Cisco Sees Upswing in Ethernet

While Ethernet acceptance in the U.S. has been slow to date, several deals
announced by Cisco Systems Inc. , Tuesday show carriers
in Europe and Southwest Asia are willing to take a chance on the technology.

One of those companies is Dubai Internet City, based in a country known
more for its 100 percent foreign ownership and tax-free income, which is
looking to provide truly high-speed Internet services for businesses in the

“Basing our infrastructure around delivering something as simple, scalable
and reliable as Ethernet connectivity makes it easy for our customers to
connect to the Internet and also enables us to roll out additional
services,” said Ahmed Bin Byat, director general of Dubai Internet City.

Gigabit Ethernet (GigE) is the evolution of local area network (LAN)
technology, and is designed to compete with
the telephone company’s pricey asynchronous transfer mode (ATM) service.

Analysis firms like Cahner’s Instat initially predicted independent
Internet service providers (ISPs) and competitive local exchange carriers
(CLECs) would flock to the technology to circumvent the Bells, but it never
materialized. In late 2000, Cahner’s expected the GigE and 10 GigE market
to reach $24 billion by 2004 after watching the technology garner $2
billion in end-use revenues in 1999.

Metropolitan area networks (MANs) were not the industry solution many
expected, however. Some critics pointed to the insecurity in the model and
the cost of deploying the systems, which became prohibitive after the dot
bomb era dried up funding for most U.S. carriers.

According to Gartner Dataquest, that’s about to change, and expect a more
down-to-earth number of $4 billion in revenues by 2005.

Steve Koppman, Dataquest senior analyst, said the inherent popularity of
LANs in corporate and residential environments make GigE and MANs an
increasingly attractive offering for independent carriers.

“Public Ethernet is gaining popularity from its low cost, simplicity and
the widespread comfort commercial customers already have with Ethernet in
the LAN, where it has long been the dominant technology,” he said. “Growth
will be limited below the potential demand, however, by constraints on
fiber connectivity and resulting service availability, though this
situation will improve over the forecast period.”

Koppman points to the technology’s bandwidth-on-demand capabilities as one
of the reasons for GigE’s success down the road. Case in point is Cisco’s
deal Tuesday with FastWeb SpA, an Italian broadband carrier serving 50,000
residential and business customers.

FastWeb plans on using Cisco’s GigE equipment to deliver voice over IP
(VoIP), video-on-demand (VoD), video conferencing and virtual private
networks. The Ethernet effort gets a helping hand with the carrier’s
relationship with a local municipal utility (which owns nearly 31 percent
of the carrier), and is giving the carrier “privileged” right-of-way access
on its cable network.

Using Cisco Catalyst 3524 switches for last-mile GigE connectivity, the
equipment is married with FastWeb’s existing Cisco 12000 Series routers for
end-to-end IP.

Enrico Deluchi, Cisco operations director in Italy, said potential
homeowners in Milan are increasingly looking for Ethernet connections on
the walls, in addition to the standard cable and telephone jacks.

“The bundled offer of 10Mbps Internet connectivity together with services
such as video on demand and flat rate voice calls is very compelling for
subscribers,” he said. “From the network perspective, the choice of
end-to-end IP provides FastWeb with flexibility and speed benefits in
launching new services while keeping operating costs under control.”

Bredbandsbolaget (B2), a provider out of Sweden serving 80,000 customers,
is turning to Cisco’s “Ethernet to the X” to give apartment- and
condo-dwellers 10Mbps speeds over a MAN. Like FastWeb, B2 uses leverages
its existing partnership with Cisco to connect its switches and routers and
provide high-speed services like gaming-on-demand and streaming TV.

“We are building the largest IP network for residential users in Europe and
maybe the world,” said Jan Morten Ruud, B2 chief executive officer. “This
is a truly pioneering business, exploiting a new market and new technology,”

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