Gary Reback: US Government Must Enforce Antitrust Laws to Encourage Innovation

On the need for government intervention in the free market to protect competition and encourage innovation

Gary Reback is one of the nation’s most prominent antitrust attorneys, best known for spearheading the efforts that led to the federal lawsuit against Microsoft.   Gary spoke to an attentive and eager audience on May 14th in Santa Clara, CA.   The Commonwealth Club and Yale Club of Silicon Valley sponsored his enlightening and provocative talk. Reback’s main message was that the government l’aissez faire policies, so strongly promoted by University of Chicago economists, have gone way too far. As a counter-weight, he says we need more government oversight of the private sector along with more vigilant anti-trust enforcement.
To set the stage for the current recessionary economy, Gary began by chronicling the history of the U.S. antitrust movement. From its beginnings in the 1870s (a time when big business controlled the railroads), through Teddy and Franklin D. Roosevelt, Thurmond Arnold and others, there has been an ebb and flow of power and control between the federal government in Washington and big business (e.g. monopolies) or Wall Street investment firms. Starting about thirty years ago, conservatives forced an overhaul of competition policy that has loosened business rules for everything from selling products to buying competitors. In the free market era of the 1990s, big business and investment banks certainly had the upper hand. To a large extent, that is what has caused the global financial meltdown and enabled companies like Microsoft, Intel, Cisco, Oracle, and Google to become so powerful. We were surprised to learn that expensive medical care and non-generic prescription drugs are the result of a lack of anti-trust enforcement.
Mr Reback firmly believes that in a high-tech world, U.S. government “hands off” policies actually slow innovation, hurt consumers, and entrench big companies at the expense of entrepreneurs.   In particular, Gary calls for increased government scrutiny of high tech firms monopolistic practices. He argues that monopolies have the power to raise prices by restricting output, supply and competition. As a result, the economy weakens, unemployment increases, and innovation is pressured.
We take it for granted now, but many of the advances in semiconductors and software were the result of a few dominant lawsuits against big companies. 
In the late 1950’s, AT&T was forced by the U.S. government to license the transistor. William Shockley, one of the co-inventors of the transistor, licensed it from AT&T to form Shockley Labs, which later begat Fairchild Semiconductor, which in turn begat Intel, AMD, and National Semiconductor. The early years of the semiconductor industry in Santa Clara Valley (it was not called Silicon Valley till the mid 1970s) was therefore, a direct result of the lawsuit against AT&T. For more on those early years, please see the article by this author:
In the early 1970s, concerned about possible anti-trust legislation, IBM was forced to unbundle software from hardware. This created a whole new independent software industry, which had not existed before. Software had previously been bundled with mainframes and minicomputers made by the same computer manufacturer.
Merger enforcement is perhaps the biggest business issue of our time, according to Reback. What do we do with companies too big to fail? How about Citibank Group, for example? If it had not been for the repeal of the Glass Steagall act in 1999, Citi would not have been able to acquire Smith Barney, Solomon Brothers and other investment firms. Hence they would not have gotten too big to fail.   Better to have government carefully scrutinize the mergers and acquisitions and/or break up large companies before they become too big to fail! One has to wonder if certain tech companies, like Oracle and Cisco have become too dominant in their industry or even too big to fail because of acquisitions that occurred without anti-trust scrutiny. For example, Oracle has done over 40 mergers after it acquired People Soft and now has proposed to acquire Sun Microsystems.
Is Google the next Microsoft? Yes, in terms of its dominance over web search software, in comparison to Microsoft control over desktop and notebook PC software. No, in at least two other important ways: 
  1. Google created technology that people liked and it worked well. 
  2. The company was also more customer friendly with a more congenial corporate culture and image.
Author’s Note: the next battle between these software titans will be in mobile OS market- Android platform from Google vs Windows Mobile from Microsoft.
Gary believes that Google’s big search competition will come from social networking sites (e.g. Twitter and Facebook), rather then from traditional search engines from Yahoo or Microsoft. He also noted that potential anti-trust action was enough for Google to call off its plans to put adverts on Yahoo’s search result pages.
Was the European Union’s (EU) huge fine against Intel Corp justified? Just one day before this talk- on May 13th– EU regulators slapped a record 1.06 billion euro ($1.45 billion) fine on Intel for antitrust violations and ordered it to halt illegal efforts to squeeze out arch-foe AMD. This fine was levied after an 8 year EU investigation of the company. "Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," EU Competition Commissioner Neelie Kroes told a news conference.
Should Intel have known better to refrain from engaging in unfair trade practices? Most definitely yes, according to Gary. Intel was actually a U.S. government witness in the huge anti-trust suit against Microsoft in 1998. The plaintiffs (US Department of Justice and 20 states) alleged that Microsoft abused monopoly power on Intel-based PCs in its handling of operating system and web browser sales. The issue central to the case was whether Microsoft was allowed to bundle its flagship Internet Explorer web browser software with its Microsoft Windows operating system. Bundling them together is alleged to have been responsible for Microsoft’s victory in the browser wars, especially over arch rival Netscape (which seemed by this author to be a superior web browser). Didn’t Intel learn anything from the trial and the verdict against Microsoft regarding unfair competitive practices? Gary response, "Of course, Intel says it is innocent of the charges and never broke the law, so perhaps the company will be exonerated after the EU Commission decision is reviewed by the European courts."
Opinion: We suggest the reader to ask the question to an Intel executive or lawyer.
In summing up, Reback opined that “anti-trust action failures” in the health care and banking industries have contributed to unreasonably high medical costs and a financial meltdown. Meanwhile, heightened scrutiny over acquisitions (e.g. Oracle’s) would result in a stronger U.S. economy by encouraging more competition and invigorating innovation and the start up culture. 
Bio: Gary Reback is one of the nation’s most prominent antitrust attorneys. He has been named one of the “100 Most Influential Lawyers” in America by the National Law Journal and is quoted regularly by major media. His book Free the Market! is a memoir of Reback’s titanic legal battles—involving top companies such as Apple, Microsoft, IBM, Oracle, and AT&T—and a persuasive argument for measured government intervention in the free market to foster competition.   Gary is currently of counsel with Carr & Ferrell LLP. He is a very friendly and easy to get a long with person, in this author’s opinion.

