Tuesday, April 15, 2003

NGN Ventures: Service Provider Perspectives

SBC will deploy a variety of access and metro optical technologies based on the business model for each service, existing network compatibility, and regulatory issues, said Ralph Ballart, Vice President of Broadband at SBC Technology Resources, speaking at the NGN Ventures Conference. On the access side, SBC has more than 2.2 million DSL subscribers, and the service is available to 28 million (more than 65%) of all SBC customers. Deployments of DSL technology will continue. SBC is also selectively using PON based fiber to the home (FTTH) to complement DSL as an access solution. Ballart said that a great economic advantage of PON is that the cost of fiber deployment is reduced because much of the path is shared by multiple customers. However, a decline in the electronics costs is needed for larger PON FTTH deployments. SBC feels than an even greater need is for a level regulatory playing field that addresses the differences between regulated phone companies and their unregulated cable competitors. SBC's review of the FCC's latest ruling will have large impact on its future FTTH rollout plans.


SBC is expanding its metro optical networks to offer new services. GigaMAN is a fiber based point to point GigE service. For the initial customers, this was set up with direct fiber connections. As the service as grown in popularity, SBC has moved to a Nortel CWDM access solution. Although Ballart now feels that Ethernet has become "carrier grade" and it has always offered outstanding price/performance characteristics, SBC will not necessarily use pure Ethernet equipment when offering its Ethernet Optical Network (EON) service. For example, if a customer is in a MTU that has a SONET connection with existing capacity (a common scenario according to Ballart), the best solution is to overlay an Ethernet signal on top of SONET. Ballart said that his system "wish list" for EON includes robust management and troubleshooting capabilities and full IETF HVPLS implementation. SBC will use Cisco's 7600 platform when it starts to deploy EON service in the second half of this year. SBC also offers Multiservice Optical Network (MON) service for SONET, GigE and Fibre Channel connectivity. As metro SONET networks become more congested, Ballart would like to move to a metro DWDM platform that offers reconfigurable wavelength add/drop, no wavelength "banding" and shared optical protection while offering SONET-like ease of engineering.


For Clayton Lockhart, VP for Strategic Network and Operations Architecture at AT&T, the key question is how to get the tools and technology needed to migrate from the old network to the new. He feels that today's network is made up of "frozen pipes" which can't easily provide for new usage patterns and promising potential growth areas, such as peer-to-peer computing, multi mode business users, teen users and digital media. The industry must re-think "The Network" and make it user-centered. Lockhart feels that customers should be able to use the network in a way that suits them through their own "dashboard" control system. He also believes that CPEs, connections and services must be easy enough to set up that residential and small business users can do so themselves.


On the system side, AT&T would like to see industry partnerships to address the challenges posed by networking equipment. The company is seeking "mating" and partnership proposals from vendors, start-ups, VCs and carriers. Lockhart said these could take many forms, such as the partnership of established vendors, a start-up and established company partnering, a group of start-ups joining forces, or an integration company pulling together the best in class capabilities of numerous vendors who use an open architecture. AT&T uses about 40 different boxes in the multi service access category, and it takes about three years from the time AT&T decides it wants to go in a certain technical or product direction until the time it is fully and reliably implemented. This needs to change.


Cogent Communications CEO Dave Schaeffer said that his company has an advantage over other carriers, because it targeted a very specific customer and created a network to meet its particular needs. Cogent offers a single product: Ethernet access to small and medium businesses over its own proprietary next generation network. Schaeffer said that AT&T offers over 8,000 products, which creates organizational and network complexity. Schaeffer advises service providers to productize their networks with simple choices that are easy to manage and sell. He also said that it is foolish for new service providers to target the voice market.


Cogent's network runs Cisco core optical systems to run IP directly over DWDM. The core connects to metro fiber networks that Cogent obtained the right to use through 20+ year IRU arrangements. The company then lays its own fiber to office buildings, where it installs layer 3 CPE equipment. Cogent always delivers Layer 3 service in a ring configuration. At the edge, the company uses just three architectures to connect its metro networks to office buildings: 1) CWDM directly into a layer 3 router, the most cost effective way to deliver 20 fast Ethernet connections; 2) active transponder connections for DWDM; 3) an active DWDM transponder and TDM switch fabric (Cerent 15454) for packet over SONET converted to Ethernet in the building, which is the most expensive but most flexible option. Cogent averages more than two customers for each of the 700 buildings on its network. The average building has been on its network for just seven months. To add an average retail building to the network costs $75,000 in capital expenditures: $35,000 for a fiber lateral to the building; $15,000 for in-building riser; $15,000 for in-building electronics; and $10,000 for the receiving electronics in a hub location.

