectivity, demanding applications that are being released and high bandwidth services such as video and mobile backhaul.
Weinschenk: What is the top-line finding?
Cochran: The news is that 36.1 percent of buildings are fiber-connected. The flip side is that 63.9 percent have no fiber. Historically it’s been inching up.
Weinschenk: How does this compare to last year?
Cochran: Last year 31.8 percent had fiber. When you start breaking it down by building size and segment you see the majority of the fiber is in the “NFL” or “NBA” cities -- basically, major metro areas where there is a high density of business. Large enterprises are fairly well penetrated. In the SMB sector, the number of buildings drops down to significantly less. A significant number of buildings don’t have fiber yet.
Weinschenk: Where is the most action?
Cochran: The SMBs are seeing more activity. There is saturation in large enterprises, so that that number can’t jump too much more. The activity is starting to focus on second-tier cities and other parts of the country where the buildings are more spread out and the fiber is not as plentiful.
The fact is if you are delivering services, you are going to wire where the largest customers are now. You talk to retailers and wholesalers and it becomes clear that they want to expand their footprint to as many locations as they can. They want to serve their customers with fiber. We’ve seen that all through the year in direct build-outs and acquisition activity.
The cable segment as well as the competitive provider segment is deploying fiber to more and more places. They are buying fibers from wholesale providers where they can. We’ve seen movement on the wholesale side as well.
If you are building out a new site you are not going to put in copper. Fiber is newer. Remember the big surge in fiber? People said, “If you build it they will come.” So it is available at the wholesale level, now someone has to sell it to end customers. Demand is building and people are looking to deliver it to more and more sites.
Weinschenk: Are businesses expanding their use as well?
Cochran: There is demand for higher speed on the enterprise side. Speed is everything. There are new apps that are driving bandwidth demands for data centers and there is the need for high-speed connections for VPNs, backhaul for video and other things. The challenge has been maintaining older infrastructures. For that reason carriers want to retire legacy infrastructure such as copper plant. Service providers want fiber and the customers want fiber. There are a lot of benefits on both sides.
Weinschenk: What about the Metro Ethernet Forum’s new Carrier Ethernet 2.0 spec?
Cochran: Another thing that is pushing it or heightening the visibility of this are network-to-network interfaces. All the providers need partners in areas in which they don’t have an on-net presence. There is a network-to-network interface relationship supporting the ability to buy between areas. There had not been a standard, so most of the big guys were doing bilateral agreements, which have allowed them to interconnect.
I mentioned CE 2.0 last because it’s new. The component that is most applicable is the standardization of the interface. Now all the players at least have a baseline for doing interconnections. It mostly helps those newer companies such as cable operators and regional providers. It helps them establish relationships. The CE 2.0 specification right now is mostly led to certification on the vendor side. The only service provider in the U.S. to get certified is Comcast. Telstra has been certified as well in Australia.
Weinschenk: Why is the advent of CE 2.0 a good thing for the Carrier Ethernet sector?
Cochran: It establishes the baseline for interconnections. Over the course of this year it will become prominent as those providers show they can interconnect. It still requires you to have a business agreement, though. It’s more on the technical side. At least now they know it’s there as they consider doing business.
Once a carrier has been through the process, it is an apples-to-apples comparison. Just being able to talk about it helps on business purchaser side as well. The types of Ethernet services being offered are not consistent between carriers now, but a baseline is defined by CE 2.0. So it’s the seal of approval. This is something that says that this technology will work if it’s earned these certifications. During the next 12- to 18-month period this will take shape as the certification takes hold.
Weinschenk: So you expect more carriers to be certified?
Cochran: We know a number of carriers going through the process now. We’ll be seeing that over the next few months.
Interconnecting is one of the challenges of expanding the fiber footprint. The ultimate goal is to have everything on-net. Providers want as many of their customers on their own network as possible. That makes very important capabilities such as SLAs much easier to create.