Ethernet over First-Mile Copper (EFMC) – A Panacea for Broadband

Mukul Gupta
Senior Consultant
Infosys Technologies Ltd.

Navin Kumar
Senior Consultant
Infosys Technologies Ltd.

1. Executive Summary

In the recent past, the growth rate of broadband has been decelerating. Of late, the focus of the
players in the broadband market has mostly been on influencing the demand-side factors, while
the supply side has relatively been ignored. This singular focus has not been very fruitful, and it is
time to change tack and focus on the supply side as well. A breakthrough is needed on the supply
side for propelling the broadband market. The need of the hour is an access technology that is
cost-effective without compromising quality of service (QoS) and reliability.

Ethernet over first-mile copper (EFMC) fulfills the need optimally. Though still in its infancy, EFMC
is highly affordable and provides symmetric bandwidth. Concerns over QoS and reliability can be
effectively overcome by the use of multiprotocol label switching (MPLS).

For the success of EFMC, its deployment needs to be well managed—“a crawl, walk, and run”
approach is the most suitable one. A slow start with an emphasis on creating awareness and a
nurturing atmosphere, followed by targeting small-to-medium enterprises (SMEs—the prioritized
segment), and then finally going full throttle and covering the residential segment and effectively
managing the risks and challenges, is critical to the success of EFMC.

2. Propelling the Broadband Trajectory – Need of the Hour

Amidst the hype and hoopla surrounding the broadband industry, it is difficult to ignore the fact
that the going so far has not been very smooth—things have been moving in fits and starts. The
industry has been plagued with myriad issues—high cost, a plethora of access technologies
hindering consolidation, too many and different types of providers resulting in patchwork and
integration issues, lack of service-level agreements (SLAs) as the target segment is mostly
residential and SMEs, technology obstacles in the service layer and the operations and support
areas, etc. To add to the woes of the players in the broadband space, the growth rate in the
recent past has been decelerating at a rapid rate.

Different schools of thought attribute this deceleration to various factors—mostly on the demand
side of the equation, such as the lack of a killer application, unattractive price points, etc. The
supply side of the equation has been a path less trodden—the focus has at best been minimal.
The authors are of the opinion that the supply side could be the key for the take off and
commoditization of the broadband market as it impacts cost—the dominant issue retarding
industry growth

We are living in times of uncertainty—the dot-com crash, corporate governance scams, 9/11, the
current economic recession, war—which have created an environment where predictability of
outcomes has become a rare commodity. This has had a very adverse impact on the investment
climate around the world—both in the developed and developing economies. Investment in
technology has taken the most severe hit. Cost reduction and control is high on the agenda of
every CXO. In this context, the need of the hour for broadband to take off and become the
dominant access technology is a solution that is cheap without compromising on QoS and
reliability. The solution should be able to leverage the existing infrastructure to the extent possible
for maximum acceptance by the players in the broadband space.

3. EFMC – The Savior

3.1 Understanding EFMC – Carving Out Clear Boundaries
Ethernet is the dominant technology in the local-area network (LAN) and has been that way in the
last few decades. EFMC is the application of Ethernet technology outside the LAN but specifically
in the local loop over copper. It is important to have a clear understanding of the boundaries
within which EFMC operates and specifically things/areas that do not come under its purview—
this is essential to ensure that the area under focus is not diluted.

3.1.1 Advantage Ethernet

It may be worthwhile to take a quick look at where Ethernet is today and what it can offer in its
various transformations. This will give us a good handle on how Ethernet can be leveraged to
propel the broadband market.

Ethernet has established itself well in the enterprise space. With approximately 95% of all
enterprise traffic starting off and ending as Ethernet over more than 200 million Ethernet ports
worldwide, Ethernet is projected to have a 131% growth rate during the next three years.
In metro and backbone networks, Ethernet has already shown that greater growth potential
exists, as compared to other Layer-2 technologies (asynchronous transfer mode [ATM], frame
relay, etc.). With the recent rolling out of smart edge routers by Riverstone, Cisco Systems, etc.,
and with these companies putting their weight behind Ethernet in first mile, or EFM, Ethernet may
well become the main force behind network nirvana of the future—encompassing the residential
segment as well. The advantages of Ethernet can be leveraged for the subscriber access network
to achieve the long-cherished dream of broadband enabling each home to transform them into
information-rich hubs of multimedia activity.

3.1.2 Public Ethernet

Public Ethernet refers to an Ethernet-based seamless “global enterprise network nirvana” for
providing end-to-end network transmission of voice, data, and video in Ethernet format.

