COLT in ambitious Ethernet talks with Hibernia Atlantic

11 Nov 2004

LONDON – COLT yesterday unveiled an ambitious Ethernet service that will give businesses across Europe 1Gbps LAN-to-LAN connectivity linking 32 major cities. In what will be seen as a major development for US multinationals located in Ireland the company’s local operations are in talks with fibre carrier Hibernian Atlantic to connect the service to Boston using its transatlantic fibre network.

COLT’s move to Ethernet VPN (virtual private network) services is expected to cannibalise the existing business of leased line, IP VPN and MPLS services by boosting coverage from 100Mb per second to 1Gb per second for a 20-30pc lower cost.

With its ability to facilitate bandwidth upgrades in days rather than weeks, Ethernet is able to link office networks and related data centre facilities together simply and seamlessly in a virtual local area network (LAN) environment – liberating businesses from geographical constraints and providing affordable broadband on-demand to support their growing business.

Neil Rickard, research vice president at Gartner said that Ethernet business services in Western Europe are forecast to grow 48pc CAGR (compound annual growth rate) year on year by 48pc to become a €2bn a year business in 2008. “We are already seeing a modest decline in leased line bandwidth services of some 10pc,” he said.

Rickard added that the growing importance of regulatory requirements like Basel II and Sarbanes Oxley are pushing businesses to geographically separate their data storage and disaster recovery systems, driving demand for affordable and simplistic LAN-to-LAN services. “98pc of all data traffic is Ethernet. Therefore it makes sense that the interface businesses use to exchange data is an Ethernet format, rather than the array of technologies in use today.”

Jean-Yves Charlier, the newly appointed CEO of COLT Telecom, in describing the growing relevance of Ethernet to business said: “We are seeing customers push out the boundaries of the local area network and want to connect the LAN to anywhere in the world. Instead of trying to link to another office at 3 to 4Mb speeds over conventional data transmission, they want to communicate with another office at the exact same speeds they are used to internally. Ethernet VPN is 20pc more cost effective than traditional legacy networks. We believe the technology will be of particular relevance to CIOs who are looking at on-demand storage and disaster recovery services or who are interested in interconnecting their various offices around the world on a campus basis.”

COLT’s Irish operations, which employ 30 people in East Point Business Park in Dublin, is expecting to report revenues of €12m this year. The managing director of COLT’s Irish operations, Gary Keogh, told in London yesterday that the company is planning to look at providing blue chip Irish companies as well as large multinationals with the opportunity to connect via Ethernet VPN with the States.

“We are in talks with Hibernia Atlantic to connect this network with their trans-Atlantic fibre network into Boston and a number of our multinational customers are interested in pursuing this option,” Keogh said.

Hibernia Atlantic evolved out of the 12,200km trans-Atlantic fibre optic cable, which was at a cost of US$900m (€821.9m) by Canadian firm 360networks. The cable was bought last year by Columbia Ventures Corporation, following 360network’s filing for Chapter 11 bankruptcy protection in the US.
The final cost to it of the network asset was just US$18m, a fraction of the installation cost of the transatlantic cable, due to the massive slump in the telecoms market since mid-2000. The sector’s downturn has forced many new generation telecoms carriers that emerged in the 1990s to file for bankruptcy.

Hibernia Atlantic’s cable has immediate capacity of up to 160Gb per second on each of its two separate fibre optic cables. This is equivalent to handling 2.5m simultaneous phone calls while also delivering 13,000 movies. In addition, it can be upgraded to handle a protected capacity of 1.9 terabits per second, or more than 10 times current capacity.

By John Kennedy