NGN Ventures: Emerging Optical Architectures

DWDM systems need to be simplified and made less expensive, according to Kevin Ranking, President & CEO Tropic Networks, who spoke at this week's NGN Ventures Conference. First generation DWDM has attributes that pigeon hole it into special situations. A major problem is the complexity of provisioning. Every move/add/change in the network requires a tremendous amount of engineering, resulting in a "Launch and Pray" method of provisioning wavelengths. DWDM needs to be closely integrated with existing SONET/SDH systems to deliver an intelligent phontonic layer that's easy to manage and a streamlined network architecture which drives down CapEx. Ranking believes that DWDM systems should connect to existing SONET equipment via ITU-grid optical signals, and they must be compatible with SONET OSS functionality, allowing end to end per wavelength path visibility from the NOC. To further reduce the capital expense of DWDM systems, OEO conversions and the required transponders must be cut and the signal should be kept in the optical domain both inside and between network elements. Tropic Networks offers a metro core DWDM/OADM platform with ability to manage signals on a per-wavelength basis.


Jagdeep Singh, President & CEO of Infinera agrees that the problem with optical networks are their high cost and complexity. As optical networks increase in capacity, the number of required components and the complexity and cost of the network increase as well. This has resulted in the creation of redundant networks and elements to address the needs of each network span: long-haul, ultra long-haul, and metro. Singh also observed that photons are great for transport, but problematic for other aspects of networking. An all-optical network is an analog network, making it impossible to manipulate or measure bits during transport. Other ways to process information are needed. Infinera's has not yet unveiled its technology, but Singh said that its solution will simplify the optical network, enhance service provider portability, and offer managed bandwidth transport.


Dr. John Bowers, CTO of Calient Networks believes that service providers need to migrate from complicated ring architectures to mesh networks while having the flexibility to offer new services as needed without re-building their networks. He suggests that the answer is a transparent all optical network enabled with 3D MEMs switches. Such a network would support real time distributed computing, geographically distributed, large bandwidth networks, and traffic patterns that vary widely over time. Bowers said that 3D MEMs switches provide other advantages, including support of GMPLS provisioning and restoration, transparent switching, and integration of DWDM systems. Bowers predicts that carriers will deploy MEMs switches in order to offer new services and can then take advantage of the operating expense advantages that the technology offers in the network core.


Enterprises already own LANs and SANs, and it is time that they own their entire networks, said Pawan Jaggi, CEO of Celion Networks. Today, WANs are complex and costly, and WAN equipment is designed only for service providers. As a result, enterprises practice "bandwidth avoidance" outside of their LANs. To be convinced to own their own networks, enterprises need to see a quick ROI vs. leased circuits, turn key system solutions, and "touch-free" LAN-like automated operations. Celion's optical solution for enterprises transports signals 6000 km without regeneration from a microwave size box and provides 10 GbE, GbE, OC-192 and OC-48 interface options. Celion aims to provide transport solutions that are distance insensitive and offer a negligible cost of incremental bandwidth.


Simplification of DWDM networks is very much needed, but vendors are not truly dealing with the carriers' problems, according to Dennis Morgen, Network Architecture, Operations & Strategic Planning VP at AT&T. For example, there is still a lot of talk about transport and switching as separate things. These aspects of networking should be merged and viewed in common. Instead of doing TDM grooming, AT&T wants to see it take place at the packet layer. This isn't being addressed enough by the industry. Morgen would like vendors to provide a transformation to a new network architecture. A "pasted-in overlay" will not ultimately provide the needed solution, while a radically new architecture that allows service providers to meet the needs of their customers will be embraced. There are too many suppliers in the optical segment of the industry and the paradigm is wrong. Instead of each vendor trying to sell its own box in isolation, Morgen wishes that these individual box innovations could be combined as a full network solution. This requires companies to merge.


