Carrier-grade Ethernet is a critical piece of today’s enterprise WAN, and carriers continue to expand their network footprints and make higher capacities available.
TeleGeography’s latest Bandwidth Price Report—drawn from our Network Pricing Database—takes a deep dive into Ethernet’s place in the WAN and analyzes recent pricing trends across geographies and capacities, focusing on Ethernet over MPLS (EoMPLS) and Ethernet over DWDM (EoDWDM).
With more than one option for higher capacity services, how do you choose what’s best for your WAN?
There is a lot to consider as the market and the connectivity landscape change, but the basics of these services remain the same. DWDM is an unprotected path, while EoMPLS is considered a pseudowire, with a mesh that offers redundancy that can easily reroute traffic in case of an outage.
Redundancy and diversity are two words that we hear over and over. So, what’s all the fuss? For more on this topic, don’t miss next week’s Capacity Europe panel discussion, “Submarine cable routes: why diversify?” featuring my colleague Rob Schult.
Until then, keep reading to sample our analysis.
The Market for 10 GigE
It’s normal to automatically think of wavelengths once 10 Gbps is required. As MPLS core backbones have increased in scale, more carriers are offering high-capacity services.
The most common use case for 10 GigE EoMPLS is connectivity between data centers, and it can also be beneficial between a data center and a disaster recovery center. When deciding between EoDWDM and EoMPLS for 10 GigE, there are crucial factors to consider beyond price.
When deciding between EoDWDM and EoMPLS for 10 GigE, there are crucial factors to consider beyond price.
DWDM connections are provided over optical wavelengths with Ethernet interfaces into the customer switch or router. It’s important to note that in order to utilize Ethernet over DWDM, there has to be this translation between a local loop to a DWDM, so you can have an Ethernet handoff.
When a customer chooses two diverse DWDM paths for protection—as opposed to EoMPLS—they also have to manage the failover, or the ability to switch automatically and seamlessly to a reliable backup system. Ultimately, this perspective can help explain why unmanaged waves can be offered at higher capacities for lower prices, and why a managed and protected EoMPLS service often commands a premium.
Now, if the added protection is not a priority, it’s possible to run a single wavelength with Ethernet between data centers. In the below figure, we can see how unprotected DWDM and EoMPLS prices compare at the 10 Gbps level across major international routes.
Median 10 Gbps DWDM and 10 GigE EoMPLS Monthly Prices on Key Global Routes
Notes: Each dark blue column represents the weighted median monthly lease price for an unprotected 10 Gbps wavelength on the listed route, and each turquoise column represents the median monthly lease price for 10 GigE EoMPLS. Prices are in USD and exclude local access and installation fees. Data as of Q2 2024. 10 Gigabit Ethernet (10 GigE) = 10,000 Mbps. Source: © 2024 TeleGeography
Across all seven routes, EoMPLS commands a premium over DWDM, ranging from 19% on London-New York to 64% on Hong Kong-Singapore. Note that this figure represents our medians, and not all reporting carriers offer both services on each route.
When comparing pricing from carriers who offered both services on these routes, EoMPLS came at a premium compared to unprotected EoDWDM in most instances, although there were examples to the contrary. For some carriers, EoMPLS prices were as high as 5.4x the price of DWDM on Marseille-Singapore, and 3.6x the price of DWDM on Los Angeles-Tokyo. Examples of carrier discounts for EoMPLS were greatest on London-New York at 48%, and Los Angeles-New York at 30%.
Comparing an unprotected DWDM to EoMPLS is a little bit like comparing apples to oranges. For DWDM to have similar redundancy and quality of service as EoMPLS, it would require two separate wavelengths with diverse routing, in case of an outage. And that makes the average premium of 43% for EoMPLS across these routes quite reasonable for customers requiring SLAs. When we multiply these DWDM medians by 1.6 for redundancy, EoMPLS is more cost-effective on all routes except Hong Kong-Singapore at $4,142.
Higher capacity EoMPLS pricing schemes are varied and still coming to fruition, but a few trends have emerged.
To learn more about these trends across Ethernet capacities, pricing suite customers can log into their TeleGeography account to read the full Bandwidth Price Report.
Stacey Parker
Stacey Parker is a Research Analyst at TeleGeography. Her research is focused on connectivity services and pricing in the European markets.