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Even the most compelling business models for carrier Ethernet, from the industry’s leading experts, leave money on the table. Most of these models base their revenue assumptions on simply higher-speed Internet access coupled with some form of virtual private Ethernet (LAN) service. However, they ignore revenues from the very services that enterprise customers and carriers already depend on. New Pseudo-wire solutions provide the key to a better business model by preserving traditional services over new packet networks.

Pseudo-wires were first introduced in core networks using MPLS encapsulation methods to provide Layer 2 service emulation (e.g., frame relay, ATM, etc.). Now Pseudo-wires are boldly moving into new access networks using IP, MPLS and even VLAN encapsulation to enable circuit emulation and service emulation. Ethernet service providers can now offer Layer 2 transport of legacy services such as full-featured TDM voice, branch-to-branch PBX tie lines, frame relay, and ATM without the need to go through a router. These legacy services, along with the new Ethernet services, result in a new integrated access paradigm--the “integrated access Ethernet.”

There is no doubt that carrier Ethernet offers extensive opportunities for reducing operational expenses. Carrier Ethernet extends the scalability and operational benefits of Ethernet from the enterprise into the service provider domain. A business case study from the Metro Ethernet Forum, for example, concluded that carrier Ethernet services can reduce opex by 23% for service providers and these savings grow each year as technology and services mature. These savings result primarily from the ability to provide remote, software-based provisioning that greatly simplifies configuration of services and reduces the number of expensive truck rolls that are needed to turn up and maintain a service. These opex savings accrue directly to the bottom line.

But experience is also showing that the top line improves dramatically when carrier Ethernet providers employ Pseudo-wire solutions to offer a full-service portfolio. The same operational expense savings that apply to new Ethernet services now combine with increased revenue opportunities furnished by a wide range of voice and data services, all offered over a packet access network.

An “integrated access Ethernet” with legacy voice and data services offers profitable new business opportunities while benefiting enterprises as well as service providers. Pseudo-wire solutions from Axerra Networks are now being deployed to offer a full range of circuit emulation and service emulation solutions, from TDM circuit emulation to frame relay, secure Internet access, and even ATM. With the addition of Pseudo-wires, “integrated access Ethernet” can now support virtual private LAN services plus voice applications, proprietary data applications, and video at T1/E1 rates and beyond. As an example, many enterprises have a large installed base of PBXs and have grown accustomed to the user experience of their proprietary "feature phones." For these enterprises, Pseudo-wires enable PBX-to-PBX tie line applications with no loss of features to the user. Field experience is showing that this service alone adds between $200 and $600 per site to the top line, depending on the size of the enterprise.

The addition of Pseudo-wires into an “integrated access Ethernet” service mix benefits enterprise customers because it enables them to utilize a single service provider for all their communications needs--simplifying administrative and billing processes and furnishing a single point of contact for maintenance issues. For service providers, circuit emulation Pseudo-wires allow the full range of features available from existing TDM-based Class 5 switches to be extended across the new “integrated access Ethernet.”

A new opportunity has also emerged for carrier Ethernet providers to increase revenues by addressing the needs of mobile wireless providers for the aggregation and backhaul of wireless voice and data traffic. A mobile wireless operator’s radio access network (RAN) is a source of high recurrent costs due to the number of lines that must be leased from the local telco. These leased lines are needed to backhaul traffic from cell sites to radio network controllers and mobile switching centers. These costs are escalating dramatically as wireless traffic increases and as mobile wireless operators transition to 3G services, which require more bandwidth. Mobile wireless operators are urgently seeking cost-effective alternatives that will enable them to reduce expenses in the RAN. Today, Pseudo-wire solutions enable carrier Ethernet providers to offer a compelling solution. Field trials currently underway show that Pseudo-wires enable the support of all generations of mobile wireless networks, preserve native signaling and features across packet networks, enable bandwidth sharing between 3G voice and data, and provide the high-performance clock recovery capabilities that are required.

Pseudo-wires are well matched to carrier Ethernet metro networks, where Layer 2 switching furnishes performance and statistical multiplexing, but without the delay and unpredictability of Layer 3 routing. In addition, a new generation of Pseudo-wires is emerging with encapsulation of both Layer 1 and 2 services directly onto Layer 2 Ethernet networks. These solutions do not require the IP header, thus reducing overhead while improving efficiency and latency. These improvements yield improved quality for voice services because the compression typically used in VoIP is not needed. The reduced latency also means that delay-sensitive signaling protocols, such as those used for mobile wireless backhaul, can be deployed on carrier Ethernet.

The benefits of Pseudo-wires in packet access networks are being touted by both providers and enterprises. Opex savings, combined with the new revenue opportunities available through Pseudo-wire solutions from Axerra Networks, ensure that “integrated access Ethernet” now offers an improved and compelling business model.

Joe Ashton is vice president, sales, Americas, for Axerra Networks, Inc.

Visit Axerra Networks online.