Adding any-to-any capability for its metro ethernet services is an eminently logical move for AboveNet, because as trading venues proliferate, the need for low-latency links to algorithm servers at multiple sites around a city tends to increase. In London, for example, the London Stock Exchange is now competing for trade with Chi-X and Turquoise, with more to follow.
AboveNet currently provides three levels of metro services: dark fiber; WDM (optical wavelengths); and point-to-point ethernet, with speeds ranging from 100Mbps to 10Gbps. It also offers WAN services on a longhaul fiber network, connecting all of its US locations.
Its financial services customers include the trading floors of major banks, as well as the data centers of these institutions, which use its network for synchronous and asynchronous replication. AboveNet also services some of the best known names in internet search and social networking sites, but it is clear that the financial sector, with its bandwidth-hungry replication applications and, in the high-frequency trading arena, its low-latency requirements, is a prime target market for the company.
Interestingly, its competition varies somewhat by product line: AT&T and Verizon are the company's key rivals in private metro ethernet, WAN services and WDM, whereas in dark fiber services, its main competitors are Level 3, XO, or utility companies. This raises the question of whether the other players in metro ethernet are also offering, or plan to offer, any-to-any connectivity. It is certainly likely, since ethernet is very much the coming thing in terms of transport, as it represents a cost saving by being able to invest in switches instead of routers.
The ability to go beyond point-to-point connections with ethernet should provide a further competitive edge for AboveNet, even though its competitors can be expected to offer the same capability at some point. Nonetheless, AboveNet should be able to leverage its more focused approach to selling high-bandwidth connectivity, and there will be numerous opportunities to upsell its metro ethernet services to its existing customers.
It will also be interesting to see which vendor AboveNet selects to enable the any-to-any ethernet capability. It says it has looked at technology from Cisco, Nortel, Juniper and Infinera, and expects to make a decision shortly.