Telecom Council Announces SPIFFY Award Winners- Telecom Start-ups and Supportive Carriers Recognized


The mission of the Telecom Council of Silicon Valley is described along with the rationale for the SPIFFY awards. Notable comments from selected award presenters/ recipients are included in this summary along with Norwest Venture Partners Tim Chang’s observation on the current harsh climate for telecom start-ups and entrepreneurs.  Tim presented before the awards were announced.
Who is the Telecom Council of Silicon Valley?
The Telecom Council of Silicon Valley connects companies and individuals involved in the region’s communications technology industry with one another for business development, collaboration, and education. The Council, formerly know as the Service Provider Investment Forum, hosts events to bring together local telecom professionals- the industry’s critical mass of businesses, research, ideas, capital, and human expertise.   Their principal goal of the Council is to provide an arena to "Connect, Communicate, and Collaborate."
What are SPIFFY Awards?
The SPIFFY Awards recognize the most outstanding telecommunications start-ups in Silicon Valley, as judged by the Service Provider members of the Telecom Council of Silicon Valley.  
Over 20 Service Provider (SP) members of the Telecom Council of Silicon Valley announced the winners for this year’s SPIFFY awards for their innovation, execution, management, and technology at the annual SPIFFY Award ceremony. These are SP’s or their venture capital subsidiary that have a presence in Silicon Valley.   Of the 96 pre-screened telecom startups that presented at Telecom Council meetings in 2008, members of the Service Provider Forum (SPIF) chose seven winners and seven runner- ups. There was also an award given to the most successful SPIF alumni (start-up that had won an award last year).
Competition for these awards is stiff because all startups are screened by Telecom Council Steering Committees before they are selected to present to the SPIF or other Telecom Council forum meetings. Startups who present have already been identified as having ideas, relevance, and traction that most appeal to carrier members from around the globe.   Bling Software won awards in two different categories.
The winners and 2nd place finishers of the 2009 SPIFFY Awards were:
  • The Edison Award for Most Innovative Start-Up: 4Home, Qik.
  • Ground Breaker Award for Engineering Excellence: Morpho, Staccato Communications
  • The San Andreas Award for Most Disruptive Technology: Bling Software
  • The Fred & Ginger Award for Most Supportive Carrier: Swisscom (for the active role of their Silicon Valley-based team in the telecom innovation scene), Intellect Partners (a division of Telia Sonera).
  • Graham Bell Award for Best Communication Solution: TruTap and Amika Mobile shared this award
  • The Core Award for Best Fixed Telecom Opportunity: Brilliant Telecom, Zeugma Systems
  • Prodigy Award for the Most Successful SPiF Alumni: 2Wire, JahJah
  • The Zephyr Award for Best Mobile Opportunity: Bling Software, Avot Media
The Telecom Council looks forward to promoting ongoing innovation in the telecom value chain and reviewing over 100 telecom startups in 2009.
Here are the url’s for the web sites of the winning companies:
Here are a few notable comments from the award presenters and recipients:
Adobe has been involved in mobile communications for five years. They believe it has now become mainstream and is contributing to the evolution of the web. From the company’s web site ( “Adobe aims to empower device manufacturers, content providers, and operators to deliver engaging experiences that run consistently across desktops, mobile phones, and consumer electronics devices by leveraging the Adobe® Flash® Platform.” They have recently folded their Mobile Division into their main corporate business.
BT believes that fixed line communication has become “something new again” This is due to VoIP, unified communications and intelligent services offered over fixed lines to business and residential subscribers. (BT does not have a mobile/wireless division, having abdicated that market to Vodafone in the U.K. and elsewhere).
Brilliant Telecom is a timing and synchronization company whose technology has been deployed by Vodafone.
Bling Software CEO graciously accepted both awards. The company’s embedded software is said to enable consumers to have a dynamic mobile web content experience on their cell phone screens.

