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Ethernet’s price advantage over SDH increases with capacity

13 Feb 2014

Ethernet private lines provide a flexible, cost-effective alternative to legacy SDH/SONET technologies. Although SDH has endured for quite some time, comparing service prices suggests a distinct advantage for Ethernet, particularly at higher capacities.

Data from TeleGeography’s Ethernet Pricing Service reveal that the price per Mbps of SDH, EoSDH, and EoMPLS services are similar at lower capacities. However, between 155Mbps and 1Gbps, EoMPLS becomes a steadily better value than SDH or EoSDH. Above that, EoDWDM — Ethernet provisioned directly on the optical transport network —becomes the most cost-effective option.

For example, the median monthly price of a 100Mbps FastE EoMPLS circuit between Frankfurt and London was USD828 in Q3 2013, and upgrading to a USD1,234 STM-1 circuit yielded a 50% increase in both price and capacity. The disparity between SDH and Ethernet became more pronounced when transitioning from STM-4 to GigE EoMPLS service. Despite providing 60% more capacity, the USD2,583 median monthly price of a GigE EoMPLS pseudowire circuit was USD147 lower than the price of a STM-4 circuit.

Unlike SDH, EoDWDM services are unprotected. To facilitate comparisons with protected SDH, EoSDH, and EoMPLS services, TeleGeography applied a 50% premium to the price of unprotected EoDWDM service, to reflect the cost of protected service. The adjusted median Frankfurt-London 10Gbps wave price of USD4,191 per month was USD94 less than the price of a STM-16 circuit in Q3 2013, but offered four times the capacity. Unsurprisingly, STM-16 service is falling out of favour with buyers in markets where diverse 10Gbps options are available.

‘Ethernet’s price advantage over SDH can be modest, especially at lower capacities,’ said TeleGeography analyst Erik Kreifeldt. ‘However, as Ethernet becomes more widely available, the price gap between the two technologies will widen. In fact, some carriers have already begun to price SDH services prohibitively high to encourage customers to make the switch.’

TeleGeography’s Ethernet Pricing Service benchmarks the price of long-haul and international Ethernet service by provider, capacity, service and route.

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