Last month, Equinix (NASDAQ:EQIX, news, filings) announced its plans to design and build a carrier neutral ethernet exchange service. The biggest question was, what will the carriers think of it? Well, the initial response from next generation carriers has been quite positive. Today, the company announced that AboveNet, Exponential-e, Hibernia Atlantic, Level 3, PCCW Global, Reliance Globalcom and Tinet have signed up to participate in its development. And that’s where we are right now, in development – there is no product here yet. But this is a nice selection of networks with which to try things out. Basically, it’s a list of challengers to the status quo, exactly the type who would benefit the most from success of the project, and thus have a vested interest.
It is interesting to note those not on the list yet as well. The largest international carriers, AT&T, Verizon, Sprint, BT, DT, FT, etc of course don’t really feel they need it given their already global scope. They also tend to move a bit slower on such things. With their size, they can afford to wait and see if this is something they need to do – there’s no urgency. Also not on the list just yet are TW Telecom and XO Communications in the US, and Colt and Interoute in Europe. I suspect that is because their ethernet offerings tend to be more on-net and regional, and thus they need less help – although I suspect they will join in sooner than the ILECs and PTTs if things go well. I am a bit surprised to see Global Crossing not in the game yet, I’ll bet they will be soon though. Now, the new question is: can you put these 7 rather disparate networks in the same room and get anyone to agree on anything?
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I think Equinix was trying to overshadow the bigger story of the day in this space: http://telephonyonline.com/service_delivery/news/chen-launches-cenx-110309/
I saw this too:
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Ethernet Gets a CENX View
November 3, 2009 | Ray Le Maistre | Post a comment
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NEW YORK -– ETHERNET EXPO 2009 — CENX, the latest startup led by Metro Ethernet Forum (MEF) president Nan Chen, has set up three U.S. peering points for Ethernet services, aiming to extend the reach of Ethernet services by making it easier for carriers to connect to one another’s networks.
It’s an effort more than two years in the making, Chen tells Light Reading here on the opening morning of this year’s Expo as CENX gets its formal coming-out in the form of a press conference. In fact, he says he’s been working on (or at least thinking about) the issue of Ethernet interconnect since 2004, relatively early in the MEF’s process of thinking about Ethernet services, because he knew it would be an eventual requirement.
Light Reading first reported on CENX in July and almost unraveled the company’s name correctly — it stands for Carrier Ethernet Neutral Exchange. (See Nan Chen Takes CENX Route.)
The idea is to provide common ground for carriers to hook to one another’s networks, as is done in voice networks and the Internet. If a carrier wants to pursue an Ethernet customer that’s outside its network’s reach, it can go through a facility like CENX’s to buy wholesale bandwidth on another provider’s Ethernet network.
“Just look at one of the smallest service providers in the United States. They can access the world,” Chen says. Likewise, a small (or large) provider could sell its network footprint, essentially, to providers worldwide.
Equinix Inc. (Nasdaq: EQIX) has already pledged to create such a service, but CENX has been up and running for a few months, Chen says. (See Equinix Offers Global Ethernet Peering .) CENX’s facilities are in well-known collocation facilities: 1 Wilshire (Los Angeles); 60 Hudson (New York); and 350 E. Cermak and 427 S. LaSalle (Chicago).
In those spots, CENX has set up equipment (from vendors Chen won’t name) along with software that watches the traffic, enforcing service level agreements.
CENX takes the interconnect concept one step further by providing a Web interface that lets bandwidth sellers display what they’ve got — and lets buyers shop for the bandwidth they need.
By creating these interconnect spots, CENX and Equinix let carriers avoid having to set up interconnection agreements one by one, an arrangement that becomes inefficient and cumbersome as the number of ad hoc deals increases. The MEF is working on standards for these network-to-network interfaces. (See Supercomm: Ethernet Peering Gets Closer.)
CENX is privately funded by Chen “and a few other folks,” as he puts it. He’s not disclosing the other investors yet, or how much was put into the company.
Chen says his position at CENX won’t be a conflict of interest with his job at the MEF. He says the MEF has had a service-provider committee examining the question of Ethernet peering, and an independent exchange company was deemed the best answer. The committee members were AT&T Inc. (NYSE: T), Cox Communications Inc. , Level 3 Communications Inc. (Nasdaq: LVLT), Optimum Lightpath , Orange SA , Tata Communications Ltd. (NYSE: TCL), and Verizon Communications Inc. (NYSE: VZ).