Norwest Venture Partners’ Tim Chang on the outlook for telecom entrepreneurs
Resiliency, good timing, connections, and patience are always needed, but especially in this challenging economic environment.
There are pockets of strength in mobile communications:
  • Smart phone are selling well
  • Apple App Stores are doing over $1M of business each day
  • There are now 50M mobile web users in the U.S.- over ¼ of the total number of users
  • Web video usage has increased (Source Fierce Telecom)
  • While the mobile advertising market is slowing, it does have future potential
  • Mobile ARPU has increased for cellular carriers: AT&T from $50.88 to $59 from the Q1 to Q4 in 2008; VZW from $50.40 to $51.7 in the same time period.
Tim believes that cellcos will go back to metered service (vs. flat rate plans) and create tiered bundles of services for consumers.
Finding funding has been (and will continue to be) very hard for capital-intensive start-ups, e.g. semiconductors, network equipment, touch screens. Venture investors can’t afford to spend $60m to $100M before such companies validate their business plans with technology they can sell to OEMs. 
SP deployment cycles are slowing and that benefits larger companies at the expense of more nimble and quicker start-ups. Femtocells and new CPE were cited as an example. 
System oriented start-ups (network infrastructure equipment, modules, CPE, etc) were advised to target their products/technology to tier 2 carriers that might be more open and receptive than tier 1 carriers.
Strategic investors, e.g. SK Telecom might provide funds that VCs would not provide in this challenging financing environment. This is especially the case with IPOs not being an exit strategy option for start-ups.
VCs are pursuing a barbell investment strategy- providing seed capital to very early stage or embryonic start-ups and later rounds to mature companies in their investment portfolio. Series B and C funding rounds have been the hardest to complete, which means that many start-ups are folding operations.
Some promising mobile market segments include:
  • Game playing with iPhones
  • Micro transaction payment processing
  • Wireless enterprise applications and backhaul
  • Apps where content is in the “cloud” and available on demand.

FTTP/ FTTH emerges as the winner for Delivery of Triple Play service bundles to the home- GPON gains market traction!


The United States is third among the world’s economies in the total number of FTTH households at 3.3 million, and is in 10th position in the global ranking with 2.9 percent market penetration. What’s most encouraging is that the US continues to experience the highest rate of growth of any economy in terms of FTTH subscribers – doubling the number of connections year over year.

