Silicon Photonics – Cisco and Intel see "Light at the End of the Tunnel"

Introduction:

Among the many presentations on Silicon Photonics (SiPh) at the excellent 2013 Open Server Conference,  two were of special interest:

  • Joel Goergen of Cisco called for a radically new data center architecture that used SiPh to interconnect components and modules, rather than circuit cards or racks of equipment.
  • Mario Paniccia of Intel focused on using SiPh for rack level interconnects, but called attention to total solution cost as a critical issue to be solved.

The other presentations – from SiPh component vendors, potential customers (Oracle), and a market researcher (Ovum)- all agreed on the promise and potential of SiPh, but differed greatly on the technology details, link distance, receiver vs transceiver, and “sweet spot” for a volume market.

Silicon Photonics is a new approach to using light (photons) to move huge amounts of data at very high speeds with extremely low power over a thin optical fiber rather than using electrical signals over a copper cable.  It’s been in the research stage at Intel for over 10 years, while a few component/module companies have already shipped SiPh receivers (but not integrated transmitter/receivers or transceivers yet).

For a description of all the SiPh (and other) presentations at the 2013 Open Server Summit, please visit their web site for the conference program.  You will also find catchy quotes there like: “Only silicon photonics holds the promise of making 100G more cost-effective than 10G and 40G nets,” by Andy Bechtolsheim, Arista Networks, Oct 2012.


Using Integrated Silicon Photonics for Higher Speed Interconnect Technology – A Frame Work for The Next Generation, by Joel Goergen of Cisco:

Exponentially increasing Internet traffic along with the Internet of Things (IoT) will place a huge burden on next generation, cloud resident data centers. The new requirements include: higher system performance, coping with higher power consumption via more effective cooling concepts, faster interconnect speeds (between components, modules, cards, and racks). The challenge for designers is to provide faster compute/storage/networking systems with more effective bandwidth/performance per Watt and with highly efficient cooling. Hopefully, all that can be provided at improved cost/ performance/power efficiency to the owner of the data center.

Goergen sees the prime use of SiPh as a high speed/low latency interconnect for individual components and modules used for compute, memory and storage (possibly networking as well, but that was not mentioned). Attributes of this future system include: lots of links, very low latency, lower power consumption, minimum protocols, secure and easy to scale.  

The realization of that vision is shown in the figure below

Dis-aggregated set of things becomes interconnected through Silicon Photonics.
Silicon Photonics Simplifying Interconnections

A huge advantage of this “SiPH to connect everything” approach is “intelligent power,” which includes power efficiency, monitoring and capability to repurpose power from one area to another. The focus would be on “power distribution to the chip level,” according to Joel. His stated bottom line was that “total ASIC power is screaming for alternative system architectures.”

An illustration of “intelligent power” within a future data center is shown in illustration below:

Silicon Photonics has the potential to enable intelligent powering, improving overall data center power efficiency.
SiPh WIll Improve Power Efficiency

The advantages of this novel approach include optimized cooling in a decentralized environment and more effective use of Data Center facility space.   Joel proposed to localize the CPU/Memory/Storage farms and contain the heat based on that area of the building.  The result would be to keep like components together, be able to change farm types as the Data Center grows or as needs change. It would also better manage costs for electrical and cooling in distribution. He said that such a distributed architecture would drive new, enhanced cooling technologies.

Author’s Note:

The emphasis on power and cooling is of utmost importance as this is often cited as the number one problem with large, high performance Data Centers. Joel is proposing use of SiPh to mitigate that problem.

In summary, this presentation proposes use of SiPh for a high speed/low latency interconnect for components and modules within Data Center equipment.  The concept of cards and racks are replaced by interconnected components/modules.

