Ascend Gets Stable Footing, Adds Fiber To Growth Plan
Date: 7/16/98
Author: Michele Hostetler
Ascend Communications Inc. wants to climb
back to its old heights and beyond - this time
with the help of fiber-optic lines.
The network equipment maker, which
stumbled after a big acquisition, is getting
serious about fiber optics, the high-powered
next generation in data- transmission lines.
Ascend started shipping products for its
fiber-optics strategy, called New Public
Network, in June.
Ascend's competitors - most notably Cisco
Systems Inc., Lucent Technologies Inc. and
Northern Telecom Ltd. - are expected to be
close behind with their own battle plans. But
analysts say that by offering cheaper and
faster products, Ascend is pushing into this
burgeoning market at a quicker pace than its
competitors.
''Ascend has created a competitive
environment,'' said Frank Dzubeck, industry
analyst with Washington, D.C.-based
Communications Network Architectures Inc.
''They have a very compelling argument. I
think they're in a leading- edge position.''
Ascend began its rise in networking in the
early '90s by locking on to the then-nascent
Internet market. Ascend made it by selling
pricey and rugged gear to Internet service
providers and telephone carriers so they
could run their networks over today's
copper-based lines.
Last year, Ascend was slowed down by its
purchase of Cascade Communications
Corp., allowing competitors to grab market
share. Ascend took several hits to its bottom
line, but now seems to be getting back on
track, analysts say. They note that earnings
have been improving on a quarter-to-quarter
basis, though they continue to fall short of
year-earlier operating net.
Webs of fiber-optic lines, collectively known
as optical networks, could provide a new
opportunity for Ascend.
Fiber-optic lines transmit data over networks
at thousands of times the speed of
conventional copper lines, but are expensive
to install and maintain. Still, Internet service
providers and telephone carriers see a
market for them. They plan to rent out space
on them as sort of an expensive toll road for
companies to quickly transmit data.
Fiber-optic lines will handle the surge in
online data traffic and are the next step for
Internet service providers, says Hassan
Ahmed, general manager of Ascend's core
switching division.
''What it helps us do is go deeper and deeper
into the network's core. I see '98 as the real
buildout of this vision,'' Ahmed said.
The move toward fiber accompanies
Ascend's move into asynchronous transfer
mode (ATM) technology, says Jay
Nakahara, managing director of New
York-based Invesco Services Inc. ATM is
the current standard for dividing bit-guzzling
graphics so they can be moved more
efficiently.
But traditional copper lines tend to slow
ATM down, while fiber optics fully utilize
them, analysts say.
''I think it's an opportunistic move for
Ascend,'' Nakahara said of combining fiber
optics and ATM.
Internet service providers have had to
maintain three separate networks to ship
voice and data. Each network needed its
own equipment.
First is the data network that includes ATM.
The second is the transmission network for
voice. The third is the fiber-optic network,
which existed on some systems before but
has been too expensive to be widespread.
That setup should begin to change as
companies use new tools that allow them to
merge their old copper- based systems with
fiber optics. Voice and data networking are
converging, giving fiber-optic networks
another boost. That's the area Ascend has
targeted.
Traffic from data and transmission systems
flows into their optical counterpart for
transport across distances. Synchronous
optical network technology (SONET) is used
to adapt the copper-based voice network to
fiber optics.
There are other advances on the optical front
to bolster Ascend's plans. Fiber-optic
networks are receiving a boost to make them
more affordable and useful. Technology
called ''dense wavelength division
multiplexing'' acts like a prism to expand the
number of data streams running on a
fiber-optic line.
To make the network even faster and
cheaper, Ascend has cut out the SONET
middle layer between the dense wavelength
system and the voice network with a switch
known as GX 550 Smart Core.
The traditional method of merging copper
with fiber optics costs about $8,200,
according to BancAmerica Robertson
Stephens. Ascend's approach costs about
$1,400.
Williams Networks, a division of Tulsa,
Okla.-based Williams Communications, is
the first major customer of Ascend's New
Public Network strategy. Williams is building
a fiber- optic network from the ground up.
It's using ATM and fiber optics to run voice,
data and Internet traffic.
(C) Copyright 1998 Investors Business
Daily, Inc.
Metadata: ASND CSCO LU WMB I/3574 I/4890 |
