Ode to Ethernet: 40yr-old technology still rocking it

• Robert Metcalf’s original Ethernet concept has evolved; no denying it has changed our lives completely
• Despite being the reigning king of connectivity for 40yrs, Ethernet not expected to step down anytime soon

REWIND your life by a few years and think back to how you stored your data; you’ll probably see yourself coming out of a cybercafé with a floppy disc or at best, a CD.
 
Juxtapose this to today’s scenario where you are digitally available anywhere, anytime. All this has been possible thanks to the cables, links and protocols networks which reach our homes, around the globe.
 
Ethernet has become the most dominant of these networking protocols, providing the underlying high speed backbone connections that power the Internet. Over the past four decades, it has brought a paradigm shift in the way we communicate and has in turn impacted the global economy profoundly.
 
And, recently, we’ve witnessed huge demand for low latency Ethernet from financial firms that rely on highest speeds and availability.
 
Powering our digital lives
 
Robert Metcalf’s sketch of the original Ethernet concept in an internal memo in 1973 may not receive the fanfare of a Benjamin Franklin kite, or an Isaac Newton apple, but there is no denying that Ethernet has changed our lives completely.
 
What started as a simple solution to connect a small network of computers together is now the networking layer two protocol of choice for both local area networks (LANs) and wide area networks (WANs).
 
The global Internet population now represents 2.1 billion people, and with every website browsed, status shared, and photo uploaded, we leave a digital stream that continually surges.
 
And these numbers don’t seem to cease their upward traction.
 
Due to the consistent interoperability and scalability enabled by Ethernet, the Internet has produced unique approaches to businesses and lifestyles such as international e-commerce, information sharing and community operations.
 
Today, the e-commerce market is ever expanding and is at US$30 billion in 2013 according to Gartner predictions. Consumers spend nearly US$272,070 every minute on online shopping. Through online financial trading, millionaires have been made.
 
It is no surprise that the IT and telecommunications industry is investing heavily on Ethernet and has worked towards improving its standard. It stands at US$20 billion today and is poised to grow at a 14% CAGR (Compound Annual Growth Rate) to US$40 billion by 2015.
 
What started as a simple cabling solution to connect a computer to a printer, slowly evolved to connect a network of computers together; and has now grown dynamically to support global networks.
 
Today, it is the networking layer two protocol of choice for LANs, WANs and everything in between; wherein data is stored digitally within the cloud and accessed within the blink of an eye.
 
The most popular networking technology today, Ethernet connects the far corners of the world, bringing us all closer than ever before. In fact, it is actively moving societies to a new level of inter-connectedness.
 
From copper to fibre and beyond
 
Ethernet's deployment over copper is arguably what made it as successful as it is today. Even when IEEE (the Institute of Electrical and Electronics Engineers) ratified the 802.3 standard in 1980s, it still used coaxial cable, but copper twisted pair wires (similar to the cabling used in the telephone systems) offered simplicity and could be implemented at lower costs.
 
Now Ethernet is deployed not just over copper wires but over fibre optic cables as well, bringing advantages of increased bandwidth and a wider range.
 
With connectivity gaining paramount importance for global enterprises, Ethernet services offer numerous cost and operational advantages over conventional connectivity solutions while delivering robust, high-quality services.
 
Initially viewed as an unreliable technology, Ethernet has now matured with better service level agreements (SLAs), better availability, manageability and monitoring – often referred to as ‘Carrier Ethernet.’
 
What’s next for Ethernet?
 
The latest evolution in Ethernet’s 40-years of existence is its use in the highly demanding financial trading environment.
 
Stocks, bonds, commodity prices, mergers and acquisitions can change radically – often in a matter of minutes. Every second can literally mean untold profits or losses to traders and investors.
 
In addition to the furious pace of trading and business transactions, the sun never sets on financial or business markets, as worldwide trading centres and markets work around the clock from London and Hong Kong, to Mumbai and New York. Companies on slower communications networks potentially see opportunities and business slipping away.
 
Financial firms generate revenue from purpose built, low latency networks through arbitrage created between markets with electronic trading.
 
Low latency links have been designed to provide the fastest possible speeds between electronic trading locations, allowing execution of trades between exchanges in milliseconds. Firms take advantage of the difference in the buy and sell price on different exchanges.
 
The difference in the buy and sell price is extremely small, but by trading in large volumes, the firms can earn millions of dollars every day.
 
Traditional low latency networks can’t cope in this increasingly fast paced environment. Additionally, these networks are built using point-to-point circuits requiring dedicated connections between sites – for example, London to Hong Kong requires a dedicated connection and a second dedicated connection would be required between London and New York.
 
This means high costs, increased complexity and loss of flexibility. To overcome these barriers, financial firms are increasingly turning to low latency Ethernet, which enables the choice of bandwidth and topologies – point-to-point, point-to-multipoint, bringing businesses flexibility and the best fit network within their budget.
 
Even after being the reigning king of connectivity for 40 years, Ethernet is not expected to step down anytime soon. Its future seems very promising, thanks to the IEEE's relentless push to increase bandwidth, its rapidly growing adoption by finance firms in high frequency trading applications and its role as the backbone that powers our increasingly digital lives.
 
There are very few technologies in use today that can lay claim to being 40 years old and still being on the cutting edge. Ethernet is one of them.
 
Henry Bohannon is senior director, head of Ethernet Product Management at Tata Communications.
 
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