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Ethernet's growing appeal within the enterprise in undeniable, but so is the fact that Frame Relay (FR) and ATM aren't going anywhere anytime soon. By most estimates, Ethernet revenues are growing at a rate of 30 percent to 50 percent yearly compared to flat or even declining growth of FR and ATM. However, in 2004 the combined U.S. service revenue for FR and ATM were approximately $12.5 billion, and Ethernet services drew only about $500 million.

Nevertheless, Ethernet’s value proposition is strong and enterprise adoption of the technology to address MAN/WAN needs is building. Ethernet’s ability to support more granular and scalable bandwidth requirements, its ease of use, and compelling economics, make it appealing to enterprises. Ethernet is especially effective at enterprise locations with capacity requirements beyond 10 Mb/s, such as headquarters, data centers or large branch offices.

Ethernet’s growing appeal coupled with the continued reliance on FR/ATM, presents a critical end user requirement--the ability to create a multi-protocol Layer 2 VPN that supports Ethernet, Frame Relay, and ATM access. In fact, many enterprise users of Ethernet services state that the number one hurdle they faced when adopting the service was its lack of interoperability with their current WAN infrastructures--a predicament that can be solved with the development of multi-service interworking.

Service interworking is required to transparently translate one protocol to another, such as ATM to FR, when customer endpoints require unlike protocols. FR to ATM service interworking, defined by the FR Forum’s FRF.8, has been standardized since 1995 and is widely deployed in service provider networks. As Ethernet becomes a more widely deployed and consumed service, it too needs service interworking functionality with FR and ATM to support an enterprise’s need for Layer 2 Virtual Private Networks (VPNs) with heterogeneous endpoints.

FR to ATM service interworking is far less complex than FR/ATM to Ethernet service. FR and ATM are similar data link layer protocols--both are connection-oriented, circuit-based point-to-point technologies that are similar in operation, whereas Ethernet is a broadcast technology.

In a FR/ATM network the endpoints know the Layer 2 addresses but must learn the Layer 3 addresses whereas an Ethernet endpoint knows the Layer 3 address but must resolve the Layer 2 address. This presents a challenge with service interworking FR/ATM with Ethernet endpoints, which is overcome using a method called ARP (address resolution protocol) mediation. ARP Mediation outlines the method for IP address resolution in a Layer 2 VPN environment. The address resolution is handled by the service provider’s edge equipment and therefore transparent to the end user of the service.

Currently, few service providers offer Ethernet service interworking because, until recently, the equipment vendor implementations have not met carrier requirements. The reason for this is two-fold: Traditional Ethernet routing equipment does not provide carrier-grade reliability, and legacy multiservice switching products lack Ethernet service interworking support all together. But this has all changed thanks to a new breed of equipment that makes this evolution possible.

New next-generation multiservice switching solutions combine the critical elements required to support Ethernet service interworking. They deliver carrier-class reliability, high-performance network processing, Ethernet, IP/MPLS, FR, and ATM functionality, and support for ARP mediation on a single platform. This enables service providers to offer Ethernet service interworking with their traditional Layer 2 VPN data services.

As with most networking evolutions, this provides both an opportunity and a challenge for network service providers. The right service interworking implementation manages the migration and revenue shift from legacy services like FR to next generation ones such as Ethernet. This capability enables a service provider to protect and grow their installed customer base by offering a future-proof WAN solution that evolves with an enterprise’s networking needs. Service provider’s who ignore their enterprise customer’s need for service interworking risk negatively impacting their top line data revenues. Traditional FR/ATM customers will seek more innovative sources of supply during contract renewals. In addition, service providers without service interworking will less effectively compete for new business opportunities.

The growing need for broad service interworking functionality will be used to address two networking requirements: first, service interworking gateway between a service provider’s disparate data networks and second, multi-protocol access interworking within the same data network

The service interworking gateway functionality enables interworking of enterprise locations supported on a service provider’s different networks. One common scenario would be an enterprise user whose current WAN is supported via an ATM network. In parallel, they have business locations supported on a metro Ethernet network. In order for sites on the ATM network to communicate directly and transparently with sites on the Ethernet network the service interworking gateway function is required between the two networks.

FR and ATM are highly profitable services within a service provider’s data portfolio. Although they’ve experienced year-over-year price erosion, they continue to maintain healthy margin levels. Compared to Ethernet, their economic appeal is even greater. Ethernet services have a track record of low margins with a very aggressive price per bit. Market pricing for a 10 Mb/s transparent LAN Ethernet service is roughly one to two times the price of a 1.5 Mb/s FR connection. This has caused many service providers to hold back on Ethernet services for fear of cannibalizing their higher margin FR/ATM installed base.

Unfortunately, the missed opportunity of providing a migration path to Ethernet creates the risk of losing some if not all of their customer’s business. Therefore, constructing WAN solutions that support FR/ATM to Ethernet service interworking is very important. Service interworking allows a service provider to deploy FR and ATM where appropriate and continue to scale them independently. This also positions FR and ATM to fill in availability gaps for Ethernet.

A heterogeneous environment of FR, ATM and Ethernet access offers a measured and deliberate evolution of a provider’s installed base. In addition, it allows a service provider to target a competitor’s installed base by positioning new technologies like Ethernet.

Enterprises can leverage service interworking to gradually migrate their WAN over time. Most enterprises prefer this method because deploying Ethernet on an as needed basis is more cost-effective and less disruptive than switching service providers and/or upgrading their entire WAN.

Service interworking allows an enterprise to extend Ethernet to locations such as headquarters and data centers while branch offices and remote locations continue to use FR/ATM. This selective deployment approach is cost-effective while minimizing disruption to the enterprise’s corporate WAN.

Service interworking is quickly becoming a critical feature for service providers to support their layer 2 VPN products. Frame relay and ATM services continue their dominance in the enterprise WAN arena. However, Ethernet is now a sought after alternative for high-bandwidth requirements. Because these three access technologies will coexist for many years, and because enterprises want the flexibility of an access technology agnostic WAN, service interworking is quickly becoming a top opportunity for service providers in 2005 and beyond.

Steve Alexander is CTO of Ciena Corp.

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