The evolution of the Ethernet Exchange business continues, as we are seeing each of the early participants taking the idea in their own unique directions. Today it was CENX’s turn, as they unveiled the expansion of their wireless backhaul offering, as well as a major customer in LightSquared for whom they will be helping the buildout of that 4G LTE network that is planned to start later this year. For CENX, this means taking more of an active role in connecting its customers to each other than being the passive operator of an exchange fabric that we might have envisioned a few quarters ago.
CENX is leveraging the power of the Ethernet Exchange to simplify the aggregation process. Often when it comes to backhaul, wireless providers must choose between going with a few providers for simplicity of operation but at a higher average price, or lots of backhaul providers with lower network costs but with greater complexity to manage. CENX’s plan is to take the management of that complexity onto their shoulders, thus enabling wireless providers to take advantage of the plethora of potential backhaul partners without having to manage the details of interconnection with each individually.
What that could do, if successful, is begin to break the stranglehold on backhaul the largest providers have – and which they use to require a minimum spend with them. Smaller fiber operators could enter the market with a lower density of fiber to the tower than in the past, while wireless operators might be able to cut costs – helping them to manage the wave of mobile data they are all worried about. We shall have to see if other wireless operators than LightSquared find this useful. CENX is obviously betting on this as a driver for the growth of the Exchange business, as the number of connections needed by wireless operators would be a faster way to ramp the business than one enterprise connection at a time. This year has seen the Exchange business struggle a bit to catch up with the hype when it comes to scale, but that was always the question.
It’s an interesting move, and a very different take on the future than we are seeing from other entries into the Ethernet exchange business. While LightSquared may be the new, tiny kid on the wireless business next to AT&T, Verizon, and Sprint, the revenues CENX could gain from this arrangement could be very substantial given their own startup status. That is, assuming LightSquared does in fact manage to get started on this build of theirs – it’s been quite a soap opera so far this year.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!Categories: Ethernet · Wireless