Anticipating Ethernet Sales Snags

Ethernet demand is rising as businesses seek to take advantage of the access method’s speed and low cost. Channel partners are smart to seize the opportunity, but it’s not without its challenges. Understanding and preparing for potential pitfalls will make Ethernet sales more successful.

By all accounts Ethernet adoption is increasing. Vertical Systems Group said 2011 was a tipping point when the volume of Ethernet bandwidth purchased by enterprises in the U.S. surpassed the aggregate bandwidth for legacy circuits. Looking ahead to 2015, Ethernet bandwidth is projected to more than double based, the research firm said.

SMBs and enterprises like Ethernet’s fast speeds 50MBps to 10GBps speeds over fiber and 5MBps to 20MBps over copper for less money than they have paid for T1s, DS3s and DSL.

Carriers are on notice and prepping for increased demand in 2012. “We … saw the coming of Ethernet earlier last year and have been working to make sure processes are more streamlined,” said Cindy Humphrey, vice president of products and marketing for CenturyLink’s Business Markets Group. For its part, AT&T Inc. soon will allow the indirect channel to sell AT&T Switched Ethernet Service, which it’s billing as the successor to its current platforms, CSME, a Metro Ethernet product, and OPT-E-MAN. “New capabilities include higher speed customer port options (up to 10GBps), four new classes of service including real-time, support for jumbo frames, and end-to-end SLAs,” said Kevin Leonard, vice president of alternate channels for AT&T. And competitive providers including tw telecom inc. continue to build their Ethernet networks to keep as many customers on-net as possible.

The time is right for channel partners to add Ethernet fiber and copper to their portfolios. “If you made a living selling frame relay, then MPLS, you’d better embrace Ethernet,” said Ken Mercer, senior vice president of master agency Telecom Brokerage Inc. (TBI). “Ethernet is wildly popular. We can’t sell enough of it.”

To be successful, you need to know the pitfalls you may encounter during the sales cycle to help you set customers’ expectations and reduce frustration all around.

Availability. Ethernet can be a great solution for customers, but only if they can get it. While there have been great strides in penetration, Ethernet still is not ubiquitous. This is due largely to the fact that not every building is serviced by fiber. Business fiber penetration increased to 27.7 percent in the U.S. at the end of 2010, according to Vertical Systems Group. The majority of SMB locations do not have accessibility to direct fiber, whereas most enterprise locations are fiber-ready now.

Use of the copper plant to deliver Ethernet can overcome lack of fiber, but EoC is subject to distance sensitivity; a customer typically must be within 12,000 feet, or about two miles, of a central office to take advantage of the service. MegaPath Inc. is one provider working on increasing the number of COs in service. It is planning to expand its Ethernet over copper network to more than 680 central offices by June 2012, making it the largest nationwide EoC services provider.

Installation Times. This is perhaps the biggest potential holdup in an Ethernet sale. One agent said installations are taking up to 120 days. Providers that Channel Partners spoke to reported much faster standard intervals. CenturyLink, for example, quotes 60-75 days for on-net deals and 60-90 for off-net. tw telecom said it takes 15 days for on-net and 40-45 days for off-net. Both AT&T and Verizon declined to provide estimates. However, a Verizon spokeswoman said, “Network and customer premise build outs are an industry challenge, which can add to installation intervals. A top 2012 priority for Verizon is reducing our installation intervals by driving more efficient internal processes.”

A number of factors can contribute to gridlock. For instance, if the carrier must connect with another company’s fiber going off-net deployment takes longer. Similarly, there are access issues that may involve multiple carriers.. For example, Level 3 might own the fiber from the CO in Phoenix to the CO in Chicago, but getting to the COs involves using facilities from CenturyLink in Phoenix and AT&T in Chicago. This causes delays and increases costs, Mercer said.

Another problem that crops up, especially in older networks, is outdated hardware, which must be replaced. Plus, customers sometimes need to upgrade their own equipment to accommodate Ethernet, adding to installation times.

Service Level Agreements. One more problem that can crop up relates to service level agreements, or SLAs. Until recently, most Ethernet services have come with limited, if any, SLAs covering speed, quality and other requirements. But now that Ethernet is proving itself, carriers seem more willing to offer thorough SLAs. But it’s a work in progress.

Thanks to its acquisitions since early 2011, CenturyLink has three different switched Ethernet products with varying SLAs. For 2012, the company is devising standard agreements. “We’re not there yet but we’re working toward that,” Humphrey said. Verizon said it offers “competitive SLAs” that address latency, jitter and packet loss, and a spokeswoman said the carrier improves its agreements “on a continuous basis.” tw telecom just updated its Ethernet SLAs in November; its agreements cover everything from enterprise switched and extended native LAN services to point-to-point Layer 2 and point-to-point configuration. Guaranteed availability ranges between 99.9 percent and 99.999 percent. AT&T did not provide specifics on its SLAs, except to say that the new switched Ethernet services includes the end-to-end covenants.

Since SLAs are all over the board and evolving, it’s important to know what the provider offers to make the best match to your customer’s requirements.

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