The Way Forward With Carrier-Class Ethernet Across the Enterprise; Latest RHK Study Confirms New Application and Cost Saving Expectations

Business Wire, March 9, 2005

HANNOVER, Germany -- A new study announced today by analysts RHK Inc. on behalf of the Metro Ethernet Forum (MEF) confirmed that end users continue to demand ever greater bandwidths across the WAN and are prepared to spend more on WAN services so long as they can reduce overall IT costs. Meanwhile Carrier Ethernet is meeting this demand, it is enabling new enterprise-wide applications - and users cannot get enough of it. These are just some of the conclusions that can be drawn from RHK's new study.

"We interviewed fifty-five organizations across Europe and North America from a variety of industry verticals and found widespread interest and deployment of Ethernet services across these enterprises" according to RHK Senior Analyst Brian Van Steen. "The scalability and flexibility of Ethernet is well suited to meeting the growing bandwidth demand and, given its far-reaching knowledge base among IT professionals, Ethernet is seen as a simpler, more cost-effective way to link internal departments as well as connecting to external customers and suppliers."

The fifty-five organizations selected all had more than two hundred employees across ten or more dispersed locations, and were from industry verticals most likely to need high bandwidth. The sectors addressed were consumer, financial, health, manufacturing, public, professional and technology. Forty were from North America and fifteen from Europe. Forty-four of them already used Ethernet services, three were evaluating them and only eight were not considering the technology for various reasons, including a lack of availability in five cases.

The strongest response concerned bandwidth requirements: with 98% identifying increased bandwidth as a factor or higher, and 36% accepting it as a "critical factor" in their preference for Ethernet. Second came the need to lower overall IT costs - a factor or higher for 91% - so much so that 93% of the sample were willing to increase WAN services spend in order to lower overall IT spend. The other main finding was that 82% rated new enterprise-wide applications as a factor or higher - VoIP being singled out as one important example, while new or upgraded ERP (enterprise resource planning), SCM (supply chain management) and collaborative applications were also cited. Many were also using Ethernet links to set up remote disaster recovery systems. Other areas of future interest were grid or on-demand computer systems and the adoption of Ethernet services to force a higher level of customer care.

"This study has also highlighted important messages for the service providers in terms of their pricing structures" adds Brian Van Steen. "The demand is there but not all our participants were able to get the services they wanted. Carrier-class Ethernet does reduce service provider capital and operating costs, and customers expect to pay less as a consequence. On the other hand, it also has the flexibility to deliver increasing levels of service guarantees, and we find that users are prepared to increase their spending for their WAN services as long as overall IT spend is kept in check."

A 39-page Special Report of the findings has been prepared by RHK, and a brief summary of the main findings are available for members of the press at www.zonicgroup.com/press_resources/mef. For further information contact Gary Southwell, Co-Chair, MEF Economic Committee, Gary@MetroEthernetForum.net or Brian Van Steen, Senior Analyst at RHK, Brian_VanSteen@RHK.com

About The Metro Ethernet Forum:

The Metro Ethernet Forum is a non-profit organization created to accelerate the adoption of Ethernet in metro networks worldwide, the Metro Ethernet Forum consists of more than sixty five member companies representing a range of leading Ethernet service providers, major incumbent local exchange carriers, top network equipment vendors and other prominent networking companies. For more information about the Forum, including a complete listing of all current MEF members, please visit the MEF web site at www.MetroEthernetForum.org