Pricing the Service
For the incumbents, pricing the metro Ethernet services is an extremely challenging exercise. Incumbents that are selling T1 and DS3 connectivity services would be competing with themselves by offering Ethernet services. A very aggressive Ethernet pricing model would jeopardize the sales of T1 and DS3 lines and disrupt the incumbent's business model.
For incumbents selling T1/E1 and DS3 services, their Ethernet pricing model has to do the following to succeed:
• Move hand in hand with existing pricing for legacy services to avoid undercutting the legacy semces.
• Offer different levels of services with different price points, in addition to the basic conne ctivity service. Metro Ethernet services present a good value proposition for both the cuseomer and carrier. The customer can enjoy enhanced data services at higher performance levels, and the carrier can benefit from selling servi ces that it otherwise wouldn't have been able to sell with a simple TDM connection. So the carrier can actually sell the Ethernet connection at a lower price than the legacy connection, based on the hope that the additional services will eventually result in a more profitable service than the legacy eerviceSl
Continue reading here: Figure 21 Ethernet over SONET
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