This is due largely to FiOS deployments by market leader Verizon (VZ) and to ongoing buildouts by more than 600 smaller independent network providers across the country. "Aggressive FTTH deployment in the US has created a lot of buzz about this exciting technology, and the word of mouth from early FTTH subscribers is driving growth and fueling further deployments."  For more information, please see:

As we predicted several years ago, GPON has become the preferred last mile delivery technology for FTTP, with BPON, EPON and point to point optical Ethernet losing market share with declining sales. The nascent GPON market posted healthy growth worldwide in 1Q08, driven by service provider investments in broadband access networks, according to market research firm Infonetics Research (  Even VZ is moving FiOS new installs to GPON with trials offering 100M bits/sec downstream. (see Ken Pyle’s comment below).

During the same period, BPON equipment sales declined significantly and EPON sales dipped, together bringing the overall PON market down three percent to $417 million worldwide in 1Q08. "Service providers increasingly turn to PON as the next generation of residential broadband access, primarily in areas where DSL service penetration has reached maturity and operators are looking to increase average revenue per user (ARPU)," says Mark Showalter, directing analyst for broadband networks at Infonetics Research.

FTTN vs FTTP: Which is the right last mile topology?

While AT&T ( U-Verse) has gone with fiber to the node (FTTN) and VDSL to the premises, Verizon has been very aggressive in its FTTH/ FTTP (FiOS) deployment. Many independent telcos have also rolled out FTTP, as per the announcements noted in this article.   Despite the higher build out costs and potential regulatory obstacles, we think FTTP will be the clear winner over FTTN.

Our opinion is that new video services, like multiscreen IPTV with simultaneous recording, will cause a "bandwidth explosion." Despite regulatory obstacles, we think that network operators will be forced to deploy fiber as close to the home as possible to provide the necessary increased bandwidth needed for new services. It looks like its starting to happen now with several independent telcos announcing their FTTP roll outs. For additional information, please see: 

FTTH growth stays on track as connections rise to 3.76 million North American households

The upgrading of North America’s last mile networks with end-to-end fiber is continuing at a robust pace, with fiber to the home (FTTH) arriving at more than 1.6 million households over the past year, bringing the total number of FTTH subscribers to 3.76 million, according to a study released today by the Fiber-to-the-Home Council.

The study, by RVA Market Research (, pegged the annual growth rate for fiber to the home in North America at 76 percent, the highest of any country or region in the world.

Here’s a snapshot of recent FTTP/FTTH activity from independent telcos in the U.S.:

Dumont Telephone is rolling out fiber to the premises (FTTP) in Dumont Iowa (pop. 676), replacing the aging copper in its network. As a result, its maintenance costs are going down, and trouble tickets have dropped dramatically. One of the company’s four technicians is planning to retire some time in the next five years, said Roger Kregel, Dumont’s general manager, and Kregel may not replace him. "On a four-person team, that’s quite a bit," he said.  

To read the rest of the article, click here.

Embarq looks to make FTTP a bigger part of its future

A top executive with Embarq says the company cut the cost of fiber-to-the-premises deployment 19% per home this year and can shave an additional 5% next year, bringing the cost of FTTP in line with copper-wiring solutions. James Hansen, senior vice president of network services for the company, which currently deploys FTTP in greenfields, says he now sees a day when Embarq will "do a video play on network-based facilities."

Comporium Communications Surpasses 6,300 Subscribers with FTTP gear from Enablence

Comporium Communications, has now connected more than 6,300 residential and business customers with Enablence’s FTTP equipment, and will now begin to deploy the TRIDENT7(TM) Universal Access Platform GPON solution. Comporium, based in Rock Hill, South Carolina, is one of the largest American ILECs (Independent Local Exchange Carriers) and cable television operators with almost 100,000 customers throughout its service area.

Wave7 Network Architect says DOCSIS 3.0 Not a Competitive Threat to FTTP

FTTP providers need not fear DOCSIS 3.0, says according to Jim Farmer, chief network architect for Enablence’s Wave7 FTTx networks division.Fiber-to-the-premises providers don’t have much to fear from DOCSIS 3.0 technology, which boosts the bandwidth of cable broadband networks, according to Jim Farmer, chief network architect for Enablence’s Wave7 FTTx networks division.  Click here to read the rest of the article.


Please contact the author ( if you’re interested in FTTP/FTTH consulting or other research projects.

What is the market for Carrier Ethernet- metropolitan and/or rural areas?