• For the service provider, this implies an economically viable solution set with uniform
network architecture/backbone performance, over-provisioning, granular bandwidth,
dynamic rerouting, etc., along with uniform customer information.
• For the end customer, this primarily brings a lower-cost-per-bandwidth broadband
service.
With the noose tightening over the cost of service-creation infrastructure and associated
technology investments, the current thought wave among some service-provider CXOs is to
figure out ways to cut costs by consolidating the myriad metro- and access-based services
infrastructure onto common Internet protocol (IP)–based next-generation network (NGN)
infrastructure. Gigabit Ethernet wide-area networks (WANs) have already become a reality that
enable traffic to move across ATM, frame relay, Ethernet, and IP virtual private network (VPN)
infrastructures compounded with flexible billing options across much-desired services such as
Ethernet-based TLS (transparent LAN services) and VPLS (virtual private LAN services).
And based on this success, the feasibility of a seamless public Ethernet (see Figure 1) is
becoming a sought-after realistic option by early movers to pick up a major tech advantage over
current market-share leaders.

Public Ethernet (see Figure 1) can be divided broadly into two parts:

• Metro Ethernet
• Ethernet in the first mile (EFM)
This paper ignores the metro Ethernet space and just focuses on EFM.

EFMF Branch Offices

Metro Network

SOHO

EFMP
Provide r CO
Backbone
Apartments

EFMC

Houses
Metro Ethernet Ethernet in First Mile

Public Ethernet
Focus of this paper

Figure 1: The Public Ethernet Nirvana

3.1.3 EFM
EFM extends the ubiquity and advantages of Ethernet to the local loop, which primarily consists
of the copper twisted pair with instances of fiber. The main objective of EFM is to help broadband
providers in overcoming the critical access bottleneck. By using a higher bandwidth capability and
the reduced provisioning cost of Ethernet, EFM can be potentially applied for delivering
economically viable bandwidth to the end customer at homes, apartment complexes, and
buildings, small offices/home offices (SOHOs), etc.

EFM has following variations for subscriber access network topology (refer Figure 1):

• EFMF: Point-to-point (P2P) EFM service over fiber

• EFMP or EPON: Point-to-multipoint (P2MP) EFM service over fiber
• EFMC: Point-to-point EFM service over copper or VDSL

The emerging standard for EFM is 802.3ah, being incorporated by a task force set up by the
Institute of Electrical and Electronic Engineers (IEEE). The 802.3ah standard addresses:

• Various Ethernet access network topologies for delivering broadband

o EFMF, EFMP, and EFMC

• Physical-layer specifications
o Copper, fiber

• Operations, administration, and maintenance (OA&M) support

 o Link monitoring
o Basic defect indication, remote failure indication
o Media access control (MAC) layer ping
o Remote loop back (failure Isolation, remote problem resolution)

3.1.4 EFMC
EFM over copper leverages the critical advantages of Ethernet (see Figure 2) over exiting copper
twisted pair as well as existing digital subscriber line (xDSL) layouts to provide the most
economically feasible network access solution set.

Low overall cost / Ubiquity Compatibility

High Profitability
ƒ WAN deployment & transport
cost upto 90% less than ATM &
SONET
ƒ Lower CPE, access charges
ƒ Increased service revenue per
access line (due to lower OPEX /
CAPEX)
ƒ More than 200 Million ethernet
ports worldwide
ƒ 95% of all enterprise traffic starts
off & ends as ethernet
ƒ “Ethernet in first mile” on the
cards
ƒ Supports multipoint services
natively
ƒ Inter-working with L2 tech enables
retention of existing FR / ATM while
adding new ethernet based services
ƒ No protocol conversion needed
ƒ Best fit for IP traffic

High Capacity / Bandwidth Improved Flexibility

ƒ More BW than other L2 Manageability ƒ Kbps granularity in service offerings

technologies
ƒ Can scale from 1Mbps to
10Gbps in seconds without
service disruption
ƒ Investment in human resources
is minimal – can be managed by
a routine LAN Manager
ƒ Expensive IT staff can focus on
core business applications
ƒ Seamless migration to new high
speed ethernet services
ƒ Allows over subscription
ƒ Provisioning is easy & immediate –
on demand
ƒ Asynchronous frame structure

Figure 2: Advantage Ethernet

Research is nearing completion on defining standards for the ability to run Ethernet over a single
pair of voice-grade copper at distances from 2000 ft. up to 18,000 ft.+ and speed from 10 Mbps
up to 52 Mbps or higher if possible. This is significantly higher than any other existing network
access technology and that too at the reduced cost achieved through Ethernet.

The standards being defined with respect to EFMC are as follows:

• The IEEE 802.3ah

• ANSI/ASC T1/E1.4
• ETSI

3.2 EFMC – The Value Proposition

EFMC provides compelling reasons for its acceptance as the access technology of choice.

