Mike, it depends on your definition of "threat" to TITAN's dominance..
All optical networks are the next big thing in high capacity networking, no doubt about that. The TITAN has taken the first step in addressing optical networks by outfitting its cross connect with optical interfaces as we have previously discussed. That means that no demultiplexing is needed in front of the cross connect to do an optical to electrical conversion before the cross connect can happen. But still has to do it internally, but at a much more cost efficient and space efficient rate than having separate mux and de-mux external to the cross connect.
Bottom line is that it is still a TDM based machine that can interface optics based networks at the port level. To date that has been the bread and butter network. Traditional DS1, DS3 networks (yes, there are still lots of them out there) need TDM based cross connects interfaced at the electrical level and SONET based networks that need cross connects interfaced at the optical level. These are the 2 prevailing network types out there today and Tellabs has the cross connect that is the best for both types of networks.
The all optical network is an EMERGING type of network that does not exist today. Today, the TITAN cannot carry light signals through its primary matrix, only electrical. Much of the talk of the demise of digital cross connect suppliers like Tellabs is that we are starting to see the advent of structures such as DWDM and OADM (optical add/drop multiplexers) within the next year or two. These are some of the building blocks to get to the all optical network, but it ain't here in total yet. And keep in mind that it is an unproven concept with untested equipment and some vapor equipment.
Having worked for large telcos in the past, they are typically reluctant to put high capacity, reliability dependent voice and data on new types of networks at the beginning. Typically, a major player like AT&T, MCI or an RBOC wait several years to see how the technology matures with early adopters who absorb all the pain of the early deployments. There is not a single OADM in operation today that I know of (could be trials of course running somewhere to test prototypes).
If I know Tellabs, they usually do not let trends like this pass them by. They were the first to have optical interfaces on their cross connect while Lucent was still thinking about doing it and to this day does not provide on certain cross connect products. It will not be long before they have products to meet the optical network demand. They wanted the Ciena deal to kick start the development since Ciena had been working in this area already. But Tellabs will get there, it will take longer than they planned with Ciena, either through acquisition or internal R&D.
In the meantime, an article in the 8/15/98 issue of America's Network on page 27 states " Despite all the talk about SONET beginning to disappear, SONET vendors are enjoying healthy growth and the carriers that are building new fiber optic networks are using the technology in those networks. In addition, many carriers already are deploying four-fiber OC-192 (10 Gbps) bidirectional line switched rings (BLSRs) in their networks." NORTEL, Alcatel, Fujitsu and Hitachi offer OC-192 BLSR technology today to provide additional reliability for long haul fiber optic networks.
Later on the article states "the SONET market in North America is continuing to grow rapidly. The market was estimated at $3.1 billion in 1996 and will be worth more than $4.2 billion this year. Growth won't flatten until 2000 or 2001, years in which the market will be worth $5 billion." Depending on how optical networking develops, I have seen estimates for 2002 as high as $6.3 billion from credible sources. Being conservative by nature, I would say Tellabs has the best cross connect product in a $5 billion market through 2001 and that's not bad compared to an all optical market of maybe $0.01 billion now.
And I bet that Tellabs will be developing the optical products that will meet the needs of networks that will interoperate on the seven layer level. I don't see the need for that in less than 5 years from now. If I know Tellabs, they won't be sitting around. There will be press releases 5 years from now from Tellabs that they have fully optical cross connects and that SONET-like optical layer protection is working in the field. Initially, I see this as an optical cross connect at 1300 nm short reach OC-48. True interoperability of optical layer protection from different vendor's gear is probably about 10 years out (I agree with the article's author on this).
In the meantime, look at the real world and real deployments. MediaOne put in SONET for its network upgrade in Atlanta using super headends and who's cross connect? Tellabs.
Who else is building SONET based networks currently? Check out this list and estimated completion investments:
NextLink Communications: investment - undisclosed
Williams Network: investment - $3 billion
Frontier Corp: investment - $500 million
IXC: investment - $1 billion
Level 3 Communications: investment - $8 to 10 billion (SONET at first)
Qwest Communications: investment - Undisclosed
The cross connect of choice for most of these OC-48 and OC-192 networks? Tellabs (although some of these operators have yet to announce their SONET infrastructure vendors).
There is a delicate balancing act between providing products currently in demand while preparing for the next wave and having products ready for it when it arrives from a practical stand point.
I would say that rumors of TITAN's death have been greatly exaggerated.
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