September 25th Update:  Carrier Ethernet Thunder from Light Reading + PBT based Backhaul in SPRINT’s Xohm

Undoubtedly, this piece is intended to promote Light Reading’s Ethernet Expo next month in NYC.  However, it has some useful market share numbers from the leading vendors, e.g. Cisco’s share has dropped to below 50%, while Alcatel-Lucent is in 2nd place.  Light Reading claims “there has been a thundering of CESR-related product and feature news in recent months.”  Judge for yourself:

Provider backbone transport (PBT, also call provider backbone bridging, or PBB) will be used for backhaul in Sprint’s new Xohm WiMAX network. Sprint is using gear from Ciena (and Clearwire is, too, according to Unstrung).  In this scenario, the WiMAX MAC frame is enveloped in a PBT frame and transported over fiber optic cable.

PBT is based on an emerging standard for IEEE 802.1 “service provider” MAC bridging that has been in the works for many years (I participated in the initial debates in early 2002!).  PBT is an alternative to MPLS-TP (IETF and ITU work in progress) for a scalable Carrier Ethernet network.
PBT: Alive ‘n’ Kicking
The MPLS camp is determined to write PBT’s obituary. Even former supporters of the controversial Ethernet technology, such as Huawei Technologies Co. Ltd. and Nokia Siemens Networks , are keen to dig PBT’s grave now that they are no longer championing the still pre-standards flavor of Ethernet.
The MPLS camp’s alternative to PBT is MPLS-TP (transport profile), another pre-standards technology that is being pushed hard here by the likes of Nokia Siemens, Cisco Systems Inc. (Nasdaq: CSCOmessage board), and Alcatel-Lucent (NYSE: ALUmessage board). (See Transport MPLS Gets a Makeover.)
But PBT is alive, and even kicking: The news that Sprint Nextel Corp. (NYSE: Smessage board), widely regarded as a Cisco shop, is deploying equipment from Ciena Corp. (Nasdaq: CIENmessage board) to use PBT for WiMax traffic backhaul was a boost for the technology’s supporters, who say there are more such announcements to come.

September 18th Update:  Nortel to divest Metro Ethernet Unit

Standards in search of a market?  Neglected enterprise network customers?  This is how we characterized the Carrier Ethernet market, which was originally intended to provide new private line, virtual private line and virtual private LAN services to business customers.  But that market has been growing very slowly.
Nortel just announced it plans to divest its Metro Ethernet unit.  Who will buy it?  A Heavy Reading analyst reports:  ” The CESR market is likely to be about $2.1 billion in 2008, compared to $1.9 billion in 2007. So it’s a growing area, but also very competitive, with 21 equipment vendors in the space,”   That is a very small growth rate- insufficient to support so many vendors, in our opinion.  For more info:
“I am shocked by this announcement from Nortel,” says Heavy Reading‘s Sterling Perrin. “Given Nortel’s history and contributions to optical networking, they are in many ways selling the core business of Nortel. This has got to be incredibly difficult for the many long-time Nortel optical employees who have stuck with the company through tremendous upheaval.”     Perrin says Nortel’s Metro Ethernet Networking (MEN) business, which houses the carrier Ethernet and optical equipment, only contributed about 13 percent of the company’s revenues through the first half of 2008, so “its contribution within the company clearly has diminished through the years.”

Nortel Move to Sell MEN Perplexes Analysts


Nortel is wrestling with the same problems as the rest of the telecom equipment industry: Carrier sales are tepid and sales cycles are prolonged. Exchange rates no longer are favorable toward North American currencies.


Original Article:

A recent Viodi TV video on Carrier Ethernet for rural markets (see bottom of this article for Abstract and link) , stimulated me to share thoughts about that long hyped technology, which has seen more action on standards, articles and conference papers then actual deployment.

The following report is taken from two posts to the IEEE ComSoc SCV Discussion mail list which I combined and edited for Viodi View readers.

Our take:   In a post several months ago, we opined that despite a plethora of standards for Carrier Ethernet and over 8 years of vendor effort to get it going, the technology was still in search of a mass market.   We identified last mile distribution for IPTV and fiber access VPNs for large business customers. Well, that may be changing with more and more carriers interested in expanding their Carrier Ethernet service to small and medium business customers. In addition, we see an important role for Carrier Ethernet in 2G/3G copper based backhaul (mid-band Ethernet) and in fiber based backhaul (Optical Ethernet).

