Optical intelligence in the core and Packet intelligence at the edge. This article from lightreading suggests that is where the market is headed. I would submit that Nortel has a substantial lead in "optical intelligence in the core". Their installed based and new technology should keep them in the lead. The demand for SONET equipment came from the carriers, not from Nortel who was just selling what the carriers wanted.
Scott Clavenna - Director of Research at Light Reading
The election that wasn’t may have grabbed the world’s attention, but the U.S. government
apparently has a better handle on broadband access than it does on who will ultimately run the
country. So while Al “Father of the Internet” Gore and George “Son of the President” Bush endlessly
tally their votes on CNN, I’ve been spending my time with two recent reports from the FCC and the
Department of Commerce.
The feds aren’t normally my first choice for cutting-edge market research. But they have one thing
going for them: When they send out a questionnaire, they get responses. The DOC wants to know
who is connected to the Internet. The FCC is interested in how quickly broadband access is
penetrating the market. Both agencies have some very good news for makers of optical networking
gear. Internet usage is increasing in a hurry among all Americans, not just the “haves.” Meanwhile,
broadband access is accelerating rapidly, with cable modems in the lead but DSL growing at a
faster pace.
But this bull market for broadband also leads to a disturbing question: Are carriers really building the
right networks for this Brave New World?
Here are some highlights from the DOC report, “Falling Through the Net: Toward Digital Inclusion” (
esa.doc.gov.
The share of households with Internet access soared by 58 percent since the last survey, rising
from 26.2 percent in December 1998 to 41.5 percent in August 2000.
More than half of all households (51.0 percent) have computers, up from 42.1 percent in
December 1998.
116.5 million Americans were on line at some location in August 2000, 31.9 million more than 20
months earlier.
The share of individuals using the Internet rose by a third, from 32.7 percent in December 1998 to
44.4 percent in August 2000. If growth continues at that rate, more than half of all Americans will be
using the Internet by the middle of 2001.
The rapid uptake of new technologies is occurring among most groups of Americans, regardless of
income, education, race, ethnicity, location, age, or gender, suggesting that digital inclusion is a
realizable goal.
Conclusion: Internet access is no longer a luxury item but a resource used by many.
The FCC’s report, snappily titled “High-Speed Services for Internet Access: Subscribership as of June
30, 2000” ( fcc.gov
quantifies the deployment of broadband access, as of June 2000 (a remarkably recent date,
considering this is the FCC we’re talking about).
Subscribers to high-speed services increased by 57 percent during the first half of 2000, with a
total of 4.3 million lines (or wireless channels) in service.
Deployment of cable modem services on the “last few feet” to subscriber premises increased 59
percent over six months, reaching 2.2 million lines; high-speed ADSL lines grew 157 percent over
the same period, approaching 1 million lines.
Subscribers to so-called advanced services (furnishing more than 200 kbit/s in each direction)
increased by 41 percent during the first half of 2000, to 2.8 million lines (or wireless channels).
Advanced services lines delivered over ADSL increased by 75 percent; over coaxial cable systems,
by 63 percent.
As of June 30, 2000, there were about 3.1 million residential and small business subscribers to
high-speed services. By contrast, there were approximately 1.8 million such subscribers at the end of
1999.
Is it fair to assume that more users at higher access rates will put significant strain on core networks?
Absolutely. Will carriers have to continually scale their optical networks to accommodate this traffic?
Without a doubt. And they’ll need more than Sonet and DWDM. This is packet traffic, which will
require new levels of intelligence in optical networks and much greater flexibility in responding to
Internet apps.
Think of it this way: Consumers — especially children — are spending more time at the computer
and less time in front of the TV. Multimedia applications will drive the adoption of broadband
access (Napster is already doing just that). That multimedia traffic, in turn, will force the deployment
of “high-touch” routers (those that look deep into every packet, ordering them according to many
more variables than can a typical core router) at the network edge and massively scaleable switches
at the core. Optical networking equipment must not only supply the fattest pipes possible between
network nodes but also deal with the variable nature of IP traffic.
Let’s take another look at those government reports. Their main thrust is that the digital divide is
starting to narrow, while broadband access is just starting to reach the masses.
What gets overlooked in much of the talk about carrier capex and the alleged softening of the
optical market is that the network is still in its infancy. By and large, carrier buildouts are desperate
attempts to scale a voice network in a world where data rules. These efforts demand massive
infusions of Sonet, DWDM, and cash but do little to cut service provisioning times or increase
revenue opportunities. It’s really the old solution of throwing bandwidth at the problem. It didn’t work
on the enterprise, and it isn’t going to work on the Internet.
It’s no wonder that carriers are getting frustrated: They’re building the wrong network for the job.
So what’s the right network? There are two answers, and both could be correct.
One camp argues that a dynamically switched circuit network is the way to go, since it leverages the
installed base of reliable Sonet equipment. Trouble is, this also means adding the requisite
intelligence and switching power to Sonet in order to bring Internet dynamism to a static network of
fixed circuits. Sycamore Networks Inc.’s (Nasdaq: SCMR) team-up with Sirocco is one example of this
approach in action; Ciena Corp.’s (Nasdaq: CIEN) Core Director is another.
The other camp, only now beginning to flesh out its argument, says it’s time to stop trying to force-fit
packet data onto a circuit network. The alternative: Build infrastructure that accommodates circuit
traffic on a packet network. ATM was once the poster child for this approach, though provisioning
complexities and cost limited its adoption to the network core. Ethernet is now starting to turn up as
the new platform on the edge (watch Lantern Communications, Luminous Networks Inc., and Atrica
Inc. here), and MPLS is beginning to put a squeeze on ATM at the core (witness Tenor Networks
Inc., Vivace Networks, and Caspian Networks).
Carriers that have the luxury of starting with a blank slate are starting to take the pure-packet play
seriously, while well-established providers continue to push Sonet into the data world. True, the
latest generation of packet prophets claim this is wasted effort, but it’s worth remembering that Sonet
was originally intended to transport both circuit and packet traffic. The International
Telecommunication Union (ITU)’s original vision of B-ISDN had Sonet supplying the underlying
physical layer for multiprotocol, multiservice networks. This concept may actually be realized soon,
though ATM will typically occupy only a piece of Layer 2, sharing space with MPLS as the network
evolves.
Either way, look for an increased emphasis on “optical intelligence” at the core and “packet
intelligence” at the edge. Each carrier will define those boundaries for itself, creating ample niches
for startups and ample confusion for big vendors, who have to craft network solutions for their
customers without appearing to contradict their own rhetoric. I guess that makes them the real
politicians.
Scott Clavenna is president of PointEast Research and director of research at Light Reading
lightreading.com |