DSL/ADSL has already evolved over a period of time (amidst the over protective policies of the
incumbents) to provide broadband over copper existing in local loops, but the much-sought-after
probabilistic economies of scale has failed to materialize, and as a result there has been no
substantial reduction in the price that would ensure mass uptake by residential segment. Each
DSL access multiplexer (DSLAM) can deliver service to only about 250 homes. Beyond that, the
service provider needs to install additional DSLAMS at the local telephone-switching office. This
means an increase in capital cost compounded with the charge for extra collocation space in the
switch office. And if the additional number of homes to be covered is just a few (five to 10), then
this additional cost may not be justified, and the additional homes may well have to live without
broadband until some new bandwidth-hungry homes/buildings/establishments pop up in their
vicinity.

Cable originated as a conduit for pay TV and expanded into delivering broadband services, but
providers are still grappling with the cost justification for laying cable to cover a seemingly large
population at a reasonable price. Also, the incremental cost to serve a cable customer may be as
high as $400, as compared to maybe $200 to $300 in the case of DSL.

With Ethernet, however, the capital cost is 50% to 70% less. This together with a minimal cost for
the customer premises equipment (CPE) creates a strong value proposition in commoditizing
broadband for rapid uptake in the residential segment. The incremental cost to serve an EFMC
customer would come down to 30% compared to xDSL and cable, and this cost benefit can be
passed on to the customer.

Regardless of their current competitive uptake across the globe, both asymmetric DSL (ADSL)
and cable have problematic issues in upstream capacity, making them fit only for passive
entertainment applications.

Cable running over a shared network doesn’t guarantee fixed speeds to individual homes.
Moreover, a large portion of cable’s capacity is plagued by television stations, which further
deteriorates broadband performance during peak TV hours. Compared to cable, ADSL may be
holding a stronger market position in the profitable SME market, but inability to provide symmetric
bandwidth creates a bottleneck to run any e-business operation. The only way to get a higher
upstream bandwidth is by sacrificing the existing downstream bandwidth, but then this may
adversely affect working in even a small office of around 15 to 30 people.

With Ethernet, symmetric bandwidth has never been an issue, and it can easily be scaled up to
new high-speed services, compounded with the ease of provisioning granular bandwidth. This will
provide the much-desired unhindered bandwidth requirements for upstream intensive applications
in the comfort of home (music swapping, home videoconferencing, photo sharing, etc.).

4. Proliferation of EFMC – The Journey Ahead

4.1 A Crawl, Walk, and Run Approach
Even though the value proposition of EFMC is compelling, it will be a pipe dream to expect that
EFMC will be the dominant access technology in the near future (12–18 months). EFMC is in its
infancy, and it is important that the right steps are taken in the right manner and at the
appropriate time for its takeoff. Like with any new product/technology, the proliferation of EFMC
will be dictated by a complex interplay of many factors, spanning the demand and supply side—
understanding these factors and having/managing the right expectations at all ends (markets,
service providers, research laboratories, etc.) will be crucial to the takeoff of EFMC.

Given the current state of the broadband market and the absence of an upbeat mood, a “crawl,
walk, and run” approach should be the best way to go for the effective proliferation of EFMC.

4.1.1 A Slow Start – Creating Awareness and a Nurturing Atmosphere

Today, Metro Ethernet is a reality, and the time is appropriate for the movement of Ethernet into
the first mile, mostly over fiber (more from a technology readiness perspective than anything
else). Initially, the focus should mostly be on EFM and very little on EFMC, and even here it
should not be very aggressive. Other variants of EFM leverage relatively recent existing
investments in infrastructure and attempt to convert cost elements to revenue elements—
something that most providers should be focusing on to enhance their profitability.1 Localized
pockets should be used that can be monitored and managed effectively. It is essential that these
initial thrusts be successful, as this will provide the necessary pull, which will prevent the early
demise of the core concept of EFM and help to create a nurturing and friendly climate for the
acceptance of EFMC at a later stage. Once there is acceptance of EFM as a concept, then the
stage is set for the spread and acceptance of EFMC. This period should not be very long—3 to 6
months.

4.1.2 Increasing the Pace – Target the Prioritized Segment

Once the environment is ready for the spread of EFMC, the most appropriate/prioritized segment
(see Figure 3) should be chosen for the initial thrust. This is important to do the following:

• Get the maximum bang for the buck

• Ensure that there are no major setbacks that can thwart/kill the progress of EFMC
• Create a favorable climate for mass deployment
• Generate revenues, part of which can be ploughed back for the development and mass
deployment of EFMC

This doesn’t mean that the other segments are totally neglected—service providers should
ensure that there is sufficient stirring in these segments during this stage to generate sufficient
demand for EFMC once the takeoff happens in the priority segment.