We recommend reading the Telecommunications article (below) for a realistic assessment of the Carrier Ethernet market.  There are still way too many chearleaders out there, even after so many startups in this space have gone belly up. Opinion:  We still think that the main use of Ethernet in the MAN/WAN will be: for IP VPN access,  to deliver IPTV services to residential customers, and for backhaul of 3G/4G and possibly WiMAX networks (as Ethernet over Microwave Radio or Fiber).

In addition to the market information provided in the articles below we note that ITU-T SG13 Question 11 is wrestling whether or not to define a lower rate (ODU0) to carry 1 Gig E and 2 Gig E over the OTN (a DWDM based optical network).  They have a late September meeting in Korea, where they will hopefully decide.  One of our members participates in that committee and we will report back in early October with results.

Here’s a summary and links to recent Carrier Ethernet articles of interest to Viodi View readers:

The Rural Telco Play: Carrier Ethernet Fills Wide-Open Spaces

A  study that was disclosed at the OPASCO show reported that rural telcos’ traditional revenue will diminish by 5 percent this year, 9 percent next year and 13 percent the following year — and that federal and state subsidies, including the Universal Service Fund, will not support the revenue shortfall. As a result, rural carriers will have to take quick action to launch new revenue-generating services such as Ethernet.

The benefits of Carrier Ethernet are not lost on the rural telco community. Indeed, among Nortel Networks’ 40 Carrier Ethernet customers are Dakota Carrier Network, Frontier, Golden West Telecommunications and Panhandle Telephone Cooperative Inc.   Increasing bandwidth demands are being driven by a variety of both residential and business applications, including IPTV, video on demand, Internet access, Ethernet services and 3G/4G wireless, noted Mike Loomis, director of Carrier Ethernet technical sales at Nortel
Carrier Ethernet services: strategy for success Service providers need a plan that balances their strengths and weaknesses

by Doug Allen  Telecommunications Magazine, August 12, 2008       Conventional wisdom says carrier Ethernet services are the next Big Thing in telecom, and service providers are moving accordingly, from the Tier 1 carriers to alternative CLECs. Consider Verizon Business, along with AT&T one of the top national carriers, which claims Ethernet service revenues grew by more than 100% in 2007 over the previous year, even though Ethernet is only a small portion of the carrier’s overall data services portfolio. To read more, go to:

Business Ethernet shows gains

Fueled largely by demand from AT&T and Verizon Communications customers, the number of Business Ethernet services rose 16% in the first half of the year, according to Vertical Systems Group’s latest market analysis. “Most providers steadily increased their port deployments, spurred by new Ethernet service offerings and migration of larger customer networks,” said Rick Malone, principal at Vertical Systems Group. xchange (9/5)

XO Enhances Ethernet infrastructure to deliver new speeds and extended reach

XO Communications has rolled out new Ethernet speeds in several of its markets, which now have access to 20, 30, 40, 50, 60, 70, 200, 300, 400 or 500 Mbps at on-net fiber locations. Chicago; Dallas; Los Angeles; Minneapolis; New York; San Jose, Calif.; Seattle; Philadelphia; and Washington are the first markets to gain access to the higher speeds, although additional markets are set to follow. To read more, go to:

Light Reading: Ethernet Services Revenue Still Growing Strong
The latest news from key players suggests that the market is still going strong, although the law of large numbers is beginning to make growth look more modest than the 25 percent to 100 percent rates characteristic of 2005-2007.  To read more….

NXTcomm: Carrier Ethernet heats ups at NXTcomm Trade Show in Las Vegas

There have been a number of product announcements and advancements offered by Tellabs, Alcatel-Lucent, Ericsson, Ixia, Soapstone Networks, Extreme Networks, Fujitsu, Foundry Networks, Actelis and others. While this week’s announcements address a variety of market trends, it might be safe to say that increasingly apparent needs for bigger and better mobile backhaul options are fueling some of the activity, while the emergence of a complex multi-carrier, multi-network Ethernet environment also factoring into the innovations.

Foundry Unveils Carrier Ethernet Switches

Foundry Networks unleashed a series of Carrier Ethernet edge/aggregation switches designed to scale Ethernet services while reducing the burden on MPLS routers. Foundry is unveiling six 1RU Carrier Ethernet switches under the NetIron CES 2000 brand. The switches feature 24- or 48-port gigabit Ethernet copper or fiber interfaces with optional dual 10 Gigabit Ethernet uplinks. The switches support the IEEE 802.1ad Provider Bridge (PB) and 802.1ah Provider Backbone Bridging (PBB) standards for scaling multipoint Ethernet services by hiding media access control (MAC) addresses.

