1. The Business Case for Enterprise Metro Ethernet Ralph Santitoro Director, Network Architecture Nortel Networks rsantito@nortelnetworks.com

2. 2 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Contents Challenge #1 –Cost of Bandwidth Flexibility and Scalability Challenge #2 –Cost of Network Design and Maintenance Example Business Case

3. 3 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Challenge #1 to be addressed Inflexible Bandwidth Scalability Costs Increasing non-Ethernet service bandwidth often requires: –New service (step function) T1  T3, FR  ATM –New hardware new interface or equipment –New service provisioning different protocols / technologies Often resulting in: –Oversubscribing to meet growing bandwidth needs OC-48 OC-12 OC-3 T3 T1 1.5M 45M 155M 622M 2.4G TDM hierarchy or L2 Service dictates bandwidth increments and technology Frame Relay POS ATM

4. 4 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Challenge #1 addressed by Ethernet Services Flexible Bandwidth Scalability Costs Increasing Ethernet service bandwidth: –Requires just bandwidth provisioning –Provision only amount of BW needed Same protocol for LAN and MAN Lower OpEx and CapEx with Ethernet –25-40% lower cost than TDM, Frame Relay, ATM interfaces 1 –10x lower cost than high speed SONET interfaces 1 –Easier and less costly to meet growing bandwidth needs OC-48 OC-12 OC-3 T3 T1 1.5M 45M 155M 622M 2.4G Ethernet provides flexible bandwidth increments using same technology Frame Relay POS ATM 1GbE 10/100MbE 1 Source: Network Strategy Partners, LLC Ethernet

5. 5 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Challenge #2 to be addressed Cost of Network Design and Maintenance –IT organizations typically have 3 distinct telecom / datacom groups WAN / MAN Telephony Data (LAN + routers) –Why? Different technologies / protocols / architectures –Requiring different skill sets

6. 6 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Challenge #2 addressed by Ethernet Services Ethernet Services simplify Network Design and Maintenance –WAN / MAN  Ethernet Internet access Inter-company and partner/supplier connectivity –Telephony  IP Telephony application over Ethernet Telephony treated as another application on data network –Data (already over Ethernet) unless you’re still using Token Ring☺ Lower network operations and support costs –Can utilize a similar skill set –Common protocol and technologies simplify troubleshooting

7. 7 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Example Business Case 2 1 Large Site with 500+ employees 4 Medium Sites with 100-499 employees Applications: Private Data and Internet Access 2 Source: Network Strategy Partners MEF-sponsored business case whitepaper

8. 8 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Bandwidth Growth and Pricing Assumptions Bandwidth Growth Assumptions: –Bandwidth demand increases annually at the following rates for the following applications: Internet Access: 30% Private Data: 20% Service Pricing Assumptions / Qualifications: –Pricing based on monthly recurring charges only –All service pricing: Decreases 10% annually Includes local access charges –Distance-sensitive private line pricing based on 3 mile average local access distance 20 mile average interoffice distance

9. 9 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Service Requirements Application ServiceYear 1Year 2Year 3 Medium Sites Internet Access 1: Private Line3 x T14 x T1 2: Private Line3 x T14 x T1 3: E-Line4Mbps5Mbps6Mbps Private Data 1: Private Line2 x T1 mesh3 x T1 mesh 2: Frame Relay2 x T13 x T1 3: E-Line3Mbps4Mbps5Mbps Large Sites / Data Centers Internet Access 1: Private Line10Mbps FT315Mbps FT320Mbps FT3 2: Private Line10Mbps FT315Mbps FT320Mbps FT3 3: E-Line10Mbps13Mbps17Mbps Private Data 1: Private Line2 x T1 mesh3 x T1 mesh 2: Frame Relay27Mbps FT330Mbps FT3T3 3: E-Line25Mbps30Mbps36Mbps

10. 10 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Monthly Service Cost

11. 11 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Cumulate Cost by Service

12. 12 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Summary Enterprises benefit from Ethernet services –Only pay for the bandwidth you need –Low cost Ethernet interface to access service Enterprises can reduce OpEx using Ethernet services –Simplified network design and engineering –Utilize common skill set for IT staff

13. 13 SUPERCOMM 2003 Business Case for Enterprise Metro Ethernet Metro Ethernet Forum References Metro Ethernet Services for the Enterprise – Business Case –http://www.metroethernetforum.org Metro Ethernet Services whitepaper –http://www.metroethernetforum.org/metro-ethernet-services.pdf