WHITE PAPER Cisco Long-Reach Ethernet Technology Long-Reach Ethernet: Delivering The market opportunity in Europe and Asia is just Cost-Effective Broadband to as substantial. Currently, high-bandwidth Internet Multiunit Buildings access is negligible for most users outside North In the highly competitive world of America. However, that situation is about to telecommunications, service providers constantly change. In Europe alone, total households with seek new market niches that will yield robust broadband access will skyrocket in the coming revenue and profits. In this spirit, service years. In fact, residential broadband access in providers are preparing to meet an emerging, Europe is expected to jump from about 1 percent highly lucrative market opportunity focused on household penetration in 2000 to 11 percent by providing cost-effective, high-bandwidth service 2004. “There is a US$23 billion-plus local to multiunit (MxU) buildings, such as hotels, broadband opportunity [in Europe] in the next residential, and commercial buildings. few years,” according to NorthPoint Communications. In the United States, the broadband market for multiunit buildings is vast. Among all multiunit Why is the MxU building market for broadband buildings, the U.S. market for high-speed Internet about to take off? Because hotel guests, office access is expected to jump from $371 million in workers, and apartment dwellers require faster 2000 to $2 billion in 2004. In the U.S. hospitality and faster connections to drive increasingly industry alone, the broadband market will complex Internet-based applications. Typically, explode from $137 million in 2000 to $674 these applications devour bandwidth as they million in 2004, according to Cahners In-Stat feature sophisticated video, graphics, and audio. Group.1 And the Gartner Group reports that Meanwhile, many service providers see an residential high-speed access penetration “will excellent opportunity to serve a largely captive jump from 5.9 percent of total U.S. households in audience of millions of potential customers by 2000 to more than 26.7 percent in 2004.”2 providing broadband connectivity to individual Inevitably, multidwelling units (apartment buildings. buildings, condominiums, and dormitories) will grab a large portion of that market. 1. “The Wired Room: Hotel Broadband Preference Analysis,” Cahners In-Stat Group, June 2000, p. 1. 2. “The Residential Broadband Revolution: Finally,” Gartner Group, August 2000, p. 17. Cisco Systems Copyright © 2001 Cisco Systems, Inc. All Rights Reserved. Page 1 of 8 Before initiating service, though, service providers face a • Cable lines—Cable is simply not a top technology critical choice that will determine their success in this choice among building owners and integrators for the booming market. They must decide how best to provision provision of broadband. Because it is a shared medium, service. Certainly, many options exist. But, increasingly, cable is regarded suspiciously among customers who service providers are turning to the new innovative Cisco require top-notch security and a dedicated amount of technology called Long-Reach Ethernet (LRE). broadband. Thus, building local exchange carriers (BLECs) have shied away from proposing building-wide LRE extends Ethernet over single-pair wiring at distances solutions based on cable. of up to 5,000 feet. The result is a cost-effective, highly • Home Phoneline Networking Alliance (HPNA)— HPNA available, and rapidly deployable means to provide needed technology combines IP and DSL technology to yield a bandwidth to multiunit buildings. competitively priced broadband solution. The HPNA 1.0 Broadband Options specification provides a data rate of 1 Mbps. The The market opportunity exists because most buildings are HPNA 2.0 specification is somewhat more robust. This not wired with Category 5 cable, high-grade wiring that technology, though, is best suited for the single-residence allows native Ethernet connections throughout a building. home. Scalability and performance limitations make it an In fact, nearly all buildings constructed before 1985 (as unattractive choice for multiunit buildings. well as many after this date) are almost guaranteed not to • EtherLoop—A new technology, EtherLoop combines be appropriately wired for Ethernet. In the absence of Ethernet packet delivery, burst technology, and either Category 5 cable, service providers are faced with a ADSL or high-data-rate DSL (HDSL) to provide handful of inadequate choices to provision buildings with relatively high bandwidth to home users. Although high-speed service. These include: EtherLoop overcomes some of the shortcomings of • Asymmetric digital subscriber line (ADSL)—A widely a straight ADSL deployment, it still suffers from deployed