Interest Grows in
Ethernet in the First Mile

Analysts anticipate significant growth in Ethernet-based first mile solutions for delivering broadband services over the next five years. But much of this growth will be the result of infrastructure upgrades in China, not increased U.S. fiber deployment.

by ISP-Planet Staff [November 13, 2002]

The recent formation of industry groups and standards-setting organizations and a projected reduction in costs for end-users will significantly drive the number of residential Ethernet in the First Mile (EFM) subscribers over the next four years, according to high-tech market research firm In-Stat/MDR.

The Scottsdale, Ariz.-based research firm reports that the number of EFM subscribers, over any media type, will increase from 1.3 million in 2001 to 36.8 million in 2006, with Asia-Pacific representing the largest market during the five-year timeframe.

Sam Lucero, In-Stat/MDR analyst, said Ethernet's efficiencies would spur EFM growth onward.

"Ethernet's relatively low cost, simplicity, flexibility, ubiquity and high bandwidth has resulted in a growing momentum for EFM over the past year and a half," Lucero said.

EFM standards are currently being scrutinized by the Institute of Electrical and Electronics Engineers (IEEE) 802.3ah Task Force. Plenary meetings regarding standardization efforts are being held this week in Hawaii. A parallel effort to develop market awareness is being undertaken by the newly formed Ethernet in the First Mile Alliance (EFMA). Formed in December 2001, EFMA is an industry-based alliance intent on promoting EFM as a universal broadband solution.

According to Lucero, interoperability problems will not stop vendors from releasing new equipment.

"A lack of standards has not prevented vendors from entering the market," Lucero said. "A number of equipment vendors, ranging from relatively small, specialized, privately held companies, such as Alloptic, to the largest networking vendors, such as Cisco, are currently providing EFM gear."

Key findings from the report, Ethernet In The First Mile: Like A Bridge Over Troubled Water include:

Currently, EFM for residential access is mostly an Asia-Pacfic phenomenon, and will largely remain so through 2006, with more than 63 percent of the total number of residential subscribers.

Because countries in the Asia-Pacfic region rely heavily on Multi-Dwelling Units (MDUs), short local loop lengths, low labor costs, government support, the need to deploy new infrastructure. This is particularly in the case of China.

Western Europe will be the second largest market for EFM on a subscriber basis, with Scandinavia seeing particularly large deployments through 2006.

EFM deployment in the U.S. will remain fairly limited and EFM will typically be deployed by non-standard service providers, such as public utilities and property developers, though this will begin to change toward the end of 2006.

From a technology standpoint, EFM to consumers through 2006 will largely be an Ethernet over copper phenomenon. While it is nearly as cheap to deploy fiber in greenfield developments as it is to deploy copper, the cost to overbuild with fiber is still largely prohibitive, and there is simply too much copper already in the access network for the incumbent carries of the world to ignore.

It will be at least 20 more years before direct fiber to the home (FTTH) initiatives will become a mainstream means of residential connection to the local exchange. However, when that day finally comes, InStat/MDR contends that it will be Ethernet, not ATM, which will be the communication protocol binding the residential fiber subscriber access network together.

In-Stat/MDR is part of the Reed Electronics Group, a division of Reed Elsevier, a worldwide publisher and research provider.

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