Economics of Ethernet over SONET/SDH

Ethernet provides a simple, cost-effective solution for transporting enterprise data applications that is fast replacing traditional private line and Frame relay services. However, carrier-class Ethernet architecture is still evolving and transport vendors need a flexible architecture that provides a hedge against the timing and extent of migration to Ethernet. Ethernet-over-SONET provides a viable architecture that allows service providers to start offering Ethernet service without over-committing themselves while simultaneously protecting their embedded base. This paper presents an economic evaluation of Ethernet-over-SONET architecture based on a number of scenarios that serve as building blocks of service provider network transformation. We construct a business model that evaluates the various alternative strategies available to the service provider to address bandwidth demand growth and simultaneous migration from legacy to ethernet services.