Latest Trends in Optical Networking: 100G & Next-Generation ROADMs
Rajan VaradarajanFriday, June 18th, 2010
There has been a renewal of interest in optical networking companies recently with the anticipated shift to 100G technologies poised to happen soon. Various players are positioning themselves for this big industry shift. Along with this interest in all things 100G, there is also an industry evolution from the early generations of ROADM technology (Reconfigurable Optical Add Drop Multiplexer) to newer versions that provide a significantly higher degree of flexibility and reconfigurability.
Reconfigurable Optical Add/Drop Multiplexers (ROADMs) technically refer to a network element that has the capability of adding/dropping selected wavelengths for local traffic as well as redirecting express traffic to other directions in a multi-degree node. The “Reconfigurable” part in ROADM refers to the ability to do this local add/drop as well as the redirection of express wavelengths in a dynamic fashion from a remote network operations center and without manual re-fibers of line cards and with minimal pre-planning to account for uncertain traffic patterns. This reconfigurability is the key to efficient network adaptation to unforeseen demand patterns and customer connects/disconnects without costly service disruptions. The term ROADM, has been used more broadly than just the network element itself and has been used to refer to (a) an optical transport system that incorporates ROADM technology, and (b) optical components and sub-systems (made by companies such as JDSU) that form the building blocks of the ROADM system.
100G networking and associated optical products can be broadly classified into (a) client side, short-reach, standardized, pluggable optical modules that are used to connect short reaches between routers/switches and transport equipment or among switches, and (b) line side models, DWDM interfaces that are proprietary, vendor specific and cover distances of 1,000 - 2,000 km.
Early low-volume shipments of client side interfaces, which are standardized by IEEE, have commenced and the key players for these interfaces are Finisar, Santur and Opnext. The client side models have not yet reached attractive price points compared to 10G modules, hence slow uptake of the models is projected until the cost-volume positive feedback cycle kicks into higher gear. While early parts are sampling this year, rapid market adoption is highly predicated on the cost points of the modules.
On the DWDM line side that covers geographical reaches across regional, long-haul or ultra-long haul distances, there has been a concerted effort by all major optical equipment vendors to introduce 100G capable systems. The advantages of 100G on the line side are very compelling, as it increases the fiber capacity to 8 Tb/s and the preferred technology path using coherent optical transmission provides a number of additional advantages of simpler link design and inherent compensation of some fiber impairments such as chromatic and polarization mode dispersion. The advantages of 100G systems and reasonable price points relative to 10G systems will facilitate line adoption of 100G; it is expected to occur rapidly once systems are available in early to mid 2011. While early versions of 100G line side technology are available now, optimized and field deployable systems are expected in 2011. The major players in this space are Ciena/Nortel, Alcatel-Lucent, Nokia-Siemens, Huawei and Infinera. Each of the vendors has announced slightly varying flavors of the technology and approaches. With the R&D focus on 100G and coherent technology and the commoditization of 10G technology, it appears that 40G technology is being squeezed out in carrier applications (for both line side and client side applications). This was reinforced by Infinera’s recently announced decision to discontinue 40G non-coherent PIC (Photonic Integrated Circuit) and focus resources on 100G coherent technology in a PIC.
Along with the evolution from 10G to 100G discussed above, the other major area of interest in the optical networking space is the emergence and adoption of next-generation ROADMs that provide colorless, directionless and contentionless capabilities. The first generation of ROADMs introduced in 2003-2004 enabled the carriers to add/drop some wavelengths without disrupting other wavelengths. While this provided a huge improvement over the previous method of operation, it still had a number of limitations in terms of a fully automated reconfigurability. Newer optical building blocks and lower costs are enabling the realization of next-generation ROADM architectures which remove these limitations. Directionless ROADMs enable a common bank of transponders to connect to any direction in a multi-degree node. Colorless ROADMs enable a transponder to flexibly connect to any mux/demux port and contentionless ROADMs enable use of the same wavelength in different segments of a network with a common node. The key building blocks for these new levels of reconfigurability is higher port count WSS (Wavelength Selective Switches) and smaller, lower cost WSS switches. These advances are expected to catalyze the ROADM market and continue the high growth trajectory of this sub-segment of the optical component space and continue to benefit ROADM market leaders like JDSU.
