Why do long-haul Ethernet prices vary so widely?

27 Oct 2009

Ethernet has frequently been heralded as the future of long-haul networks, due to its combination of simplicity and low cost. However, data from TeleGeography’s Ethernet Research Service suggests that the reality is far more complex than popular belief.

Because Ethernet service standards and product definitions are still evolving, carriers have deployed a wide range of Ethernet implementations, including Ethernet over DWDM, Ethernet over SDH/SONET, and Ethernet over MPLS (as Pseudowire and VPLS services). While enterprise customers use a standard Ethernet interface to access all of these Ethernet variations, the underlying transport networks used to deliver the service differ greatly.

‘Ethernet can be less expensive than traditional WAN technologies,’ said TeleGeography analyst Brianna Charpentier. ‘However, Ethernet prices can vary dramatically, and the underlying network technology has a big impact on costs.’

For example, buyers seeking a point-to-point Ethernet connection between two offices will generally find that carriers deploying Pseudowire Ethernet over MPLS service can charge lower prices than those that have deployed Ethernet over SDH/SONET. According to new data from TeleGeography’s Ethernet Research Service, the median price of 100Mbps FastE Pseudowire service on six major routes was 15% to 80% lower than a FastE circuit delivered over SDH/SONET.

‘Buyers can’t simply assume that Ethernet will deliver cost savings,’ explained Charpentier. ‘Buyers need to be aware of carriers’ service offerings, and how differences in their network architectures influence service costs.’

TeleGeography’s Ethernet Research Service presents profiles of the long-haul Ethernet service offerings of 40 leading carriers, and detailed Ethernet pricing data, by carrier, for 63 key global routes.

For further information, please contact: Stephan Beckert (sbeckert@telegeography.com) on +1 202 741 0043

TeleGeography’s Ethernet Research Service