The benefits were said to include:

  • Drive Higher Voltages to the chip due to reduction in the DC Voltage (IR) drop
  • Inteligent Power Distribution-  Not just Efficiency or Monitoring
  • Liquid Cooling at the chip / at the system- Hotter components and higher densities are coming
  • Dis-Integrate the Data Center Components – Target the most effective way to organize, optimize power and cooling using Photonic Interconnects as the frame work

Revolutionizing Computing and Communications with Silicon Photonics, by Mario Paniccia-PhD Physics of Intel

Intel claims that Silicon photonics offers a way to extend silicon manufacturing to higher speeds and thus provide low cost opto-electronic solutions and tremendous bandwidth. The results would be advances in a wide range of applications in servers, high-performance computing, and networking. Recent developments point to practical applications in the near term. For example, a new optical connector and fiber technology support data rates up to 1.6 terabits per second.

Mario unequivocally stated that the “sweet spot” for SiPh deployment was rack level interconnects on the order of six to 12 inches. [Other SiPh speakers talked about distances of 2km and more].  He indicated that Mega Data Centers, High Performance Computing (HPC) and the NSA Data Center in Utah were all interested in SiPh for that application. SiPh promises include: increased performance and energy efficiency with lower system cost and thermal density. This will “enable new form factors,” he added.

Paniccia claims that any interconnect link >= 25G b/sec at a distance of >= 2m will need a photonic link. But such fiber optic interconect links are expensive and dominate HPC/Mega Data Center costs. The challenge is total systems cost, which includes the photonics (laser, packaging, assembly) as well as the cables and connectors.  “Current cost constraints limit use of photonics in and around servers,” Mario said.

According to Paniccia,  “The goal of SiPh is to bring the advantages of semiconductor processing to optical communications.  In particular, high volume, low cost, highly integrated functions and scalable speeds.”

“Intel has built optical devices in silicon that operate >40G b/sec,” according to Mario.  A crucial point is that SiPh building blocks are now being integrated into a complete system.  These include: lasers, data encoders, light detectors, and other functions.  Intel is using a “hybrid Silicon laser” along with advanced packaging and assembly techniques. This is in sharp contrast to the other SiPh vendors which all use separate off-chip laser light sources.

In 2009, Intel demonstrated a 50G b/sec SiPh link that was organized as 4 wavelengths X 12.5G b/sec/ channel.  Silicon germanium was used as a photo-detector. Intel quietly pursued their research without making other public demonstrations until this year.

  1. This January, Intel and Facebook announced they were collaborating on “Future Data Center Rack Technologies
  2. In April  2013, Intel showed a live demo of a 100G b/sec SiPh link at their IDF conference.  It was claimed to be “a completely integrated module that includes silicon modulators, detectors, wave-guides and circuitry.” [Intel believes this is the only module in the world that uses a hybrid silicon laser.  For more on this topic see Panel at the end of the article].
  3. Intel CTO Justin Rattner also displayed the new photonics cable and connector that Intel is developing with Corning at IDF. This new connector has fewer moving parts, is less susceptible to dust and costs less than other photonics connectors. Intel and Corning intend to make this new cable and connector an industry standard. Rattner said the connector can carry 1.6 terabits/sec. You can watch the video here 
  4. In September 2013, Intel showcased the above referenced MXC cable and connector developed with Corning, capable of 1.6 terabits/sec per cable with up to 64 fibers. They also demonstrated a 300m SiPh link @ 25G b/sec over multimode fiber.
  5. At ECOC later that month, Intel demonstrated 25G b/sec SiPh transmission but at a much longer 820m.

But what really significant is Intel’s emphasis that a total systems approach, was needed to make SiPh a viable interconnect technology.  That includes photonics, cables, connectors, and structured wiring/assembly which includes optical patch panels to interconnect servers in a rack.

Mario concluded by saying that Intel plans to make SiPh real and that the future for the technology was very bright. We take his words very seriously!

Closing Comment and Analysis:

This author has followed Intel closely since first applying for a job there in the summer of 1973. I’ve also worked for the company as a consultant in the late 1980s and mid 1990s.  We have never before seen Intel pursue a research project for more than three years without either bringing it to market or killing it (neural computing was a late 1980s hot project that was killed as that market was not there- and still isn’t).  SiPh is quite an exception to that practice as it’s been in the research phase at Intel for over 10 years!

