China to lead metro Ethernet adoption

Users are looking to metro Ethernet as a high speed alternative to ADSL (Asymmetric Digital Subscriber Line) or cable modem, according to a Fiber access in Asia-Pacific study by IDC Asia-Pacific.

Based on fiber-optic networks, metro Ethernet offers LAN-type connectivity to urban areas. It scales from 2Mbps up to 1Gbps in bandwidth and is more affordable than traditional broadband services such as ADSL.

IDC's study revealed that the number of metro Ethernet subscribers in the region (excluding Japan) is expected to grow from last year's 280,000 to 9.3 million in 2006. "This represents a compound annual growth rate (CAGR) of 110 percent," the market research firm said in a statement.

In 2001, subscribers across the region contributed US$395 million to the metro Ethernet market and this is expected to reach US$19 billion in four years.

Renee Gamble, IDC Communications Research market analyst, singled out China, Hong Kong, Korea and Taiwan as the markets to watch.

But unless you're a charitable organization, set your sights on Korea. "Although China will dominate the subscriber market, Korea is where revenues will be strongest," the Beijing-based analyst said.

In China, metro Ethernet services to residential areas start from US$13 per month for 2Mbps as opposed to US$18 for ADSL, while companies pay US$140 a month, US$15 cheaper than the ADSL equivalent, Gamble said.

She explained that the high density in Chinese cities will boost the uptake of metro Ethernet services as, unlike other countries, there is vast deployment of this technology to home users. "Critical mass will be found in the residential market where competitive pricing against ADSL services will position the market for tremendous growth."

According to government statistics, China has more than 1.26 billion people and its 668 cities are home to around 380 million residents.

Meanwhile, Korea is poised to do well in terms of revenue for metro Ethernet service providers as the technology has been pitched as a leased line alternative to enterprises, she said.

Hong Kong and Taiwan are two other countries to watch, Gamble said. "The service is getting a big push in the SAR, while Taiwan will see the commercial launch of metro Ethernet offerings this year," she added.

Singapore, Malaysia lagging
Service providers in Singapore--the island-state with a population of nearly 4 million people and 50 percent Internet penetration rate--are not expected to extend the benefits of metro Ethernet to home users, Gamble said.

"Singapore has all the ingredients...so metro Ethernet services to the masses should be affordable. Unfortunately, service providers are interested only in pushing this service to the corporate market," she told CNETAsia in a telephone interview.

A case in point is Singapore Telecommunications (SingTel), the Republic's leading telecoms provider. "The demand for metro Ethernet will be driven by the demand for high speed Internet, disaster recovery, and IP VPN services. (Thus) metro Ethernet will be more suited for corporate customers as the traffic pattern is symmetric and there is a need to scale to very high bandwidths," said Chan Yim Leng, SingTel senior director (Domestic Data Services).

SingTel started metro Ethernet deployment last June under its Meg@POP suite of IP solutions.

Gamble said that for now, due to the intense competition in Singapore, it isn't wise to offer "deluxe broadband" services to the residential market. But this landscape is expected to change by 2006.

Across the causeway, Malaysia, with over a million users connected to the Internet, has not displayed any interest in developing a metro Ethernet market, Gamble said.

"Malaysia likes to see technology which is tried and tested before launch," she added.

However, despite the high costs related to laying fiber-optic networks, Gamble observed that in China, Hong Kong, Korea and Taiwan, the determination of governments and service providers in these markets to drive the deployment of next-generation networks is resulting in a concerted push for metro Ethernet broadband access services.