Disruptive, rather than purely incremental innovations are needed to escape the industry's problems, said William Stensrud, General Partner at Enterprise Partners. He warned that the telecom industry is increasingly becoming like the airline industry. Pasting new solutions on top of underlying problems will not result in a competitive, financially sound industry. To be a surviving vendor, a company needs a low burn rate so that it will still be in business when the big opportunity arises, and must be a "scavenger" that opportunistically solves current problems in the mean time. A start-up must make itself indispensable to its prospects, which is the only way it can win business from a service provider.

SBC Sells 9 Million Shares of BCE

SBC Communications sold approximately 9 million shares of BCE (Bell Canada Enterprises) in a block trade on 15-April-03. Financial terms were not disclosed.
http://www.sbc.com

SBC Enhances its Metro Wavelength Service Portfolio

SBC Communications enhanced the features and widened availability of its Multi-Service Optical Networking (MON) service, which uses DWDM to connect the data centers, mainframes and storage networks of large enterprises within a metropolitan area. SBC's MON is now offering up to 160 Gbps of capacity per fiber pair. The enhanced service also provides the ability to connect multiple locations in a metro area using a ring network configuration. Previously, the service was available as a dedicated point-to-point network solution. The enhanced MON service offering works in conjunction with a number of data transport protocols, including ESCON, FICON, ETR, ISC, Fibre Channel, Fast Ethernet, Gigabit Ethernet, 10 Gigabit Ethernet, SONET and D1 video, all in their native format. The MON offerings are available throughout the SBC 13-state local service territory. SBC is using Nortel Networks OPTera Metro 5200 5.0 Multi-service Platform release 5.0, a DWDM system, for the service.
http://www.sbc.com
  • SBC Communications first introduced its Multi-Service Optical Networking (MON) servince in 2001.


  • In October 2002, SBC Services, an affiliate of SBC Communications, signed a multiyear agreement to purchase the Nortel Networks OPTera Metro 5100 Multiservice Platform. The equipment will be used for managed wavelength services including high-speed Optical Ethernet and storage services throughout SBC's 13-state territory. A year earlier, SBC signed a contract to purchase the Nortel Networks OPTera Metro 5200 to support its Multi-Service Optical Networking (MON) service. The OPTera Metro 5100 is designed for smaller bandwidth requirements that extend wavelengths to the customer premise. The OPTera Metro 5200 is a higher scale, survivable platform for metropolitan access and interoffice applications.

Arkansas CLEC Selects Santera for Voice/Data Switching

Ritter Communications, an Arkansas-based independent operating company and CLEC, has chosen Santera Systems' SanteraOne to provide both its data and Class 5 voice traffic in a central location. The SanteraOne is a voice and data switching platform delivering key applications such as full feature IXC Tandem, Class 4/5, PRI Offload, packet/cell switching and Voice over Broadband (VoB) services. Financial terms were not disclosed.
http://www.santera.com
http://www.callritter.com

SBC Withdraws Long Distance Petition for Michigan

SBC withdrew its FCC petition to offer long distance service in Michigan. FCC Chairman Powell said he believed SBC met the requirements under Section 271 of the Telecom Act, but that a narrow issue related to billing appeared to be unsatisfied. The question involves whether SBC is currently providing wholesale billing functions in Michigan for competitive LECs in a manner similar to the existing precedent elsewhere.
http://www.fcc.gov
  • SBC said Michigan is the nation's second most competitive market for local phone service and that its application withdrawal would only be a temporary delay.

Broadcom's Revenues Grow 10% Sequentially to $327 Million

Broadcom reported Q1 net revenue of $327.5 million, an increase of 10.7% from the $295.9 million reported for Q4 2002 and an increase of 37.1% from the $238.8 million reported for the first quarter of 2002. Net loss (GAAP) for Q1 2003 was $67.9 million, or $.25 per share (basic and diluted). Broadcom said the quarter's financial performance marks a return to pro forma profitability. It also represents the company's seventh consecutive period of revenue growth.
http://www.broadcom.com

UTStarcom Reports Record Revenues, 13th Quarter of Profits

UTStarcom reported quarterly revenues of $330.5 million, an increase of 80% over the $183.7 million in net sales reported in the prior year period. Net income for the first quarter of 2003 increased 113% year-over-year to $37.3 million, or $0.33 per share. It was the 13th consecutive quarter of profitability for the company. During Q1, UTStarcom announced more than $350 million in contracts and raised its financial outlook for the year. In China, the number of subscribers on UTStarcom's PAS networks increased by 1.8 million to 9.3 million at the end of Q1. The company also highlighted progress for its IP-DSLAM in China and Japan.
http://www.utstar.com