But Intel may be announcing SiPh products very soon.  This past January, they announced they’re working with Facebook on 100G b/sec rack interconnects for Data Centers.

And we couldn’t help notice this Intel job advertisement for a SiPh Market Development Manager.

Would Intel be hiring such a person if a product announcement was not forthcoming in the near future?  

SiPh could be one of the most exciting developments in large Data Centers and HPC in years.  It could aid, abet and accelerate the movement to cloud computing.  The technology also has the potential to drastically change the architecture of compute, memory, storage and network equipment within the Data Center, as Joel Goergen of Cisco proposes.  That would be creative destruction for Cisco who has a huge market in all types of Data Center equipment.

–>Stay tuned for more SiPh developments coming this year and next.  We are watching all aspects of this technology very closely.


For a list of Intel’s SiPh research achievements please visit:

http://www.intel.com/content/www/us/en/research/intel-labs-silicon-photonics-research.html


PANEL: Hybrid Silicon Laser Project

Intel and the University of California Santa Barbara (UCSB) announced the demonstration of the world’s first electrically driven Hybrid Silicon Laser. This device successfully integrates the light-emitting capabilities of Indium Phosphide with the light-routing and low cost advantages of silicon. The researchers believe that with this development, silicon photonic chips containing dozens or even hundreds of hybrid silicon lasers could someday be built using standard high-volume, low-cost silicon manufacturing techniques. This development addresses one of the last hurdles to producing low-cost, highly integrated silicon photonic chips for use inside and around PCs, Servers, and Data Centers.

http://www.intel.com/content/www/us/en/research/intel-labs-hybrid-silicon-laser.html

Google Fiber – A Step Function Connectivity Improvement

A step function improvement in capability is how Milo Medin described Google’s Kansas City fiber project at the February 13th IEEE ComSoc meeting in Santa Clara. That huge improvement in customer experience is in contrast to the incremental gains of MSO [Multiple System Operator] and telco broadband networks, which have much lower access speeds.

Picture of a boom truck with a technician pulling fiber on an existing utility pole line for Google.
Image Courtesy of Google

Medin, who is VP of Access for Google, described a Gigabit/second fiber network that eliminates the bottleneck between home and the cloud, unleashing new applications and devices both in the home and, by implication, throughout a city. Google’s incremental improvements in its construction and operations, its relatively simple offering and its grass-root marketing are as important to its success as its innovative fiber and home networking technologies.

The story of Google Fiber is pretty well-known by now; Google issued an RFI a couple of years ago to which 1,100 cities responded to be the test bed for Google’s fiber to the home project. What isn’t so well-known is that the motivation for this was the middling price/bandwidth performance of the U.S. as compared to other countries. Medin, who was a key figure in the early success of cable modems through his affiliation with @Home, suggested that, instead of complaining to government, Google decided to solve the problem. The unexpected response of so many communities was a surprise to Google and, according to Medin, an indicator of a pent-up demand.

Interestingly, government turns out to be part of the reason for their success, but not in the form of subsidies or tax breaks. The techniques Google and the local city are using to streamline the permit process and literally work together is saving an estimated 2% of the build cost. Similarly, attachment of fiber to the poles is made somewhat easier because the local utility is municipally owned.

Thanks a Bunch CEQA, No Google Fiber for California

Rules and regulations are definitely shaping where and how the service will develop. Echoing testimony before Congress, Medin suggested that as long as CEQA [California Environmental Quality Act] is in place in its current form, Google Fiber will be virtually non-existent in California (there is a 850 home Google FTTH project on the Stanford campus). The irony that Google’s home state will not see its fiber network anytime soon was not lost in the room full of engineers at the IEEE meeting.

Medin explained that anyone can use CEQA to initiate a lawsuit to block a development. He cited the example of the use of CEQA to delay the rollout of Uverse in San Francisco for years. A linchpin of Google’s approach is achieving scale at a fast-rate and the uncertainty caused by CEQA sinks their business case. And there is a business case, as Medin pointed out that the margins on broadband are as high as 95% for incumbent providers in urban areas.