Posted in Internet, Networking, Rajan Varadarajan, Technology, Telco | No Comments »
Mobile Packet Core — Ready to Take off
Rajan VaradarajanWednesday, February 10th, 2010
Renewed interest in packet core networks over the past several months has generated new product announcements from infrastructure equipment vendors and touched off a round of acquisitions in the space as well.
I should say that packet core networks are not new. They’ve been used to backhaul IP data traffic to servers and other nodes on the Internet since the days of 2.5 G/GPRS networks. The central player in the packet core network is the Gateway GPRS support node (GGSN) in GSM/UMTS networks — a powerful router that performs multiple functions including user authentication, traffic forwarding and management, support for thousands of sessions, data records/billing, tunneling across multiple GGSNs, etc.
That said, the packet core network’s new prominence is the result of a phenomenal increase in mobile data applications and traffic driven largely the result of a multitude of all-you-can-eat data plans from carriers. Another significant factor driving demand for packet core routers is WiMAX, which is being adopted at a great rate for fixed and nomadic IP data applications, especially in developing nations. The ASN gateway packet node is the key component of WiMAX’s core and, although not a cellular network substitution or replacement, there is a sizeable overlap in the functionality of the ASN gateway and cellular networks’ packet core nodes.
Looking ahead, as the industry moves through the transition to Long Term Evolution (LTE), often categorized as 4G technology, the packet core needs equipment that not only meets today’s amped-up capability requirements but must accommodate future expansion as well. Interestingly, several packet core node vendors are targeting sales to the LTE core network, also known as the Evolved Packet Core (EPC). Unlike today’s 3G networks, EPC provides an “all-IP” aspect that carries voice traffic over IP.
Girding up for what’s next
Packet core equipment vendors include the traditional mobile infrastructure market leaders, among them Ericsson, Nokia, Siemens, Alcatel-Lucent, Hitachi (which recently acquired Nortel), Huawei and ZTE. But smaller startup companies are also making their presence known. For example, WiChorus saw initial success in the WiMAX space and enhanced its product line with offerings for the LTE Market. Tellabs recently acquired WiChorus and will integrate its product into the highly successful 8800 Multiservice Router.
Cisco also acquired a small startup, Starent, in response to its recent success with Verizon. Starent’s ST-series Multimedia Core Platforms connect to multiple types of access networks, including UMTS, WiMAX and LTE EPC. The core software runs StarOS, a variant on Linux, and the platforms incorporate hot swap capability, redundancy, and a variety of other carrier class features. Unlike the larger vendors, Starent and WiChorus offer software systems that are easier to scale for various uses and capacities. Their core products are purpose built and designed from the ground up.
A number of equipment vendors, including Hitachi, NEC, NSN and ZTE, offer modified Advanced Telecommunications Computing Architecture (ATCA) platforms as the basis for their packet core nodes. These “Big Iron” packet core nodes have a multi slot chassis populated with high capacity cards and often have network processors/ASICs/switching devices. The network processors/ASICs are useful for deep packet inspection (DPI) that, allows the node to shape/police/report traffic based on embedded content although no operator will publicly admit it. Companies such as Ericsson and Starent rely on custom-built platforms to address this market.
Ready and not
It will be interesting to see Juniper’s roadmap for the packet core network as it is fleshed out over the next few months. Juniper was supposed to partner with Starent, but instead was acquired by Cisco. Juniper also partnered with Ericsson for the 3G packet core (GGSN), but won’t be involved on 4G equipment. And Ericsson’s 2006 acquisition of Redback appears prescient as it provides credibility for the company’s IP technology with the service provider network.