Network Equipment Technologies Reports Quarterly Revenue of $33.8M

Network Equipment Technologies reported quarterly revenue of $33.8 million, up from $26.7 million in the same period of the prior year, a 27% increase, and up from $33.0 million posted in the prior quarter. For the quarter, the company posted a profit of $0.02 per share and increased its cash position by $6.1 million. The company said demand for its legacy product remains strong, highlighted by several new large orders from government customers during the quarter.
http://www.net.com

Space Systems/Loral Builds World's Largest Communications Satellite

Space Systems/Loral (SS/L) has completed static load testing of iPSTAR-1, the world's largest commercial communications satellite with a launch weight of 14,900 pounds (6775 kilograms). Thailand's Shin Satellite company will use the spacecraft to provide broadband Internet services throughout a large portion of Asia, Australia and New Zealand. Space Systems/Loral said iPSTAR-1 will provide eighty-four spot beams and a total throughput capability of approximately 40 Gbps. The satellite will support individual user data rates of up to 8 Mbps forward link and 4 Mbps return link to as many as eight million users. Launch is planned for early 2004 into an orbital slot at 120 degrees East longitude.
http://www.loral.com

UTStarcom Signs Beijing China Netcom

UTStarcom signed a contract with China Netcom valued at approximately $17.5 million for new deployments of its IP-based PAS (Personal Access System) in six suburban counties of Beijing. The deal represents UTStarcom's first iPAS contract with Beijing China Netcom.
http://www.utstar.com

ITXC Builds Momentum for VoIP to India

ITXC said its international VoIP network carried 10% of all incoming phone-to-phone traffic to India during the first year following deregulation in that country in April 2002. Traffic into India running over ITXC.net continues to expand, spurred in large part by the continuing growth of prepaid and other calls originating from incumbent, competitive, and mobile carriers worldwide. ITXC has announced interconnections in India with VSNL, the country's premier provider of international telecommunications services and leading ISP, and competitive carrier Data Access. Citing figures from market researcher iLocus, ITXC said some 220 million minutes of India's ILD traffic in 2002 were VoIP in nature. This is forecast to reach 7.1 billion VoIP minutes by the year 2007.
http://www.itxc.com

Lucent Debuts Smaller Voice Switches for Independent and Rural Telcos

Lucent Technologies introduced three new small switching solutions that specifically target service providers who need less than 5,000 lines. The new Lucent VCDX 2400, VCDX 4700 and the 5E-XC Remote Line Unit can be used to supplant existing switches that need replacement or to enter new markets in small towns and rural communities. The 5E-XC Remote Line Unit supports up to 3,000 subscribers and runs off a host 5E-XC switch. It can provide emergency standalone capability, allowing the unit to continue to switch 911 and intra-community calls if there is an interruption in the line to the host switch. The voice platforms will be sold through four accredited resellers ( DTel, Dynavar, Madison Group and Sunbelt Telecommunications) to independent, rural and small carriers in North America.
http://www.lucent.com

Ipsum Networks Raises $6 Million for IP Route Management

Ipsum Networks, a start-up based in Philadelphia, raised $6 million in Series B funding for its development of IP management solutions that assure application infrastructure availability. Ipsum's Route Dynamics solution monitors the network's routing protocols to provide a real-time, Layer 3 view of IP network operations. Route Dynamics said its solution delivers a picture of the logical health of a routed network, which can lead to improved service availability, operational efficiency, fault detection and prevention. The new funding was led by Rho Ventures of New York City, along with participation by Ipsum's original investor, Sevin Rosen Funds.
http://www.ipsumnetworks.com
  • Ipsum Networks was co-founded by Dr. Roch Guerin, who is the Alfred Fitler Moore Professor of Telecommunication Networks at the University of Pennsylvania and also serves on the Scientific Advisory Boards of France Telecom and Samsung., and Dr. Raju Rajan, who previously spearheaded the development of a policy based network management system for IP QoS at AT&T Labs.