To critics who suggest an infrastructure play is far afield for a “search” company, they should think again:

  • With YouTube and their other Google properties, Google already operates one of the world’s largest Content Delivery Networks
  • With a Fiber to the Home network, outside plant maintenance is almost zero, as compared to a traditional cable or telephone network.
  • With a gigabit connection and customized hardware, the home becomes an extension of their data centers. Although it wasn’t said in his talk, they are sure to have TR-069 or equivalent technology to allow the monitoring of devices within the home. Additionally, network managed WiFi routers integrated into each set-top will deliver a better experience than the home WiFi networks cobbled together by consumers.
Depicted is a Google optical/electrical converter (ONT) that resides in the home. What's not clear is whether or not it has built-in battery back-up.
Image Courtesy of Google

Google is taking an approach that, in some ways, is reminiscent of the old Ma Bell, whereby Google designs their own equipment. From Optical Network Terminals [ONTs] to set-top boxes, Google has created devices that maximize the customer experience [a DVR that records 8 programs at once] and minimizes operational cost. Medin indicated that Google has some of the world’s best optic engineers on staff.

Unlike the days of Ma Bell, Google can work with third-party manufacturers to build what they need, allowing them to introduce devices without the overhead burden of owning factories.

Keep It Simple Marketing

As with Google’s other offerings, they are taking a brand follows product approach to their fiber product. That is, the end service is the focus on creating an offer that provides great value and a high customer loyalty/buzz factor that will essentially market and sell itself. Like Google’s approach to their search home page, Google is keeping their offer simple. Unlike the Chinese food menu of a seemingly infinite number of tiers that traditional video and broadband operators offer, Google has only three tiers:

  • 5 Mb/s  with $300 construction charge (may be amortized at $25/month for 12 months) & no recurring charges for 7 years
  • 1 Gb/s broadband with 1 Terabyte storage For $70 per month
  • 1 Gb/s broadband with video for $120 per month with a Nexus 7 as a remote control

These three offerings probably cover 95% of the market. Amortized over 7 years, the 5 Mb/s tier exceeds the National Broadband Plan’s minimum at a very affordable rate of less than $4 per month and serves those who can least afford broadband. The $120 per month tier includes a basic level of video that many people would like. On a dollar per bit basis, the $70 provides great value to cord-cutters, while providing a superior broadband option for those who do not want to switch their existing video providers.

Further simplifying their offering is the decision they made not to offer telephone as part of their bundle. Although this decision was made for regulatory reasons, this reduces the operational complexity of their network and minimizes the staff required to run their network. With one less complex feature to offer, their network implementation is faster. They probably don’t lose much of their Total Addressable Market, given the number of people who are either wireless only or can easily pick a VoIP service (including Google Voice, which works great with a Obihai VoIP adapter).

A picture of a Google truck at a customer install. Note, the lawn sign promoting the Google Fiber project.
Image Courtesy of Google

Like what so many independent, rural operators have done with their Fiber to the Home deployments, Google is taking a grass-roots approach to marketing. Google uses a crowd-sourcing technique to determine where to build. Instead of taking a top-down approach that focus on demographics, Google split the Kansas City market into neighborhoods. When a critical mass of people commit to service in a given neighborhood, Google builds out that area creating what they call a “Fiberhood”.

Where they build is thus dependent upon the citizens of a given neighborhood. Like the way it has marketed its other Internet businesses, Google is betting on and seeding efforts to create a viral buzz about their network. One of the more interesting developments is their retail store. Although not mentioned in a recent Wall Street Journal article about Google’s rumored jump into retail, this point of presence offers a physical location to educate potential customers and the local influencers who will help sell their neighbors on the service.

And this approach seems to be working as Medin reported that in some neighborhoods 50% of the residents are committing to Google Fiber prior to build.