Some reports have Alcatel-Lucent addressing the packet core by adding functions to the 7750 service router platform, which they gained in the TiMetra acquisition and saw significant success with in the metro Ethernet space. This also has high credibility with service providers.
Lastly, Huawei’s success in Europe and Asia does not make it a major player in the North American market. Observers indicate Huawei’s presence depressed bids and profits of European manufacturers of next generation packet cores.
Tags: Alcatel-Lucent, Ericsson, Hitachi, Huawei, Juniper, NEC, Nokia, Nortel, Siemens, Starent, WiChorus, WiMAX, ZTE
Posted in Author, Networking, Rajan Varadarajan, Telco | No Comments »
Calix: Positioned Well Enough on the Road to IPTV?
Rajan VaradarajanMonday, January 4th, 2010
Calix, a strong player in the growing wireline access (GPON/DSL/IPTV pipes) segment has a singular focus on Tier-2/Tier-3 markets, which in the near-term bodes quite well as the Tier-2/3 segment is in line to receive most of the funds made available through the federal government’s Broadband Stimulus Program to build out the nation’s broadband network, part of the multi-billion-dollar American Recovery & Reinvestment Act’s (ARRP). Tier-1 companies largely passed on Broadband Stimulus.
Calix focuses on wireline access solutions of all types: DSL, GPON and ActiveEthernet. The company’s systems allow service providers to go beyond mere connectivity and reach for the brass ring of extended communications services and revenues that is driving the transformation from legacy circuit to packet; from narrowband to broadband; and from copper to fiber networks.
Wireline is the true grail. Industry headlines may all be about next-generation wireless but wireline access deployment is the key to the reliable, cost-effective, very-high-speed pipes that are the foundation for Telcos’ entry to the IPTV space.
Calix provides the entire solution ecosystem for the wireline systems. Though it started as a DSL/next-gen voice company called Broadband Loop Carrier, Calix added GPON capabilities through the acquisition of Optical Solutions Inc., and carried out a technology refresh to evolve its product portfolio from ATM to IP/Ethernet. There’s a lot to like: Calix enjoys a strong market position and is the market leader in the Tier-2 segment with good customer traction. The company has a strong, comprehensive product portfolio that is well positioned to address all wireline access market needs. As noted they are a beneficiary of Stimulus funds over the next 12-18 months and Calix is aggressively addressing growth markets such as IPTV and GPON.
But Calix also has significant challenges. The company has not succeeded in expanding into Tier-1 or international accounts where strong, well-established players maintain deep, long-standing relationships with their customers. As a result, its upside potential is limited because once ARRP infrastructure funds to Tier-2/3 carriers are deployed, Calix has little opportunity to grow at a rate higher than the organic growth of the Tier-2/3 segment in the U.S. Add to that concern over the long-term competitiveness and operational viability of many Tier 2 & 3 carriers, Stimulus funds notwithstanding, and the wireline access market is fiercely competitive with margins under 30% and relatively high R&D costs.
Overall, this is a growth market characterized by a few technology shifts. Verizon’s bold FTTP initiative has spurred a deep-fiber build out by many other carriers, enabled to a much greater degree by the ARRA Broadband Stimulus program. Calix stands to gain significantly from this build out as it has focused on Tier-2 and Independent Operating Companies (IOCs)/Rurals, again, those that are in line to receive the bulk of the funds.
The next-gen wireline access market is segmented by types of customers, and different players have strengths in different segments. Also, with almost no international presence, Calix is viable only in North America. Still, Calix’s focus on the Tier-2/Tier-3 market of North American wireline carriers brings a long customer list to bear that includes CenturyLink, Windstream, TDS Telecom and many other smaller companies.
Looking at the competitive landscape, the Tier One customers (AT&T, Verizon, Qwest) are largely the domain of Alcatel-Lucent, Motorola, Adtran and Ericsson. The Tier-2 customers (CenturyLink, Windstream, Frontier etc.) are serviced by Calix and Adtran and Tier-3 customers (IOCs/ Rurals, etc) see Calix, Enablence and Occam.