broadband technology developed for the significant speed and scalability limitations, restricting commodity market, ADSL supports distances up to 6 its appeal to the multiunit building market. kilometers (20,000 feet) and offers as much as 8 Mbps As can be seen, none of these solutions adequately meets in the downstream direction and 1 Mbps in the the needs of service providers to deliver on this market upstream direction. Typical deployments, though, opportunity. All suffer from a variety of shortcomings provide 1 to 2 Mbps downstream. On the downside, that limit their usefulness for the multiunit building ADSL is very complex, somewhat expensive to install, market. Most significantly, none of these technologies and it consumes a great deal of power (about 5 watts per delivers the three vital components—speed, scalability, line), particularly with in-building installations. and cost-effectiveness—that will enable the next • Symmetric digital subscriber line (SDSL)—SDSL generation of broadband services to users. And, without overcomes some of the shortcomings of ADSL. For new high-bandwidth service offerings, service providers instance, its performance is more scalable, providing ultimately will gain little new revenue from offering anywhere from ISDN to T1 speeds. It also consumes far broadband. less power. However, SDSL can be difficult to deploy, and it suffers from similar cost restrictions. In fact, both ADSL- and SDSL-based options can cost up to five times that of Long-Reach Ethernet. Cisco Systems Copyright © 2001 Cisco Systems, Inc. All Rights Reserved. Page 2 of 8 Long-Reach Ethernet: A Superior Solution • Robust capabilities—LRE allows the real-time, LRE significantly broadens the applications for Ethernet simultaneous transmission of data, voice, and video for technology. LRE technology encapsulates Ethernet integrated applications such as IP telephony, video packets for robust, high-frequency transmission over streaming, or multicasting. Thus, it enables the services telephone wiring, and extends the distance reach from sought most today by users who want a high-bandwidth 100 meters for traditional Ethernet over copper to up to solution. Moreover, LRE can provide an additional 5,000 feet (1,524 meters). This creates valuable revenue stream for hotels, apartments, and office opportunities for service providers to deliver high-speed buildings—and well as service providers—that offer access based on cost-effective, robust Ethernet technology. these value-added services to users. Ethernet is a standards-based, highly regarded With LRE, service providers can serve the burgeoning networking topology with 750 million ports shipped over multiunit building market confidently and cost-effectively, the past two decades. With LRE, Ethernet is now delivering impressive price/performance for established expanding from being the predominant corporate LAN and emerging high-bandwidth applications. access technology to being a universal access technology. LRE enables the high-bandwidth services that users want The Multiunit Building Marketplace over existing telephone wiring, which in turn saves The LRE solution has special appeal for the hospitality significant service provider time and expense. LRE also industry, multidwelling unit, and multitenant unit opens up new service possibilities that were once not buildings: possible using older xDSL technologies. Long-Reach The Hospitality Industry Ethernet features include: Hotels, hospitals, convention centers, and even airports • Low cost—Ethernet is generally recognized as the most already offer a broad variety of business and entertainment cost-effective networking technology available. Not services to their guests. In fact, many of these buildings only is an Ethernet-based switching platform relatively today generate substantial revenue from such value-added inexpensive, particularly when compared to an services. With broadband connectivity, these services will asynchronous transfer mode (ATM) switching fabric, increase dramatically in number and variety, becoming but LRE technology enables Ethernet to also run even more valuable to guests and more lucrative to the over existing, unconditioned telephone-grade wire that provider. And the market opportunity is vast. Currently, is already widely deployed. In addition, LRE there are about 51,000 hotels in the United States with 39 transmissions are able to coexist with Plain Old million rooms. According to Jupiter Communications, Telephone Service (POTS), advanced Private Branch only 15 percent of these rooms will feature high-speed Exchange (PBX), or ISDN signaling services over the access by the end of 2000. However, Jupiter says that by same pair of ordinary copper wires, and can be 2002, hotels will extend broadband to 50