Exchange And Mart
Company Strategy

Exchange And Mart

CENX is the independent commercial operation dreamed up by the MEF to facilitate interconnect of carrier Ethernet services. How is it faring?

The challenge of how to interconnect different carrier Ethernet networks without a lot of fuss, bother and expense has been a few years in the solving.

For big, globally-focussed carriers, the effort involved in establishing off-net partnerships that allow their customers’ traffic to flow to all corners of the planet is considerable, but well within their scope and budget. But for smaller, more localised operators, there simply hasn’t been an easy way to reach out and let their customers benefit from wide area access to Ethernet endpoints.

Now, thanks to work by the MEF and its base of influential members, this problem is approaching a solution in the form of the recently ratified eNNI standard. With individual eNNI arrangements made easier thanks to one mutually understood methodology, carrier Ethernet interconnection is theoretically possible to complete in days not months.

By way of an obvious next evolutionary step, we are now seeing the establishment of carrier Ethernet exchanges, in the form of facilities where different parties can hand over Ethernet traffic to each other, rather as is already commonplace in the world of internet traffic.

In pondering how to make such a model a reality, it seemed to the MEF that the best vehicle was an independent commercial operation, and so CENX was born (an acronym for “carrier Ethernet neutral exchange”), presided over as CEO by MEF president and founder Nan Chen.

“CENX brings us the opportunity to reach a wider base of customers” Quintin Lew, SVP, Verizon Global Wholesale

At the heart of the CENX business model is CENX Market, a web-based marketplace for service providers to interconnect carrier Ethernet services around the world. It’s powered by CENX System, consisting of hardware switching and transport, as well as a software back end and assorted applications. CENX services include Resilient Virtual Interconnect, Unique Service Alignment, Flexible Service Inquiry/ Ordering, and Real-time Portal/Management.

CENX opened for business in late 2009 with its first three Ethernet exchanges, in New York, Los Angeles and Chicago. Now it is already eyeballing other locations as areas of expansion.

“There will be new exchanges announced throughout the year – in Europe and Asia,” says Chen. To further this ambition in Europe, CENX has already struck a deal with co-location specialist Interxion, expected to bear fruit some time this summer, first in London, and then in Paris and Amsterdam.

He acknowledges that CENX, while benefiting from its close ties with the MEF, is not the only Ethernet exchange operator on the market. Equinix, with its track record in the IP exchange market, is its principal competition. “Yes, there are others in the market – but none that have been so closely involved with the development of the eNNI standard,” says Chen. “We have a healthy respect for them, but we’re not worried the market is going to be too crowded. We don’t have hundreds of locations yet, while they’ve got the bricks and mortar but not the experience.”

Naturally an exchange model only works if you have, on the one hand, a ready base of smaller carriers seeking a wider global footprint, and on the other the ability to deliver that footprint in the form of relations with the operators of seriously large Ethernet networks with high quality connectivity direct into a high density of locations.

CENX has enjoyed success with the latter requirement, now having deals with eminent names such as Level 3 and Verizon. “CENX brings us the opportunity to reach a wider base of customers, especially those who want an Ethernet connection into the US,” says Quintin Lew, senior vice president of Verizon Global Wholesale. “We’ve got the best Ethernet network in the US. We’re now expecting CENX to extend beyond the US and look for PoPs in Europe and Asia this year and next.”

Despite Verizon’s large existing base of off-net relationships all over the world, Lew says there is plenty to be gained from extending its reach still further through the Ethernet exchange model: “CENX makes interconnection more efficient for us,” he says. “There’s no need for us to keep addressing one-off situations. We can achieve quick growth and expand our geographic reach. It opens the door for our sales team to reach out to Tier 2 carriers.”

Ubiquity, says Lew, has been the main barrier for carrier Ethernet so far. It’s the sheer complexity of global interconnect that has to date been stifling that ubiquity, agrees Michael Howard, principal analyst at Infonetics Research. He thinks the Ethernet exchange model is one of the keys to unlocking this problem.

“The CENX team helped drive the definition of carrier Ethernet and development of carrier Ethernet standards, which helped open up the market over the last eight years,” says Howard. “This team has now created the carrier Ethernet exchange, which addresses those complexities in a way that enables service providers to deploy a range of service offerings to their customers anywhere in the world from a single service level interconnection. The ability for service providers to quickly and economically interconnect with their peers, such as CENX offers, could help global Ethernet services revenues reach almost $39 billion total in 2013, according to our estimates.”