Just the Beginning

The Google Fiber Space retail store hints at some of the developments in the future that a gigabit network enables.
Image Courtesy of Google

A gigabit to the home with its low latency and high-speed brings the compute power of the cloud to the home; particularly when much of the content is cached locally within Kansas City. In a sense, this extends Google’s cloud platform to the home and business, such that the performance at the end point is virtually the same as what it would be in the data center. Medin hinted that 1 Gb/s is just a start. It is not too difficult to imagine the types of things that could be enabled with this sort of bandwidth, such as:

  • City-wide WiFi or some other wireless solution (Google has been received FCC authorization to experiment with various wireless approaches for access). City-wide wireless could offer a low-cost mobile/nomadic solution for its customers. It could also be important for autonomous transit options.
  • Distributed data centers – with 1 Gb/s connections, a Peer to Peer compute network (think connection of those DVRs) becomes a possibility. Why not use the computing power as well and create a virtual data center spread over hundreds of thousands of residences.
  • Like what Google has done with its Android and Chrome operating systems, the fiber network has the potential to enable applications from third-parties. It is possible that some of these apps might even come from existing telecom providers.

The Google fiber project in Kansas City is on its way to meeting its goal as a showcase of how low latency, Gigabit per second bandwidth can transform a city one neighborhood at a time. The fiber is really serving as a last mile nervous system that connects the seemingly disparate pieces to an ever-expanding Google ecosystem, which is where the change will really take place. Unfortunately for California residents, and particularly ironic for Silicon Valley residents, new Google Fiberhoods won’t be making their way to the Golden State anytime soon.

[Author’s Note: Thank you IEEE for the facilitating the excellent program that featured Medin as one of the speakers and thank you Alan Weissberger for your editing assistance].

Viodi View – 08/10/12

Call Me – You Might Have to Call Again If I Live in Rural America

David Lewis of ANPI Zone Telecom

Trying to make a simple phone call last week presented a bit of a challenge in rural North Dakota. There was a delay – a long delay, like I was making an international call some 30 years ago.  There might have even been a call that wasn’t completed.  I can’t remember exactly, as the frustration of not being able to connect, blurred my mind to the idea of actually trying to measure the time it took to connect or to try multiple phone calls to see how many wouldn’t complete.

Click here to read why this reminds me of my interview with David Lewis of ANPI Zone Telecom at the 2012 IP Possibilities Conference.


The Scoop on Rural Broadband

Geoff Burke of Calix

How much bandwidth do rural broadband customers need? That is the $4.5B question. Geoff Burke, senior director of corporate marketing for Calix, explains how much bandwidth rural customers are using, based on recent data measurements (January through March 2012)  from end-points distributed throughout rural America.

Click here to view the interview and hear some of the insights of the upstream and downstream measurements of rural broadband endpoints.


Infonetics Microwave Survey: NEC still leads but Ericsson gets high marks by network operators! by Alan Weissberger

In its new Microwave Strategies and Vendor Leadership: Global Service Provider Survey, Infonetics Research explores operators’ deployment plans and perceptions of microwave equipment suppliers.   In market share, NEC held the lead in equipment revenue for the first quarter of 2012 with 20%, just ahead of Ericsson; Huawei was 3rd.

Click here to read the rest of Alan’s article.


Market Survey: VZW Tops in Customer Satisfaction & Dropped Calls; AT&T last! by Alan Weissberger

Service Provider Satisfaction

ChangeWave Research (part of the 451 Group) recently surveyed 4,042 consumers on their opinions and attitudes toward their wireless service providers – including customer satisfaction ratings,  loyalty and future demand trends. The research firm also looked  at consumer reaction to Verizon’s new “Share Everything” family data plan. Among the  major U.S. providers, Verizon Wireless (VZW) continues to maintain a lead in customer  satisfaction with 48% of their subscribers saying they’re Very Satisfied with VZW’s service.  Sprint (32%) is second followed by T-Mobile (30%) and AT&T (22%).

Click to read Alan’s article and analysis, as well a comment on the Freedom Pop service and how its “no-cost” broadband could shake up the market.