High

SMEs
Marginal Value

Residential

Low
Low High

Investm ent Attractiveness

Figure 3: Target the Prioritized Segment

A prioritization matrix based on marginal value (over existing technologies) and investment
attractiveness (low cost, high probability of return in lesser time) is used to arrive at the choice of
the priority segment.

The SME segment has high investment attractiveness and high marginal value and is hence the
most attractive.

1
For a detailed understanding, please refer to "Increasing Network Profitability: A Model for Bridging the
Revenue Cost Divide" to be published in the International Engineering Consortium’s OSS 2003
Comprehensive Report
 • The key factor resulting in high marginal value for the SME segment:
o Increased symmetric bandwidth is needed more for the business segment than the
residential segment

• The SME segment scores high on the investment attractiveness parameter:

o Point-to-point rather than broadcast mode: Deployment will happen to well-
demarcated establishments and on a need basis rather than fanning out in an area
and then attracting customers (which will typically happen for the residential
segment). This approach requires less investment and also has a high return on
investment (ROI) potential, as the demand is mostly deterministic.
o As compared to the residential segment the SME segment has deeper pockets and
will be willing to invest if there is a compelling business case.
o As compared to the residential segment, the SME segment has a higher risk
appetite.

During this phase, maximum effort should be spent in wooing and delivering the promise to the
SME segment. Success of this phase is crucial to the takeoff of the next stage and hence for the
overall proliferation of EFMC:

• Successful case studies can help propel the undecided prospects, both business and
residential.
• The revenues generated can be ploughed back by service providers toward the growth
and sustenance of EFMC in expectation of greater profits in the future.
• Time available for technology maturity will help to fine tune the service offering before
entering the next stage of mass deployment. This will make it easier to attract and retain
customers, resulting in lower customer-acquisition cost

4.1.3 Going Full Throttle – Toward a Mass Market

During this phase, apart from the SME segment, service providers will actively target the
residential segment.

Service providers should account for the behavioral differences of the residential segments in
developed and developing economies, mostly because of the differential spending power that is
higher in the developed economies. Hence, proliferation in developed countries will be easier.

Spread of EFMC in developing economies may get stymied without active support and
intervention by the governments of these economies:

• Sops and subsidies – Even though the per-unit cost is low as compared to other
broadband access technologies, the overall investment required to achieve critical mass
and beyond is huge because of very high volumes. No service provider will be able to
manage the funds required to achieve this all by itself.
• Aids e-government – The investment in EFMC will be easy to justify by governments, as
it will help facilitate the advancement of e-government. EFMC will provide seamless and
hassle-free connectivity that is fast and comes at an affordable price. This will serve as
an effective vehicle for the propagation of e-government, facilitating the three main areas
of e-government: inform, interact, and transact.

However, this does not imply that the spread of EFMC in developed economies can be effective
without government support—but the fact is that the need for EFMC is greater in developing
economies.

5. Risks and Challenges

Commercialization and spread of EFMC will not be without the usual share of issues, threats,
problems, challenges, and risks—awareness of these and proactive management of the same
toward achieving the end goal of EFMC (propelling the broadband market) will be essential for
the success of EFMC.

Some of the key challenges and risks that need to effectively managed for a commercial launch
are subsequently discussed:

• Availability of Technology
There are some technology issues in EFMC (attenuation, background noise, etc.), but the
associated research bodies are positive that the aforementioned issues are mere
teething problems and that it is just a question of time before they are
eliminated/managed. However, this needs to be tracked, and deployment should start
only when there is enough confidence to go ahead—to minimize customer dissatisfaction
resulting in bad word of mouth, which can negatively impact the proliferation of EFMC

• QoS
Ethernet switches need significantly better QoS for providing differentiated services to the
end customer. This is where MPLS can be leveraged. MPLS has already shown its merit
in metro Ethernet networks to provide traffic with rich quantitative QoS capabilities along
with different qualitative class of service (packet classification, congestion avoidance,
congestion management).
• Resiliency
The link breakdown and slow recovery mechanisms associated with Ethernet are already
being resolved through IEEE 802.17 (RPR), IEEE 802.w (RSTP), and IEEE 802.ad (Link
Agg.). MPLS should also be leveraged to provide increase in reliability (fast recovery, fast
re-routing)

• Integration Issues
o with MAN and the core
o With DSL, T1/T3, etc.

• OA&M
OA&M is often neglected and most of the times happens post facto rather than
proactively. Along with the technology issues OA&M areas are also under focus through
the IEEE:
o Link Monitoring
o Basic Defect Indication
o Remote failure indication
o MAC Layer Ping
o Remote lLoopback (failure Isolation, remote problem resolution)