Ethernet has seen impressive growth and is pushing down into the SME sector. We examine the sizeable opportunity that Ethernet offers comms resellers, and look at how a growing number of SMEs are benefiting from Ethernet solutions?

Ethernet is forecast to be the fastest growing access technology between now and 2012 with a CAGR of 16 per cent for the next two years, according to Analysys Research. The key factor driving this increased demand for Ethernet access is simply the growing requirement demand for bandwidth. As companies continue to embrace cloud and hosted services their reliance and demand for bandwidth will only continue to grow.

Backbone Connect has seen an increasing appetite from end users, particularly SMEs, to improve their bandwidth. Much of this increase in demand is a direct result of the cloud and the industry's focus on IP, observes David McLeod, Director of Marketing at Backbone Connect. "As more services start to be delivered from outside the office, such as hosted VoIP and video platforms, together with an increase in demand for Internet access and other data services, customers are beginning to look more closely at the bandwidth available and the reliability of their access to the outside world," said McLeod.

This trend is a hot opportunity for comms dealers, notes McLeod. "Comms Dealers are ideally positioned to capture this business as part of the wider solution and to further tie the customer in, realise improved margins and maintain control of the deal," he added. "Ethernet access is typically sold on a three-year term. So while a dealer may be more often limited to 12 month contracts on their core products such as service subscription and maintenance, they can guarantee an extended relationship by tying in an Ethernet service as part of the deal."

Ethernet services also provide a means for additional revenue and profit. Channel partners can realise up to 20-30 percentage points when reselling Backbone Connect Ethernet products. As well as good margins, there are other strong arguments for comms dealers to fully embrace Ethernet connectivity, but perhaps the most compelling is the impact and difference the technology makes to their ability to deliver their own products. "Ethernet access offers bandwidths of between 10Mbps and 1000Mbps, is scalable, simple to work with and particularly resilient with standard technically valid SLAs of 99.9 per cent availability. So if any dealer is attempting to deliver a communications platform - hosted or otherwise - across a WAN/Internet link, then Ethernet will ensure maximum performance," said McLeod.

With the explosive growth of real-time low latency services being deployed over IP, the need for high quality, resilient bandwidth becomes as important for SMEs as it is for mid-market corporate clients. "Without doubt the reliance on IP connectivity is key for business," commented Iain Sinnott, Head of Indirect Sales at Timico. "Applications are moving into the cloud, voice and SIP adoption over the IP network is more prevalent and these demands on the infrastructure to offer secure, robust, high performing connections will continue to drive demand for EFM and Ethernet services."

Timico's indirect channel strategy has very much been to take its partners and customers from traditional services such as fixed line, mobile, basic broadband to next generation network services, which encompasses its Ethernet portfolio. "Through events and product training we help our partners fulfill the needs analysis part of the sales process. Technical pre-sales resource and other business development people are on tap to work with the partner and end customer," said Sinnott.

He noted that Timico has provisioned more leased lines in the past six months than since it started trading in 2004. "This has been driven by the huge uptake which we are now seeing in both the direct and indirect space. We are very excited about the opportunities ahead as this product becomes more channel orientated and finds a price point that represents tremendous value," he added.

Reductions in Ethernet pricing means it is now an affordable solution for SME customers. It offers impressive scalability and the flexibility to increase bandwidth at short notice right up to 1Gbps. "Resellers can sign Ethernet customers up to a solution that meets their needs today and then easily increase the bandwidth and their revenues as their customer grow," said Andrew Saunders, Head of Product Management & Marketing at Zen Internet. "Resellers can generate significant margin from the connectivity sale alone but can also introduce complimentary services to their customers. These may include the management of the customer's router, a managed security service or a high value IP VPN solution that includes Ethernet connectivity at multiple sites plus a range of complimentary services."

Ethernet is the enabler for business grade IP applications. It's flexible bandwidth feature means that it can easily adapt if businesses want to introduce new services that demand more bandwidth. "As Ethernet is not contended at the local exchange it also offers guaranteed throughput at all times of day, which can ensure a more reliable connection than a typical shared broadband service," added Saunders. "It also makes it ideal for the delivery of SIP Trunking. When incorporated into an IP VPN, QoS features using MPLS technology ensure guaranteed end-to-end performance for delay sensitive Software as a Service applications."

Ethernet connectivity is typically offered with a service level agreement that guarantees availability. Zen Internet offers a 100 per cent uptime commitment with service credits paid in the event of any faults that cause a loss of service. "This provides the confidence that businesses require to make full use of their connectivity and the services that are reliant on it," said Saunders. "In the event of any faults the telecommunication provider promptly assigns an engineer and typically has a target restore time of just five hours. The target restore time for a shared broadband service would be at least four times this target."

Ethernet is an enabler and a foot in the door to many of Zen Internet's other services that can be deployed to the same customer. With its high reliability, symmetrical bandwidth and business class support, Ethernet is ideal for supporting SIP Trunking, allowing businesses to replace legacy and costly ISDN services with more cost-effective IP-based services from a single supplier. "If your customers have multiple sites, then you can sell IP VPN using Ethernet and other connectivity solutions such as a leased line or xDSL, creating a dedicated private network for this customer," said Saunders.

"If these customers also have home workers we can add broadband and free voice calls between those offices included in the IP VPN. In addition, if you end up implementing an IP VPN it is more cost-effective for the customer to centralise their security, servers and IT applications on the private network where we can also provide server virtualisation and data hosting."

Market conditions have changed dramatically over the past year and SMEs are now looking for greater efficiencies, savings and performance from any ICT investment that they make. Coupled with the demand for increased bandwidth, this means that access to super-fast services is imperative, or businesses face a reduction in productivity and an inability to compete. "Ethernet Fibre prices have been dropping significantly in the past year, creating an opportunity for resellers to improve margin and rendering the proposition as affordable for SMEs who may have previously been deterred by the perceived cost," agrees Andy Hollingworth, Opal's Head of Wholesale.

"And for businesses that have a close proximity to the serving exchange, Ethernet is a particularly cost-effective option and has the potential to offer considerably more bandwidth for a slight increase in monthly rental cost. It is important that partners talk to SMEs to evaluate their needs now, and especially for the mid-term, if they wish to maximise savings. As businesses move away from traditional telephony systems and look to Ethernet for a more cost-effective communications solution, we will by default see an increase in take-up of technologies such as SIP Trunking as a flexible, scalable and cost-effective alternative to updating expensive hardware." 

While price is undoubtedly a contributing factor in SMEs' decision to adopt Ethernet-based solutions, it's not always the key driver, according to Darren Farnden, Head of Marketing at Entanet. "True, some SMEs are simply looking to renew existing expired Ethernet contracts at a lower cost," he observes. "However for many, the overriding factor is the desire to increase their efficiency by improving the productivity of their information and human resources. IP VPN/WAN/LANs enable SMEs to improve the way they handle large volumes of distributed data, connect regional offices and remote workers, and share centralised applications."

In conclusion, Ethernet provides a host of benefits to SMEs. Not only does it provide dedicated and guaranteed bandwidth, it also provides the infrastructure via which they can utilise hosted applications such as SaaS and VoIP. Farnden stated: "Additionally, Ethernet enables SMEs to create IP Virtual Private Networks to connect multiple disparate offices or remote workers as a means of increasing efficiency and productivity, while enjoying complete confidence in the resiliency of their network."