Getting the Word Out About Energy Efficiency

The dog days of summer are here and electric bills are skyrocketing for those in hot, humid climes. Helping people use their smart meters to save money during peak times is one of the challenges Sarah Bresko of PG&E discusses in this interview. She discusses their messaging campaign to get the word out and help people reduce usage. Click here to view the video interview.


PCs for the People – One Way a Local Telco Is Helping Their Community

Kevin Larson of CTC

This PC Pledge touted by the FCC this week is similar to what rural broadband provider CTC has been doing for years. Kevin Larson of CTC discusses the program his company he implemented that recycles PCs, while helping people who couldn’t otherwise afford computers.  He points to the importance of getting devices to people who otherwise wouldn’t have access to the power that broadband would provide.  Click here for the interview.


Some Tweets and Short Thoughts:


The Korner – Fiber to the Gas Station

North Dakota represents a personal milestone of sorts and holds a special place in my heart, being that it was the last one in my quest to visit all 50 states. This goal was accomplished before North Dakota’s ascent to energy powerhouse. .

Fiber To The Gas Station

Visiting North Dakota these days reminds me of the lesson from California’s golden days about selling pickaxes to miners being one way to cash in on a gold rush. In the modern-day gold rush that is the Bakken oil fields of North Dakota, existing businesses and new businesses are booming thanks to the oil drilling frenzy (some estimate 2,000 wells will be drilled this year). One of the big challenges the existing businesses face is finding staff and, thus, being more efficient with their existing resources is especially important.

Paul Schlichting, manager of the Garrison, ND Cenex service station, explains how a direct fiber optic connection has been critical for dealing with the increase in business and the growth in traffic and new customers.

Click here to view our exclusive video interview, get a glimpse of some of the infrastructure challenges of this high-growth economic area and hear how a cooperative telephone company is helping a cooperative service station.

Viodi View – 05/04/12

Donut Holes in the Land of Lincoln

After the dust settles on the transition from a POTS-centric, USF/Intercarrier Compensation to a broadband-centric/Connect America Fund approach for rural telecom, will the traditional definition of an incumbent still be valid? That is, if an entity other than the incumbent telco is already supplying broadband to a given area, should that entity be considered the incumbent? More importantly, which entity should be entrusted with support dollars to serve those areas that would otherwise be un-served?

Example of a use-case for broadband mapping initiative

Drew Clark, Executive Director of the Partnership to Connect Illinois, indicates that the PCI maps are constantly being updated in a crowd-sourced manner. It is a continual process for this NTIA (National Telecommunications and Information Administration) designated broadband mapping entity. Mapping broadband availability throughout the Land of Lincoln and feeding that information back to businesses and others that can use it to make decisions on where to locate is the focus of the PCI, as explained by Clark.  Click here to read more and view the video interview with Clark.


Ensuring a Level Playing Field

Former RUS Administrator Hilda Legg on the current state of USF and RUSHow do you evaluate loan applications when as much as 25% cashflow from 70% of your loan portfolio is at risk? Hilda Legg, former RUS Administrator, asks this question with regards to RUS and how it is impacted by the transition of USF to the Connect America Fund.

In this interview, Legg discusses USF, particularly from the perspective of the issues it raises for the RUS as well as the impact it has on incumbent operators’ capital plans. She also alludes to the session at the 2012 Broadband Communities Summit she organized with Wiley Rein’s Thomas Navin on this very important and timely topic. Click here to view part 1 of this two-part video.


Documonials to Inform, Inspire and Promote

email documonials@viodi.com to transform your marketing

Press and conference organizers; contact us if you need video for your web sites or conferences.


Fiber Through the Decades…..

The high-level concepts for how to deploy Fiber to the Home have been around for decades. It is the process and incremental improvements in technology that has expanded the use of fiber from specialized to mass application. We caught up with Ron Cassel of Matrix Design Group who talks about a rural Vermont fiber project that required out-of-the-box thinking and delving into decades of fiber experience to keep this particular project viable.