“This is really driven by the service provider set of the MEF. They really see there’s this pain. They really want to get it done,” Chen says.
He stresses that CENX is an extension of the work at Qosera, his former startup — which, he adds, did not shut down, contrary to some Ethernet sector gossip. Qosera was working on specific technologies that are now being put to use at CENX, which is more of a services company. (See Chen All Quiet on Qosera.)
“I’ve been having this idea for a long time,” he says. “Qosera is just one step of the way, working on some of the technologies that turned into CENX.”
— Craig Matsumoto, West Coast Editor, Light Reading
Chen did not personally invest in the company. He is funded by 2 prominent VCs. If you don’t think his MEF job is influencing some of his carrier members, you must be kidding yourself. It has conflct written all over it. They picked Alcatel equipment that is plagued with troubles. I hear they already had a failure of both nodes in Chicago. They may have POPS up, but they are not ready to deliver a quality service. I hear to attract customers they are giving the service away as a try and buy. Sounds a little desparate to me. As for their market place, I doubt many providers are willing to give all their network asset info to CENX to openly display, so where is the magic? As for the Qosera box, it has several limitations and is not exclusive to CENX. It is a mystery as to who the principals are at the Qosera and where the company is operated from? This all sounds like hype….
Here’s another example of Ethernet’s seeming inexorable migration deeper into the core and across the WAN. It’s from Converge!Digest, suggesting that some operators, at least, may be retreating from IP/MPLS VPNs to Layer 2:
NTT America’s COO, Kazuhiro Gomi: Ethernet in the WAN is encroaching on MPLS/IP VPNs
View video: http://www.convergedigest.com/Bandwidth/newnetworksarticle.asp?ID=28876
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I have two questions about the Equinix Ethernet Exchange.
1. Who owns the customer? Equinix or the carriers? If every carrier can effectively advertise every other carriers network coverage, and assuming each carrier wants to maintain a margin (and not be shunted into the wholesale “dumb pipe” position), is there not going to be potential for conflict between carriers when an enterprise customer announces their requirements through the Ethernet Exchange? Or will Equinix be owning the customer, and effectively be acting as a VNO and reselling other carrier’s networks? This has important implications for carriers that decide not to join the exchange.
2. Fault reporting / SLA. Does the Equinix Ethernet Exchange, by introducing additional switching equipment into the enterprise service offering, add potential for additional latency and service issues? Will the enterprise customer open tickets with Equinix for their Ethernet service? Will enterprise customers get the same or better SLA through the Exchange as they would do if they contracted directly with the carriers?
Equinex, like Cenx, would own the relationship with the buying and selling carriers. The carriers would then own the end customer. Cenx has stated that they do not want to compete with their carrier customers, hence the “Nuetral” in their name. I don’t seem them going directly after enterprise customers. In the beginning…..)
The exchange switch will add minimal delay being in the middle. Depending on the service alignment/translation required between the casrriers, it could be greater in some cases. the CENX offer is more complex than the Equinex offer and will most likely have a bigger impact.
It is always better dealing without a middle man. I am sure the first call will be to elminate the exchangenode in the middle before call the other carrier. The contract for the end2end circuit is between the carriers. All three parties will most likely be involved throught the process, even if the exchange handles the distance end carrier for calling party.
The exchanges can’t offer anything better then the services each buy and seller advertise.
Thanks. So the value proposition for customers thinking of connecting to one of these Ethernet Exchanges is that customers, through a single port on the exchange, can connect to multiple carriers quickly and easily?
I can see the merit in that this would avoid the costs and delays inherent with provisioning of cross-connects for each new circuit, but does it not still rely on the assumption that customers and carriers are prepared to have multiple Ethernet connections running over a shared switched infrastructure? Rather like a Tier 1 IP network connecting to customers over a peering exchange.
Nice idea, but I am not sure it will work for larger customers. In my experience selling IP and Ethernet services, customers always prefer a dedicated (ie fiber or CAT-5 cross-connect) connection to the carrier of their choice.