By Maria Zeppetella, Senior Analyst, Business Communications Services

The desire to converge data, voice and video networks onto MPLS-enabled networks is driving adoption of MPLS- based IP VPNs. Legacy services such as ATM, frame relay and private line have been steadily losing ground to such newer technologies as IP. This trend is expected to continue as enterprises seek more bandwidth, convergence, better management and increasing value-added services for their enterprise WAN expenditures.

But why has Ethernet not taken hold globally as has MPLS? Many carriers believe that Ethernet really is the WAN technology of the future, noting its cost savings, reliability and ease of management. And VPLS (virtual private LAN service)-based Ethernet could make it happen.

VPLS provides a scalable multi-point Ethernet VPN service, supporting QoS and delivering SLAs. It allows multiple Ethernet LANs at different sites to be connected together as if they were connected to the same Ethernet segment. VPLS uses MPLS to deliver connectivity over a mesh of logical circuits or tunnels, enabling service providers to offer managed Ethernet VPN services with ease. Higher layer addressing or protocol issues are left to the customer, resulting in lower OPEX for the carrier due to the simplified service provisioning. Customer locations connecting to the service are provided with the same bandwidth and QoS as if they shared a single LAN segment, while pairs of sites may be provided with an emulated private line service.

VPLS makes all customer sites appear to be on the same LAN, regardless of their locations. Unlike IP VPN, where the customer hand-off can range from Ethernet, frame relay, IP over TDM, etc., with VPLS the customer hand-off to the WAN is always Ethernet. With VPLS, customers maintain complete control over their routing, and since all customer routers in VPLS architectures are part of the same LAN, the result is a simplified IP addressing plan, especially when compared to a mesh constructed from separate point-to-point connections.

Standards for NNIs are not final as yet, forcing carriers to negotiate with carrier partners on an individual basis. The Metro Ethernet Forum standards currently under review with respect to E-NNI (external network-to-network interface) interoperability, for service handoff to other providers, will greatly influence E-LAN adoption. When there are standards in place for NNIs, more E-LAN services will be available, and not only on a metro level, but increasingly on inter-city, nationwide and global levels. Without E-NNI service providers have had to determine specific peering agreements with other carriers to extend service guarantees for VPLS-based Ethernet VPNs.

As Ethernet becomes more standardized, global VPLS Ethernet services will increasingly be seen as a suitable and less costly substitution for legacy services such as ATM, frame relay, and international private line.

Ethernet only accounted for 2.6 percent of global enterprise WAN revenues in 2005 as VPLS is still nascent and much of global Ethernet connectivity is still comprised of simple access. For now, service providers have to determine specific peering agreements with other carriers to extend service guarantees for VPLS-based Ethernet VPNs. There are still not many very large implementations of VPLS, so a large multinational corporation will have trouble connecting with 1000 offices via VPLS. However, implementations up to 100 sites are more realistic for now.

Most carriers do not have firm plans to shut down legacy networks as they still obtain a steady, albeit shrinking, revenue stream from them. (Sprint is one exception, however, that has announced it is on track to shut down its legacy networks in 2009 and will have full migration to IP by then.) Yet they may have already implemented Ethernet, initially as an access service, and subsequently as a point-to-point and multipoint service for customers.

VPLS deployments in the U.S. are limited, while globally they are more widespread. Most of the deployments are focused on inter-city/nationwide WAN Ethernet service, although in a few cases, VPLS is deployed in the metro only. Masergy, Time Warner Telecom and Broadwing were the first to offer nationwide VPLS service in the U.S. SureWest is a U.S. provider offering a metro VPLS service. Other service providers are planning to deploy nationwide and/or global Ethernet inter-city service using VPLS, including AT&T and Verizon Business.

Hong Kong's Hutchison Global Communications and South Korea's KT Corp were the first providers to implement VPLS internationally. The service consists of a VPLS-based Layer 2 multipoint-to-multipoint network interconnecting KT’s and Hutchison’s metro Ethernet infrastructure via two STM-1 links.

Yipes operates primary POPs in 17 major metro markets worldwide. All cities are linked via Yipes’ MPLS backbone with VPLS. Yipes’ global WAN services are some of its fastest growing. Many of Yipes’ customers are migrating to VPLS/Ethernet from frame relay, ATM and Layer 3 MPLS, as they prefer Ethernet’s simplicity of management, reliability, low latency and cost-effectiveness.

SingTel provides global communications services to customers in the Asia Pacific region and beyond. SingTel formed SingTel USA in 1993, seamlessly connecting US corporations to customers in Asia and other parts of the globe. ConnectPlus E-VPN – network-based Ethernet VPN solution built on SingTel’s MPLS network, using VPLS technology, port speeds from 1 Mbps to 45 Mbps, increments of 1 Mbps

AT&T offers OPT-E-MAN®, E-LAN; metro Ethernet Virtual Private LAN Service (VPLS) in 41 metros, variable speeds from 5 Mbps to 1 Gbps; SLAs supporting two levels of service. Beyond the metro, AT&T intends to expand its MPLS-VPLS capability by utilizing OPT-E-MAN as access to the Internet, Virtual Private Networks (VPNs) and EPLS-WAN. Outside the U.S. AT&T has signed interface agreements with foreign PTTs for leasing Ethernet capacity. AT&T plans to offer VPLS private networking technology to corporate customers on a global basis in 2007.

MASERGY offers a global Ethernet Wide Area Network (WAN) service, delivering services at port speeds of 1.5MB to Gig-E with 5 levels of Quality of Service (QoS), a fully-meshed topology and guaranteed site-to-site QOS. Customers can choose a Layer 2 (VPLS, Private Link) and/or Layer 3 (Private IP) solutions for a flexible, scalable business network from MASERGY’s Intelligent Transport service.

In 2005 OnFiber and Broadwing Communications announced a joint offering, whereby OnFiber provides metro Ethernet access to Broadwing’s nationwide Ethernet offering, supporting both Layer 2 VPLS and Layer 3 MPLS Ethernet for WAN connectivity. The partnership provides their customers with a true end-to-end Ethernet WAN service. In 2006, Qwest acquired OnFiber for $107 million.