“Gig-E is truly becoming a significant advance for metro networks..”

GigE service providers talk about real-world experiences

According to service providers that have begun offering it, gigabit Ethernet (Gig-E) is rolling out as smoothly as soft butter onto a hot dinner roll. And customers are gobbling up the service with relish as it becomes a regular entrée on service providers' menus.

Service providers offering Gig-E are taking their own individual approaches to what still appears to be a niche market for now, especially in terms of the applications they support, according to Rosemary Cochran, principal of Vertical Systems Group. Pricing varies accordingly, which makes it hard to make apples-to-apples comparisons. Some providers are offering fat pipe, single end Internet access, while others are focusing on transparent LAN services (TLS), which is priced differently.

"This is a new animal that equipment vendors and service providers are trying to go after and it's not yet clear where the services are," she says.

Despite their mixed approaches to the market, they all have one thing in common - an infectious enthusiasm for this simple, cost-saving high-bandwidth data service that meets the high-bandwidth data needs of a select group of customers. The new Gig-E providers also have encountered a variety of technical, logistical and/or economic challenges as they deploy Gig-E in the real world. Heres's what four of them had to say about their experiences to date.

"XO"

XO Communications Inc. began offering 10 Mbps, 100 Mbps and 1 Gbps Ethernet service to its customers in eight metro markets nationwide in November 2000. At press time, XO had more than 60, 1 Gig circuits in its "sales funnel," according to Dan Kalin, senior manager of private data network products for the Reston, Va.-based integrated communications provider. XO turned up its first Gig-E customer, Yahoo!, last September 2000, providing 10, 1-Gig circuits to connect Yahoo!'s data centers to the West Coast's Pacific Internet Exchange (PAIX) public peering point.

For XO, fine-tuning its Gig-E service with its back office systems, pulling together sales collateral, and gaining access to buildings have been more challenging than the technology itslef, Kalin says. "I've found that the biggest issue has been the logistical side of getting access to the buildings we want to serve," Kalin adds.

In addition, implementing the service has been more expensive than XO expected. That's because it turns out that signal regeneration requirements vary according to the fiber plant in use. "The signal needs to be regenerated in large rings," Kalin says. "Before, you would have thought otherwise."

Fortunately, the unexpected expense has not threatened XO's pricing model, only extended the ROI time, he adds. Customers are catching on.

"Once customers that have purchased a 1-Gig circuits realize they can replace an OC-3 link with a Gig-E connection for the same price, they come back wanting more," Kalin says.

Line cards with two ports instead of one that will enable XO to serve two customers on the same wavelength will debut this year. The cards will drop the price of delivering the service significantly, he adds. Right now a one-port card costs $20,000. The two-port card is expected to cost $23,000.

XO's 1 Gig service pricing varies from market to market, but ranges between $12,000 and $15,000 per month. A 100 mbps connection costs between $2,000 and $3,000. The price is distance insensitive within the metro ring. XO is offering only metro connections until its intercity network is completed later this year, Kalin says. As an added feature, XO offers switched service and is able to support any-to-any topologies and connect more than two sites.

"Cogent"

Washington, D.C.-based Cogent Communications Inc., also began offering Gig-E services, primarily for Internet access, in November. Its own nationwide facilities-based network connects to customers based in Class A multi-tenant unit (MTU) buildings in Chicago, Philadelphia, New York and Washington, D.C. Cogent plans to light up an additional nine cities this quarter.

Cogent is quick to point out that its metro network, which consists of OC-48 metro rings and an OC-192 coast-to-coast backbone, offers customers extremely low-cost, flat-rate bandwidth - 100 mbps for $1,000 per month - via a non-oversubscribed connection to its network. The customer always has access to 100 mbps, explains Michael Van Vleck, Cogent's vice president of marketing. A 1-Gig connection costs $10,000 per month.

Van Vleck reports that Cogent's aggressive pricing is leading to sales: At press time, approximately 1,400 customers had signed up for service.

