Adaptability of Ethernet

15 January 2011 | Camille Mendler

Some tips on how telcos can best harness the adaptability of Ethernet.

Bob Metcalfe co-invented the Ethernet protocol in 1973 while working at one of California’s premier research and development centres, Xerox Parc. Since then, his illustrious career has included 3Com founder, technology pundit, venture capitalist and university professor. But if Metcalfe has been a chameleon in his career, then I’d also argue so is his best-known invention. Ethernet has – quietly, steadily and with growing support – adapted and disseminated itself into multiple contexts that are critical to the global telecommunications industry, and to wholesalers in particular.

Investing in Ethernet switches is already a high priority. It comes in first or second place in the list of planned capex spend for global wholesalers, according to the 2010 Smart Wholesale Survey from Capacity Magazine and Yankee Group. But in central and eastern Europe, the Middle East and Africa, Ethernet is a major investment driver. That’s because in Europe and beyond, Ethernet is going viral. And I’m betting that 2011 is the year that empires will be built or lost as wholesalers learn how to harness Ethernet’s growing and multi-faceted capabilities.

Wholesalers must take heed of the oft-quoted Metcalfe Law: the value of a network grows exponentially with the number of connected endpoints. So, what’s in play? We all know Ethernet’s origins lie in the LAN, yet Ethernet is not just used in the office, but also the digital home and its increasingly connected devices. In the first mile, whether through bonded copper or fibre, Ethernet is delivering content from the incumbent exchange to the home and office. Mobile operators dealing with the 3G data tsunami and fearing for 4G future desperately need the economics of Ethernet-based mobile backhaul. In the wide area network: already embedded in metro and national networks, Ethernet is powering transcontinental connectivity, disrupting the hegemony of the IPLC. Speeds in the telecoms network and the data centre are aligning to enable IT’s greatest migration since client server – into the cloud. Ethernet exchanges are becoming the primary trading floors for digital assets.

The support for Ethernet comes with challenges, not least falling price levels as competition grows. But wholesalers need to get smart. Develop an Ethernet portfolio that crosses multiple domains, and think a lot harder about which industries can best use its proven adaptability.

Camille Mendler is vice president of global communications, Yankee Group. She can be contacted at: