Carrier Ethernet Services in a Highly Competitive Market - Japan
As a class of service, Carrier Ethernet is enjoying robust growth in the US market. Designed to augment or replace existing private line (PL) or ATM services, Carrier Ethernet from ring-based Ethernet-over-SONET to point-to-point Ethernet-over-Fiber services allow financial service firms, hospitals, higher educational institutions, the public sector and manufacturers to expand their communications capabilities to support business needs.
Where the US is relatively new to adopting Carrier Ethernet, enterprise customers in Japan appear to be savvy users, to the point where competition has created very attractive price points. A leading Japanese carrier pointed out to me that their customer base is satisfied to use Layer 3 based Ethernet services provided service level agreements in the backbone are available. The upshot, a 100 Mbps service within the general metropolitan area of Tokyo have dropped to roughly $300/month for a 100 Mbps service per end or $600/month per connection - $6/Mbps/month. Putting this in context, in the US market, a DS3 service is $2000/month for a connection - $44/Mbps/month. Even the lowest priced Ethernet service on a per Mbps basis costs $6/Mbps/month for a 1 Gbps wavelength service within a city area.