Cannibalization A big challenge faced by Service Providers is that Ethernet is largely
being used as a substitute for legacy services. As research from Vertical Systems
Group (VSG) shows, at least in North America, such substitution accounts for a large
portion, 86 percent, of the market.
And with considerably lower per bit revenues from offering Ethernet services, Service
Providers face the very real prospect of declining revenues. Notwithstanding the benefits
of Ethernet, the potential loss of revenues makes them, at best, reluctant to speed up
the offering of Ethernet services.
However, to truly appreciate the extent of this problem, you have to put these factors in
perspective. TDM applications still account for most of a typical carrier??™s revenue and so,
arguably, Carriers are still investing in their SONET/TDM infrastructure, albeit at a lower
rate than before. This opportunity cost impedes Ethernet services and infrastructure.
Operational and Technology Barriers
Offering Ethernet services beyond the LAN is quite a different proposition; there are
inherent differences that necessitate additional capabilities to operate meaningfully in
Service Provider networks, which make up the MANs and WANs.
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