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Technology Stocks : Ascend Communications (ASND)
ASND 210.50+0.5%Nov 21 9:30 AM EST

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To: Larry J. who wrote (23670)11/16/1997 2:20:00 PM
From: Jeff Jordan  Read Replies (1) of 61433
 
Focus on Network Computing

Bandwidth demand: the need for more speed

By Paul Korzenowski, The Preview

PCs are creating a ripple effect in corporations. As users become comfortable with electronic mail packages, they send and
receive more messages. As departments install new multimedia applications, larger and larger files travel from department to
department. Corporate networks throughout the U.S. are struggling to keep pace with dramatic, seemingly never-ending
transmission increases.

Consequently, more bandwidth is the networking theme at COMDEX. Vendors hope nascent technologies, such as
higher-speed Ethernet networks and new modems, can help companies unclog network bottlenecks.

The need for higher-speed communications lines arises in three locations: user desktops, backbone networks, and remote
connections. Different technologies are vying to boost network throughput in each product segment. In the desktop area, a
winner seems to be emerging but with backbone and remote connections, the battles are just beginning.

Desktops represent the most common network connection and companies have been slowly adding bandwidth there. Many
corporations started with shared LANs where groups of users all sent information over one LAN. As the number of users
rose, so did the amount of network traffic and user response times slowed to a crawl.

Companies solved this problem by dividing one LAN into multiple LANs, a process called segmentation. For instance, one
200-user LAN was broken into two 100-user LANs or even four 50-user networks. Switching represents the ultimate in
desktop segmentation. In this case, each user receives his own network connection.

Corporations are embracing switching. LAN switches will account for 64 percent of all shipments in 1997 compared to 47
percent in 1996, according to The Dell'Oro Group, a Portola Valley, CA market research firm.

Randy Krasner, the national accounts manager Northeast Computer Supplies, a Clifton, NJ reseller, said Ethernet, which
operates at 10Mbps, has emerged as the most common switched connection. The Dell'Oro Group expects switched
10Mbps Ethernet products to account for $4.1 billion of the $11.2 billion worth of network equipment sold worldwide during
1997.

Backbone ripple

The growing use of switched desktop connections is having a ripple effect on backbone networks, which connect different
departments. For instance, a backbone LAN enables engineers to send documents to the marketing department. Usually, a
company dumps all of its department traffic onto one backbone network. Because hundreds or thousands of users rely on
that network, a backbone network typically requires faster transmission speed than a departmental LAN.

To boost backbone bandwidth, corporations are examining two networking technologies: Asynchronous Transfer Mode
(ATM), which operates at 155Mbps, and Gigabit Ethernet, which has a speed of 1Gbps. "During the past 12 months, a lot
of theoretical comparisons have been made between ATM and Gigabit Ethernet," notes Sam Alunni, a senior analyst for
networking at Aberdeen Group, a Boston, MA market research firm. "In 1998, vendors will begin shipping both types of
products and customers can discover the differences themselves."

While many users rely on department LANs, a growing number of workers are now on the road or even working from home.
In most cases, they have used dial-up modems, which had a top operating speed of 28.8kbps, to access data. But they need
faster connections for graphic and multimedia files.

Dial-up modem vendors outlined standards to double their devices' top speed to 56kbps, but the work sparked a
controversy.

Ron Chan, a distribution channel marketing manager at Ascend Communications, notes that vendors divided into two camps:
one lead by 3Com and a second by Ascend and Lucent Technologies. The two sides have begun rolling out their products so
customers can decide which option is best. In addition to dial-up modems, corporations have another remote network access
option: cable television modems. Slowly freed to pursue new markets, cable television suppliers have turned their eyes to the
Internet access area. Patrick Stensson, an account executive at Vanstar Corp., an Indianapolis, IN reseller, notes, "For about
$50 a month, a customer receives an Internet connection that operates almost 30 times faster than dial-up modems." Because
cable modems run on coaxial cable wiring, they support transmission speeds as fast as 1.5Mbps.

To date, cable companies have moved slowly into the Internet area. "I expect cable modem sales to boom in 1998 because
the economics for users and vendors are so enticing," predicts Vanstar's Stensson. Booming should be an accurate
description all of the high-speed networking technologies on display at COMDEX.

I expect to see Ron Chan at Comdex to discuss Ascends products....I hope to get a better understanding of his insights and the companies position in the market.
Jeff
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