Tags: ActiveEthernet, AT&T, Calix, CenturyLink, DSL, Frontier, GPON, Qwest, Verizon, Windstream
Posted in Author, Rajan Varadarajan, Telco | No Comments »
State of the Telecom Optical Components Industry
Rajan VaradarajanFriday, August 14th, 2009
The genesis of the telecom optical components industry, as we know it today, was seeded in the research labs of major equipment telecommunications vendors of the 1980’s, companies such as Nortel, Lucent and Alcatel. The optical components that were developed were the key to winning the race in DWDM and OC-192. Those that had the components technology or the scale to drive the supply chain, dominated the burgeoning optical transport market of the late nineties into early 2000. These companies drove component business groups to serve the internal market and feed into the system - level product lines – thereby ensuring market differentiation. Some companies drove these component groups as cost centers and the profit margin went to the system business.
When capex budgets started to dry-up by the middle of 2001 and the frenzied deployment of 10Gb/s DWDM long-haul systems reduced to a trickle, the obvious and immediate fix to improve finances were to reduce fixed costs associated with component design centers and optical chip wafer Fabs. Deals were quickly made to divest and merge the captive component divisions with either existing merchant suppliers or with start-ups that were able to catch the IPO window. Since the burst of the telecom bubble, the industry has slowly clawed its way back to some level of recovery even with the emergence of new component suppliers such as Optium, Opnext and Finisar. However, with remnants of VC-funded start-ups sputtering along, the emergence of low cost manufacturers from the Asia-Pacific region along with general oversupply in the industry, the return to profitability has slowed with some companies suffering occasional losses. Even the minimally profitable companies continually face the challenges of restructuring and off-shoring while addressing the need to further invest in leading edge optical products.
Not all is doom and gloom however. Bandwidth growth has allowed service providers to expand their infrastructure on real revenues coming from bandwidth demand. Spending levels in 2005-2008 were at a high in both terrestrial and submarine networks and component company valuations did recover modestly. Behind this trend the telecom optical components industry has improved palpably. At trade shows and executive forums, the topic at the top of the list is industry consolidation, which many agree is a long-term solution. Several deals were made to this effect, but not at a pace or degree to produce lasting effect.
Then, in late 2008, strains in the financial industry brought a new round of difficulties that resulted in a freeze in spending patterns. Only now are we seeing infrastructure spending sustainably on the rise. In fact, we expect to see a continued recovery with CAGR back at 2005-2008 rates before long.
Going forward we think the fundamental problem that plagued the optical industry will have been addressed. In our view there are three key developments underway that will move the industry forward at better rates, starting now and lasting into 2010.
1) Service providers and system vendors recognize that the health of component suppliers is necessary to ensure stable and reliable supply with continued innovation coming from the bottom of the supply chain.
2) Component companies are right-sizing their businesses to run at >30% gross margin either by fully utilizing Fabs and/or outsourcing and streamlining operations.
3) Much like in 2000, M&A and consolidation will come out of necessity more so than luxury. But a second shakeout may be in the cards as operating winners and losers become more apparent. This will lead to a much healthier future.
Tags: telecom investments
Posted in Rajan Varadarajan, Telco | No Comments »
Challenges in High-End Handsets
Unni NarayananTuesday, June 9th, 2009
As we view current developments, key challenges for processor manufacturers aiming to grab the high-end handset brass ring i.e., Intel and ARM, include helping batteries last as long as possible and accommodate “easy to adopt” features that handset manufacturers need.
Who’s going to prevail? Well, stay tuned. It’s certainly something that we’re following closely. We’d love to hear your thoughts, too!
Tags: ARM, hand-sets, Intel
Posted in Semiconductor, Telco, Unni Narayanan | No Comments »
