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While they're pushing Sonet and ATM services, the Bells and other local exchange carriers are waiting to make their move into the metro Ethernet market, a segment in the midst of serious changes, as evidenced by the reorganization of Yipes under Chapter 11 bankruptcy protection. This isn't particularly surprising: Most telecom innovations have started out with small players, then grown up and been promoted by the larger ones.

Just look at DSL: Thousands of providers began offering DSL within their local reach; some providers even expanded nationwide. But most of them failed because they didn't have the financial resources to reach enough customers to turn a profit. Even the larger DSL-only providers failed because they overbuilt their networks, but they still couldn't attract enough customers to reach critical mass.

Meantime, the deep-pocketed Bells and established LECs moved in with their DSL offerings and now provide the most service. You can expect the metro Ethernet market to take a similar path. Already, Bells like SBC are starting to offer metro Ethernet services to their customers.

While SBC, with operations in 13 states, is the largest and can cover the most territory, the company can't offer its services nationwide without partnering with other carriers, whereas companies like Yipes can. Still, while Yipes and its competitors have more experience in providing Ethernet directly to customers than the major carriers do, choosing a metro provider will take some searching and a leap of faith. If the provider you choose doesn't last, getting your service changed to another's may not be easy. If you're lucky, the failed provider's network will be bought out and your service will continue uninterrupted. If not, your network could be down for weeks while your new provider gets service connected.

Making the Choice

So how should you choose? Your location will be the prime determinant. Metro providers typically deploy their services into the downtown or business district of large cities, and then only in buildings with 20 or more tenants. Your chance of being in such a building is slim: Fewer than 10 percent of business locations within the United States have direct access to fiber, according to Gartner, and less than 5 percent have access to a competitive offering. If your building isn't connected to a fiber loop, the cost of linking up can run you more than $100,000, even if the connecting fiber is close by.

This is significant because Ethernet is deployed to buildings in the form of fiber connections. Tenants are all connected to fiber via Category 5 cabling to each of their offices within the building. Those Cat 5 cables are aggregated and placed onto a local OC-48 Sonet loop. With OC-48's 2.5-Gbps capacity, more than 20 tenants could have 100 Mbps of service at one time. Considering that not everyone needs that much bandwidth, especially not at the same time as others, a 2.5-Gbps pipe can easily satisfy large buildings with 100 or more tenants.

The Bells and LECs usually service smaller geographic areas. Meanwhile, the metro Ethernet providers can connect selected buildings in cities across the country. New players in an industry, however, often are saddled with financial difficulties. Although it has been a leader in the metro Ethernet market, for example, Yipes looks as though it will be the first casualty. Having built out its network early, when leased fiber prices were higher than they are now, the company is having a hard time competing.

Choosing between metro Ethernet providers and tried-and-true carriers will depend largely on your location, needs and level of risk aversion. Ethernet is a sexy choice, but you may find the security of the carrier networks worth the added expense of the service. See our RFI results and analysis on page 44 for a head-to-head comparison of offerings from Cogent Communications and Genuity.