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By the end of 2005, Telefonica will be operating a single optical Ethernet network to serve its business customers and to deliver triple-play service to its residential customers as well.

Visiting Supercomm 2005 as a speaker, Luis Fernandez Vega, manager of technology planning and transmission for Telefonica, said Telefonica is currently operating two separate Ethernets, one for business and one for its residential triple-play customers, which currently number 40,000.

"Within the next six months, we will have national coverage for our bundled service," he said, speaking at the booth of Riverstone Networks, supplier to Telefonica. "We have been operating a network for residences and a network for business customers, but both have the same architecture and we are trying to use the same technology solutions. By the end of the year, we will combine them and we will be able to offer service to any customer from the one network."

The result will be substantial cost savings for the Spanish telecom provider, he said, based on much simpler network operation.

"One of the reasons Telefonica has been early to go into Ethernet business services is that they didn't have legacy data services," explained David Ginsberg, vice president of marketing and product management for Riverstone. "This is the real thing--the doing versus the talking about it. They have installed the network and gotten the customers."

The company decided two years ago "not to invest in ATM any more and to transition to IP," said Vega. "We could not base the business on an ATM/SDH network."

Telefonica is offering its Imagenio video service, including 50 channels of broadcast and cable TV, plus video on demand that includes exclusive landline rights to the soccer games favored by Europeans. The company has deployed more than 100,000 IPTV ports of Lucent Technologies' Stinger DSL broadband access concentrator.

Telefonica offers MetroLAN and MacroLAN virtual private network offerings to businesses, for in-city and nationwide coverage.

"We are offering flexible bandwidth, and we are offering VoIP," said Vega. "Our business customers are able to get rid of many interfaces and boxes that they had to deploy to connect to us. For us, Ethernet is new, but for them it's legacy."