Vendor Solutions - Vendors And Carriers, A Special Relationship
Who are the innovators among software and equipment vendors in the carrier Ethernet market? Who should carriers be looking to develop relationships with and what sort of innovations are coming down the line?
As carriers continue to migrate their networks in the direction of Ethernet, they will be relying on their relationships with equipment and software vendors to help them achieve their ends with the least possible disruption to services and with an optimal impact on profitability.
For their part, vendors will be relieved that this special relationship appears not to have been too badly tarnished by recent global economic upheavals. Carriers have not slowed down spending on carrier Ethernet. They may find themselves in a tricky corner as regards capital expenditure, but simply continuing to rely on sweating legacy infrastructure while rivals steal a next-generation advantage is not an option. If new money is to be spent at all, it’s going to be on new carrier Ethernet equipment rather than, say, old-school digital cross-connect devices.
Any carriers in doubt about whether their planned Ethernet investment is a sound one need only listen to the messages coming at them from enterprise and wholesale customers to remove all doubt. The net outcome of all the demands and pressures faced by carriers is that money invested with vendors on new Ethernet solutions is actually increasing, not diminishing.
Shift in dynamics
So are there any respects in which recessionary pressure has affected the vendor-carrier relationship? Is there any kind of shift in dynamics? Yes, believes John Lazar, chairman at Metaswitch Networks, an IP infrastructure vendor with customers that include several incumbent operators, a number of Tier 2 and Tier 3 local exchange operators, and other equipment manufacturers. “Both big and small vendors are making a contribution for carriers, but there are certainly a lot fewer small ones around now compared with five years ago,” he believes. “There’s less of a feeling at the moment of disruptive vendors exploding onto the market with new ideas, maybe simply because there’s less venture capital flowing into the telecoms sector now. Venture capital money is going these days into what investors see as more exciting areas like cloud computing. From Palo Alto to the Boston corridor and beyond, hardware development in particular is not seen as offering a good return.”
Looking ahead, Lazar is afraid that a lack of fresh, agile innovators might ultimately be to the detriment of the evolution of carrier Ethernet – not least because it starves larger vendors of energising acquisition opportunities.
“Lack of investment could hold up Ethernet in other ways,” he believes. “We might see smaller service providers also struggling to raise funding for the development of new services. Barack Obama’s $7.5 billion fund for broadband promotion could help to offset some of this pressure, in the US at least.”
The pace setters
Mattias Fridstrom, head of product portfolio at Teliasonera, believes that the era of the smaller, independently-minded carrier Ethernet product developer may have tailed off, but that it is far from over.
“Maybe there are not as many new start-ups as there were, but they’re still out there, and still full of good ideas,” he says. “Small companies really are the best source of innovation. Big companies can do it, but left to their own devices they tend just to do more of the same as they’ve always done.”
Reza Vaez-Ghaemi, technology manager for emerging markets at JDSU, a developer of testing and measurement products for carriers and vendors, believes that while there may be fewer small vendors in the market than there have been, it is the big names that are now setting the pace: “I would include a number of companies on the list of leaders – Cisco and Juniper on the router side, and Alcatel-Lucent, Huawei, Ciena and Tellabs on the transport and switching side,” he says.
Tom Little, president of wholesale at Bell Canada, believes that there are other lines to be drawn between different classes of manufacturer beyond large and small: “There are multiple vendors providing interesting products in the carrier Ethernet space,” he says. “More specifically, concerning vendors, one should distinguish between large, core switches or switch routers, and small demarcation-type devices.”
Big or small, the most important dividing line in the carrier Ethernet vendor market is between those that truly understand what their customers want and those who believe they know best, says Jay Greer, senior business development manager at vendor ADC. “While size can be a boon, it’s really all about how intelligently you address the needs of the operator,” he says. “We like to take time to understand their existing network and look at their roadmap for future developments. What does the future hold for that operator? After a meaningful conversation, we can present a solution that directly addresses where the customer is going. We sit with the network integration team, and any original equipment manufacturers (OEMs), to see how things like costs are impacted by decisions. It’s all about making the customer as future proof as possible.”
Metaswitch’s Lazar warns against the pitfall of seeing development of infrastructure as the prime focal point of the carrier Ethernet market: “It’s about the services and applications which that infrastructure is going to enable,” he comments. “If anyone’s migrating to Ethernet, it’s got to be all about how to monetise from all these new services. If the IPO market does pick up, there’s a backlog of carrier Ethernet network companies that want to go for a public listing. If they get public investment they can afford to do more.”