Nortel Continues to Build Customer Base for Carrier Ethernet Portfolio

With over 40 customers around the world acquired within the last 12 months, a vendor ecosystem of more than 25 members and a growing product portfolio, Nortel is demonstrating how its innovative technologies have defined Carrier Ethernet as a viable, cost-effective metro infrastructure.   Among Nortel’s 40 customers are U.S. service providers Panhandle Telephone Cooperative, Golden West Telecom, Frontier and Dakota Carrier Network as well as KPN in the Netherlands, China Netcom, Australia’s Silk Telecom and Promigas Telecomunicaciones in Colombia.

Comment:  What are the Tier 1 network operators doing?  For years, Verizon has quietly deployed Private Line Ethernet and Ethernet Transparent LAN.  What else is going on in the tier 1 carrier space?

Carrier Ethernet Growing Faster and Smarter

Standards bodies are working toward specifications for both Ethernet and optical networks that would run at 100G bps, which for Ethernet would represent the next speed hop in a streak that has come all the way from Gigabit Ethernet in about a decade. Another standard in the works will cover 40G bps Ethernet. But even the standards, not expected until 2010, won’t do the job by themselves.  On June 16th, the “Road to 100G Alliance” formed a technical committee to fill in gaps in interoperability among various Ethernet and optical technologies that are under development for 100G-bps (bit-per-second) networks, spanning from enterprises to carrier backbones.

Carrier Ethernet Vendor Ethos Makes US Debut

The four-year-old company made generally available its portfolio, which includes two Carrier Ethernet transport switches, which employ PBB-TE technology, and a management system that allows service providers to monitor and optimize their networks, said company co-founder Adam Dunsky.   Note:  PBB= IEEE 802.1ah Provider Backbone Bridging

Perspective from an IEEE ComSoc member who works for a vendor supplying Carrier Ethernet gear as well as other WAN transport equipment:

“From what I’ve seen, Ethernet is being mapped into SONET/SDH or OTN at all segments of the (wide area) network, with the possible exception of the access networks.  Even in access networks there are deployments of Ethernet mapped via GFP over PDH (DS1s and DS3s) for bundled connections.  As far as I know those types of deployments are all book ended (same vendor on each end of a link), though there is a standard for it (G.8040).”

Comment:  Carrier Ethernet is defined as the transparent of Ethernet MAC and PHY frames over a “carrier class” network.  That means robust, reliable, high performance.  While Ethernet OAM was developed by the IEEE 802.3, 802.1, and ITU-T standards committees, many feel that the associated cost and complexity diminishes the attractiveness of Ethernet in the carrier network.  Some say, that the cost and simplicity advantages are negated when you add OAM, Performance Monitoring, and Protection Switching to Ethernet.  So with that said, the key issue is when and where Carrier Ethernet terminates and Ethernet over SONET/SDH or the OTN originates.  As I previously mentioned, the now mostly extinct MSPP (God box) vendors thought that demarcation point was in the basement of a building (business tenants).  Others felt it was at the 1st POP with either fiber or copper Ethernet access including OAM. Where is it now?  What do Juniper and Cisco think about Carrier Ethernet vs Ethernet over Optical Transport networks?  What’s your opinion?

Viodi Video:  Carrier Ethernet for Rural Markets

In this interview Michael Loomis of Nortel Networks and Gary Bolton of Hatteras Networks explain the applicability of Carrier Ethernet to rural markets, using both existing copper and/or new fiber infrastructure. This allows carriers to provide services to rural areas that are comparable to what can be found in urban area. Michael Loomis points out how rural carriers are closer to their subscribers and are much faster to move to solutions than larger entities.

Prospering in the Video Business

The WTA Spring 2008 Meeting featured a upbeat panel on the distribution of video by independent telcos. Gerald Duffy of Blooston, Mordkofsky, Dickens, Duffy & Prendergast moderated a panel that provided both the big and detailed picture of the video business. 

