Is metro ethernet a viable business?

Metro ethernet is certainly viable as a technology, but the business model it is being provided under in the US was called into question in March when leading US metro ethernet provider Yipes filed for Chapter 11 bankruptcy protection, the equivalent of receivership in New Zealand.

Metro ethernet is certainly viable as a technology, but the business model it is being provided under in the US was called into question in March when leading US metro ethernet provider Yipes filed for Chapter 11 bankruptcy protection, the equivalent of receivership in New Zealand.

Yipes, backed by $US291 million in venture capital, is the victim of the costs of building its network in some 20 US cities combined with lesser-than-expected revenue from its services.

United and CityLink's situations are different, the New Zealand companies already having all or some of the infrastructure in place when they started.

Last year, then-TelstraSaturn product manager Julio Coelho told Computerworld Yipes' business model was similar to that of TelstraSaturn's Speedway gigabit ethernet to the CBD service, but obviously TelstraClear, as an incumbent carrier, is in a different position to Yipes and other US metro ethernet providers that are competing with incumbent carriers and facing financial difficulties. Regarding financial performance, United's Sean McDonald says he expects UnitedNetworks Communications to be profitable in approximately two years; its parent company won't separate its results from the overall UnitedNetworks results.

CityLink managing director Neil de Wit says CityLink is cashflow positive but won't reveal the private company's profits.

Tangent general manger Jill Garing won't say whether Tangent is profitable, but says "we're tracking to expectations".

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