When it comes to business connectivity, Ethernet's central driver continues to be its ability to meet growing bandwidth demands at lower cost and with greater flexibility than competing legacy services. Applications vary from wireless backhaul and basic Internet connections to delivering enterprise applications and providing access to cloud infrastructure. That translates into a big revenue opportunity for communications service providers (CSPs) – if they can provide the right level of customer satisfaction.
US enterprises and small- and medium-sized businesses are expected to spend more than $47 billion over the next five years on Ethernet services provided by carriers, according to data from Insight Research. With metro-area and wide-area Ethernet services readily available from virtually all major data service providers, industry revenue is expected to grow from nearly $5 billion in 2012 to just over $11 billion by 2017. Insight projects a compound annual revenue growth rate of 17% over the next five years, with growth slowing slightly by 2016 to be more in the range of 12–15% as TDM-to-Ethernet conversions are finalized.
The adoption of Ethernet by the enterprise and mobile backhaul operators is driving new requirements of service assurance for CSPs. Service assurance has become key to maximizing margins, particularly for services whose primary hallmark is scalable bandwidth flexibility and IP-based manageability at a better price and reliable customer experience.
Ethernet’s shared infrastructure
Enterprise and mobile operators in the past typically bought a dedicated T1 line (or two, or three) to deliver service to businesses, paying on average $500 per month per line, per customer. Overall, T1 lines are an expensive infrastructure choice, relatively speaking, but for a long time they were the only option in the market. Ethernet’s arrival signaled a move to a more scalable, all-IP technology, and as such, it has radically changed the cost profile for operators to deliver business services, because it enables a more efficient and shared infrastructure model.
In other words, Ethernet allows operators to service multiple customers in a building from one pipe, because the architecture allows carriers to oversubscribe the link. For instance, if the connection at full capacity supports 20 megabytes, each customer may be guaranteed 10 megabytes each through multiplexing. The expectation is that those 10 companies are unlikely to be using their full 10-megabyte capacity at the same time, meaning that the average total usage aggregated across customers should come in under the total capacity threshold for the shared link. For the carrier, such an approach maximizes margins because it means spending less money on the infrastructure cost per customer, thereby increasing profit for the same link.
The only way this can be a successful profit-boosting strategy, however, is to ensure that the shared infrastructure approach doesn’t result in congestion that could negatively impact the customer experience. When an operator oversubscribes a link and over-allocates bandwidth, it follows that they find themselves with a critical need to monitor and shape the traffic appropriately to avoid customer dissatisfaction and churn.
The customer, of course, just sees whether or not the Internet and Web-delivered applications are working appropriately – the argument that a company should expect bandwidth availability to fluctuate because the underlying technology is Ethernet, not TDM, is not one that most IT departments would accept willingly. Ethernet may be new technology, but customers expect it to work as well if not better than the legacy solution. This becomes especially critical as competition for Ethernet services intensifies and it becomes a core service for enterprise-focused carriers.
Driving deeper SLA guarantees
In an increasingly competitive environment, how can CSPs grow market share without cutting prices towards a “race to zero”? In order to differentiate their services, operators must provide guaranteed Service Level Agreements (SLAs) for Ethernet services. Fulfilling those requires a robust service assurance approach that goes beyond what has been required in the past.
Ideally, an operator must monitor the end-to-end network and service environment for Ethernet in real time, including watching metrics on jitter, round-trip delay, latency, throughput and so on. The ability to see the current status of the network at a glance, combined with the ability to set escalating thresholds as network congestion or utilization grows will allow carriers to be proactive. For instance, progressive alarming when customer traffic hits certain thresholds can help an operator leap into action to prevent the customer experience from degrading to the point of dissatisfaction or falling out of compliance with SLAs.
Carriers also need the ability to see whether an outage is an individual issue at the customer premise – for instance, if a router may need resetting – or whether the problem is with the Ethernet link itself or the underlying transport infrastructure. An effective service assurance solution will allow carriers to model end-to-end services in a hierarchical fashion, so they’re not just seeing alarms and performance data at one layer. Ethernet can ride over different transport technologies in a network as it carries traffic from customer premise to the core. Those technologies could be coax, a fiber-based SONET ring, optical DWDM lambdas, microwave or other technology – or a mix of all of the above.
A service assurance solution that can provide a holistic, hierarchical view of Ethernet services riding on these different technologies allows for a deeper service visualization. This capability can enable the service provider to offer differentiating SLAs that will drive increased market share while preserving revenue stream and profit margins.
Ethernet delivery is also a multi-vendor affair when it comes to network gear, but most CSPs rely on siloed information housed in a variety of vendor-specific Element Management Systems (EMS). Collecting that data and making it actionable in a graphical format is easier said than done. A service-focused, Ethernet assurance solution, on the other hand, simplifies monitoring a multi-vendor hardware environment, by collecting and presenting metrics across elements for visualization as an end-to-end service. This type of solution would also allow for the creation of customized KPIs/KQIs to proactively detect and report potential problems and understand the customer impact, as well as generate monthly customer SLA reports. These can be critical to improving performance and customer satisfaction, and winning market share in an increasingly competitive market.
While enterprises themselves will appreciate visibility into the performance of their own Ethernet services, another dimension to leveraging assurance platforms is the ability to roll out a portal for the customer to gain visibility into their service performance.
By providing customer portals, an operator will reduce customer support calls, bolster customer satisfaction and provide real-time visibility into SLA compliance and the overall health of the service, even on a shared link. If there’s an issue, the enterprise IT or telecoms director is likely to check the service provider portal first, which will give insight into where the issue lies. It could be a router or customer premise issue in the office, which can be fixed on-premise and thus improve customer satisfaction, saving a customer service call or truck roll for the operator.