Collaboration is key
The ideal vendor-carrier relationship goes beyond the supply and demand of products, and should also involve a degree of mutual benefit and collaboration, says Bob Walters, executive director of product marketing at AT&T Business Solutions: “We work with a number of vendors, as you might expect, talking to relevant vendors where it makes sense to do so,” he says. “We work closely with them to help integrate their products into our network and help make their solutions into what we’re looking for, and for what our customers are looking for.”
There are further important parties that must be involved in the mix if carriers are to turn the raw materials of hardware and software into saleable and profitable services.
“Vendors drive innovation of course, but more importantly from a service standpoint is the innovation that is led by bodies like the Metro Ethernet Forum,” says Little. “More consistent services across service providers will help with the adoption and success of carrier Ethernet services. Carriers also benefit in the sense that vendors implement the specifications defined by the Metro Ethernet Forum.”
The relationship between the carrier Ethernet product vendor and their service providing customer may have many dimensions, but at its heart will always remain the need to work together on the most effective way to shift from legacy to next generation. So at what point will this process reach a tipping point in favour of Ethernet?
“Our biggest Tier 1 customer has swapped out Sonet for Ethernet, which tells you that the market is ready for nothing but Ethernet,” says Vinay Rathore, senior marketing director at vendor Ciena. “This started a couple of years ago, then slowed down in the credit crunch, and is now speeding up again. It’s a matter of getting comfortable. I’ve seen lots of MNOs offloading data to Ethernet, leaving voice with TDM. They’re now considering leaving TDM behind altogether. Some have started this process.”
The endgame of an all-Ethernet world – the dream of most carriers and vendors – grows inexorably if gradually nearer: “Ethernet is maturing to be more and more SDH-like, perhaps as good as or better than SDH as a carrier-class service that offers manageability,” says Rathore. “Operators are trying it out here and there. Our customers are finding it means they are paying the same price for more bandwidth. It’s where the future is.”
FASTER AND FASTER – THE ROAD TO 100GB AND BEYOND
One of the hardest things for a carrier or service provider to judge is the timing of a leap in network performance. It is important to be marketing services where the network transmission speed at the top end of the portfolio is both affordable and effective for customers. But you definitely don’t want to fall too far behind the curve as rival service providers build the cutting edge of network performance into their offer. Getting this balancing act right is exactly where a relationship with a trusted vendor partner will pay dividends for the carrier.
Drew Perkins, CTO at Infinera, a manufacturer of optical equipment for service providers, says that he is continually asked for advice on what lies beyond what is currently accepted as the market-leading carrier Ethernet data transmission rate of 10Gb per second.
“There was an initial assumption that there would be a jump from 10Gb to 100Gb, as these things normally go in 10x increments,” he advises. “But enterprises everywhere cried out that today’s CPU technology is not ready for something as fast as 100Gb. It doesn’t offer the same economics that people thought it would, so there might be a move to 40Gb first.”
Perkins says that he is nevertheless seeing 100Gb in testing with practically every major carrier: “Some Tier 1 carriers, for whom being seen to be ready for a 100Gb world is important, may deploy sooner than others. But Tier 2 and 3 players might go for 40Gb first for commercial reasons. All will become clearer over the next year or so. Bear in mind that 40Gb and 100Gb are not even official standards yet, although they will be soon.”
A common variant of the question, says Perkins, is that if your traffic is growing 50% a year, thereby doubling every 18 months, how many years in advance do you need to plan for in infrastructure terms? “Why commit too much up front, paying more per bit than necessary?” he queries. “We talk to carriers all over the globe about this, and very few are ready to commit to actual roll-out of 100Gb right now, whatever they may be testing. There aren’t even that many 100Gb products on the market. I’d say in the first half of next year, 100Gb product will emerge in volume. We’re certainly demo-ing 100Gb right now, and will be in a leadership position.”
Too many assumptions have already been made by carriers about network speed, believes John D’Ambrosia, director of Ethernet-based standards at vendor Force10 and chair of the IEEE Ethernet task force. “People say that 100Gb is the future for aggregation networks, and 40Gb is more for the server end,” he says. “The reality today is that there are still lots of 1Gb servers out there, or even 100Mb ones. If you look at 100Gb technology, it’s a lot different than people expected, and a lot more expensive than many of us would have wanted. I think people are looking at the issue and realising that 40Gb is a lot more where they want to be from a cost perspective.”
The mind set of the telecoms industry, he believes, has moved on a lot from when 10Gb was first introduced eight years ago: “People are still crying out for bandwidth, but facing a lot more cost pressure than they were then,” he says. “The next few years will see an extension of the 40Gb family, with the 100Gb family developing too. Data centres are the big hustlers. It’s maybe not too soon before we’ll be looking at the implications of 1Tb Ethernet.”