Nortel Networks Bolsters Security Measures for Enterprise IP Telephony

Nortel Networks launched a Secure Telephony initiative aimed at bolstering security measures that cross functional boundaries between traditional, enterprise circuit-switched telephony, IP telephony, wireless IP telephony, or a mixed solution. The Secure Telephony initiative comprises three main elements:

  • Security Best Practices, which relies on comprehensive security audits to provide physical isolation of discrete areas of the network through VLANs and firewalls, ensuring that the voice network component would not be accessible in an intrusion event. It also covers authentication and access control, encryption for access and encryption of voice traffic traversing public networks. Audits can also find configuration holes in the network using Intrusion Detection tools.


  • Telephony Product Security: Nortel Networks has taken measures to harden the operating systems of key platforms that support IP telephony by using unique operating system (OS) software and disabling access services, like FTP or SNMP, when those services are not required. Security upgrades are being released for the Succession 1000, Succession MX (Multimedia Exchange), Succession Business Communications Manager and Meridian 1 platforms to make them more resistant to viruses and hacker attacks.


  • Security Product: Nortel Networks' security platforms include the Alteon Switched Firewall System and the Contivity Secure IP Services Gateway, which is specifically designed to secure transmission of IP data and voice traffic via a VPN tunnel. Its stateful firewall has been enhanced to support inspection of both H.323 and SIP standards.
http://www.nortelnetworks.com

AT&T Offers New Business Local Access Service, Enhances Ethernet Portfolio

AT&T introduced a new High Performance Access Service (HiPAS) that gives the largest global companies and government agencies new options for eliminating local loop charges. The offer is targeted at bandwidth requirements between OC-3 and OC-192. HiPAS extends the AT&T Service Assurance Warranties and performance metrics of its backbone out to the "last mile" with three network access services. These include:

  • AT&T Dedicated Entrance Facility (DEF), a SONET private line service into the AT&T Network, as well as fan-outs to other inter exchange carriers and metro locations. The service offers flexible bandwidth options and bundles a customer's local services into the same package. It also provides around-the-clock monitoring and 50 millisecond SONET restoration.


  • AT&T ACCU-Ring Network Service, a private SONET ring for managing all communications of large customers and their local channel connections. ACCU-Ring consolidates all traffic -- whether private line, switched and enhanced service, or all-distance carrier traffic (voice, data and video) -- and supports virtually all protocols for the customer.


  • AT&T Ultravailable Network and AT&T Ultravailable Wavelength services, which enables exclusive use (Network), or shared use (Wavelength) of a DWDM metro fiber network.


AT&T also announced several enhancements to its Ethernet Services portfolio. Specifically, Ethernet service channels are available with the new AT&T Dedicated Entrance Facility and AT&T ACCU-Ring Services. In addition, the AT&T Ethernet Private Line (PL) service, which was launched in September 2001, is now is available in 67 metropolitan areas.
http://www.att.com

Pew Research Center Tracks "Net Evaders" and "Net Dropouts"

A new report from the Pew Research Center finds that 42% of Americans say they don't use the Internet, with many of them either have been Internet users at one time or have a once-removed relationship with the Internet through family or household members. The Pew Internet Project tracking data shows a flattening of the overall growth of the Internet population since late 2001. The Internet penetration rate hovers at between 57% to 61% of the population. The report also identifies a trend of people dropping offline -- "Net Dropouts" -- and a certain population of "Net Evaders," who proudly reject the Internet and proclaim their independence from the online world. Most of the non-users are in "close proximity" to the Internet, meaning that they have occasional access through a school, library, or family member. The Pew report also tracks the digital divide in terms of race, age, income, educational level and region of the country. The report is online (50 pages).
http://www.pewinternet.org/reports/toc.asp?Report=88

Tellabs Reports Q1 sales of $223 million, Announces Job Cuts

Tellabs reported Q1 revenues of $223 million and a net loss of $43 million, or $0.10 per share. This compares to Q4 2002 net revenue of $313 million and a Q4 net loss of $84.5 million or $0.21 per share
Tellabs ended Q1 with more than $1 billion in cash and marketable securities.


Tellabs also announced plans to reduce its ongoing operating expenses to $125 million per quarter by Q4. The plan includes the layoff of 665 employees, or 14% of its workforce, starting in April. To drive revenue growth, Tellabs will continue to reallocate product development resources to current and future markets such as IP and data. Tellabs will also focus more on sales growth in Eastern Europe, China and other countries in Asia.
http://www.tellabs.com