Ben Foster, VP of Sales and Marketing for Twin Valley Telephone, an early adopter of franchised IPTV explained how their system has achieved take-rates of 50 to 55% through bundling of local and long distance telephony, broadband and television.   Although they only make $3 to $4 per sub per month on their digital basic, this sets the foundation for additional margin features such as High Definition and PVRs. 

Foster explained that the in-home network, with its proliferation of noise-generating sources, such as furnaces and exercise machines, is as much of a challenge as the outside plant network. 

The Outside Plant Network is important as Catherine Button of Pannaway pointed out that the need for bandwidth is rapidly growing. She cited FTTH Council information that suggested that by 2010, the high-end capability of ADSL2+ will barely meet the lowest expected network bandwidths. As a result, Button suggested that FTTH is viable for not only greenfield (new infrastructure) deployments, but many brownfield (rebuilds) deployments as well.      

Shane Pierce of Falcon IP Complete explained the nuances of content acquisition and the various rights required from transport agreements (getting the content to the headend) and distribution agreements (right to distribute to consumers). He suggested that third-party aggregators streamline the process of obtaining distribution agreements to 60 to 90 days from what could take several years if negotiated directly with the content providers. 

Northeast Nebraska Telephone is one such company that is using an aggregator, NRTC, to offer IPTV. Northeast Nebraska Telephone has 14 analog cable systems that they found difficult to maintain and challenging to keep up to date in terms of providing competitive programming line-ups. They felt that a move to IPTV would help them spread the costs of their network over more services, while providing a better product to their customers. 

Battle of the Virtual & Actual Desktop

As discussed in an earlier issue of the Viodi View, Google, Adobe and Microsoft are increasingly crowding into each other’s traditional spaces.   Recent product offerings from Google and Adobe provide more evidence of this trend.

Google documents are available now in both online and off-line versions.  They automatically synchronize to the online version and tracks revisions, just like the pure online documents have.   The following video shows how it works, although I can’t find the offline option in my Google documents account.  Maybe it will be there in a day or two.

Built on the AIR and Flex platform, Adobe’s Buzzword is another new alternative and it seems to be very good with regards to layout, comment capability and formatting.  It also works in both online and offline modes, like the Google documents.  With Adobe’s announcement of an online, no-cost version of Photoshop, integration between text and print (and eventually video) may never be eaiser.

At the Spring 2008 VON Conference in San Jose, I saw a very impressive demonstration from Communigate that is also built on the Adobe Air and Flex programs.  Communigate replaces the Microsoft Exchange server and makes it real easy to drag and drop files between different social applications, such as Instant Messaging and photos.  Since, it is all integrated, it makes for a single log-in for multiple applications.   From my limited knowledge of this space, it looks like a much easier to use, more capable and lower cost solution than the traditional mail-server applications.

The real interesting thing is that the Adobe platform can work on Linux platforms.   Google’s product, based on Open Office, has the advantage of bundling spreadsheets and presentations and it should also work on Linux, although I haven’t confirmed my conjecture. 

Once these applications have grammar checking I would be all set, as it is one feature I need.  The other issue I have seen is formatting between Google Docs and Microsoft Office products.  I haven’t used Adobe’s Buzzword to understand whether formatting is an issue with their product. 

If these small inconveniences can be fixed, then there may be some viable alternatives to the Windows/Office monopoly.  

The Virtual Business – A Telco Opportunity

This is an example of the video interface of the Pronto unified messaging client.Software as a service has been a big buzzword in Silicon Valley technology circles for a number of years. It finally seems to be filtering to the independent telcos, as evidenced by last month’s OPASTCO-Microsoft venture and this week’s announcement at NTCA’s Annual Expo that Goldfield Telecommunications and Communigate are partnering to bring the latter’s technology to independent telcos.

As reported previously in the Viodi View, Communigate offers a a communications suite, based on Adobe’s Flash and Flex 2 technology, which promises to integrate communications and multimedia applications via multiple devices, such as computers, cell phones, personal digital assistants and IPTV set-tops. This approach of software as a service is ideal for the SOHO or small business looking to offload some or all of the hassles and costs of I.T. support. 

In short, software as a service makes for more sticky customers. On a personal note, having used software services such as Google (mail servers) and Oracle’s Upshot (Customer Relationship Management), I am convinced that most small businesses will migrate to this approach over time. Software services could be great addition to a telco’s broadband bundle.