But the company says it neither has to, nor will it, sell its services below cost to gain a market foothold, Van Vleck says. And building out its network isn't putting the company in debt. Besides the $116 million in pure equity Cogent has raised, it is wholesaling bandwidth on its nationwide fiber backbone to underwrite network construction costs. Because Cogent's backbone network will accumulate traffic quickly, the company expects to begin offering settlement-free peering in the next one and a half years. "That will drive our costs down even more," says Van Vleck.

The downturn in the stock market hasn't been all bad for Cogent. In fact, it's helped simplify and reduce the cost of doing business with building owners. Before the bust, all of them wanted stock options in return for building access, he adds. That kind of wheeling and dealing has stopped.

Having to build its own rings, hubs and drops to each building the company wants to serve can be a drawback as well as a benefit, Van Vleck notes. Cogent can't begin selling its services in a building until its infrastructure is complete, he explains. The process of getting fiber to each building is becoming easier, however, because dark fiber providers are beginning to connect them to their fiber rings in the first place.

"Yipes"

Yipes Communications Inc., which has purchased its metro fiber rings from a wide variety of service providers nationwide, had turned up its Gig-E service in 20 cities at press time. The real-world cost benefits of Gig-E are turning out to be huge for service providers and end customers alike, according to Frank Robles, vice president of corporate development and co-founder of the San Francisco-based company.

Placing intelligence at the edge of a non-intelligent network reduces by a factor of five the number of truck rolls that would be necessary to provide service on a Sonet-based network, he notes. In addition, the cost of Gig-E electronics are 10 times less, with less electronic equipment needed.

Customers are thrilled with the service because they can get the amount of bandwidth they need when they need it instead of waiting nine months or more for a Sonet upgrade. In the past, some customers would install an OC-3 they could actually fill up, in order to avoid the wait for a bigger circuit when they really needed it. Yipes' Gig-E customers can buy bandwidth in 1-mpbs increments from 1 mbps to 1 gigabit, as they need it, he says.

The deployment challenges Yipes has faced include the fact that Ethernet requires some fine tuning for use in the WAN. Yipes has had to ask its vendors for dual power supplies, DC power and other requirements that were not an issue for Ethernet in the LAN environment. "Extreme Network's Alpine router has dual power because we asked for it," Robles says.

Yipes, whose business focus is LAN interconnect, charges $3,000 per month for a 100 mbps connection, which includes a fully manged gigabit router. Yipes does not quote its 1 Gig pricing, which it says depends on local market conditions.

"SBC/AT&T"

SBC Communications'Ameritech division rolled out its Gigaman Gigabit Ethernet, point-to-point, TLS in 1999. The ILEC is preparing to launch the service in Southwestern Bell and Pacific Bell territories this quarter, according to Mike Reddout, vice president for business marketing and data networking at SBC, Austin, Texas.

"Brisk sales" of the service in Ameritech territory indicate that customers are pleased with its cost benefits, he adds. Reddout says the service's price compares "very favorably" with the other dedicated point-to-point services the ILEC offers.

The notion that fat Gig-E pipes are a threat to service providers' existing data services is somewhat premature, Cochran says. It's lack of features and functionality make it a niche solution at this time.

Challenges associated with the roll-out of Gig-E in SBC territory include deploying dedicated optical fiber for each installation and merging Gigaman with other optical services on a single common transport platform, Reddout explains. Cannibalization isn't much of an issue today, as Gig-E is not yet a fully developed service, Cochran adds.

Reddout also notes that while there still are relatively few companies competing in the Gig-E marketplace at the moment, the "face of the market will change quickly over the next year or two as more companies enter the marketplace and exert downward pressure on pricing."

Time for dessert

Because of its simplicity, Gig-E is "truly becoming a significant advance for metro networks. It is not a 'vapor' solution," says Reddout. "The development and deployment of Gig-E in the metro area could be compared to what SS7 and DWDM have done for long-distance providers - it has enabled players in the [data delivery] market to optimize their networks and get more bang for their buck."

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