On a personal note, what a pleasant surprise to catch up with Ron at the 2012 Broadband Communities Summit, as we had worked together on the first digital video, CATV fiber transport project way back when. Click here to view this video interview.


A Primer on a Fiber Primer

City of Winthrop and area's fiber plansMark Erickson, the City Administrator and Economic Development Director for the City of Winthrop, MN, discusses a municipal/county project to bring fiber to the premise in their rural region.  The expansion of the scope of the project was breaking news at the 2012 Broadband Communities Summit.  The Blandin Foundation, an entity familiar to ViodiTV viewers, helped get this project started.

He explains how the Broadband Communities Primer was instrumental in helping raise awareness of and explaining the benefits to the project.  Click here to view.


 The Apartment of the Future; Today

In this brief video, filmed at the 2012 Broadband Communities Summit, Andie Garcia of Verizon Enhanced Communities demonstrates an example of a feature of the apartment of the future; that is available today. Garcia shows the type of broadband application and devices that allow owners to enhance the value of their property.  Tom Nugent of Verizon Enhanced Communities hints at other Verizon Enhanced Communities’ applications that increase property energy efficiency and provide concierge services as well.  Click here to view.

Thank you Verizon Enhanced Communities for sponsoring ViodiTV on the hotel channel at the 2012 Broadband Communities Summit.


Microsoft, HP and SalesForce Assess Key Cloud Computing Issues by Alan Weissberger

TiE Cloud Event
TiE Cloud Event

At the April 12, 2012 TiE Cloud meeting in Santa Clara, CA, three leading Cloud Service Providers presented their views as to where the cloud industry is now and where it’s going.  Microsoft, HP and Salesforce are each addressing a different segment of the cloud market with what they believe are compelling value propositions for their customers.

Some of the issues they addressed included: changing business models, cloud advantages, cloud bursting, defacto cloud standards (e.g. Amazon AWS API’s), cloud developer support programs, evolving operations needs for cloud deployments and the viability of telcos as cloud service providers.  Click here to read the rest of the article and the associated comments.


Some Tweets and Short Thoughts:

  • “Mobile Patent War” to be explored at May 9 IEEE ComSocSCV Meeting – important topic and great speaker line-up
  • 24 Hour Patient Care: Video interview regarding remote health care, particularly with regards to seniors
  • Most impressive-116 of the 118 hires are still there. It starts with their great leader – “Automattic Grows Up….
  • B4RN- “Going where Telcos fear to tread,” in England. $50 per gigabit. Everyone wants to be involved. Listening to presentation right now at 2012 Broadband Communities Summit
  • Tune in to channel 2 on the Intercontinental Hotel for coverage of the Broadband Communities 2012 Summit.

The Korner – IP at the Bar and TV is Everywhere

IP at the Bar
IP at the Bar

Sports fans at the JW Marriott had to be a bit disappointed as the TV channel in the bar was briefly changed from exciting playoff hockey to exciting coverage of the 2012 IP Possibilities Convention and Expo. Video coverage of the event was featured on channel 64 of the host hotel’s cable network.  This is the ViodiTV version of multiscreen video as we were on the hotel TV channel, at the bar and online as well.

Click here to view the video.

100 Gb/sec Networks No Longer A Pipe Dream: JANET Education & Research Network @100GE!

Verizon has been chosen by UK Education and research network JANET to help upgrade its network to deliver broadband access at speeds of 100Gb/sec (100 gigabits per second). The network overhaul, which will enable JANET to more efficiently collaborate with other academic institutions, builds on earlier 100Gb/sec tests conducted by the organizations in 2009. Also contributing to the deployment will be Alcatel-Lucent, Ciena and Juniper Networks.

Under the terms of the agreement, Verizon will share their engineering and network expertise with JANET(UK). The company thinks that this partnership will provide the U.K. academic community with an opportunity to use the latest technology available in the marketplace. As noted earlier in this news story, Verizon and JANET had previously conducted trials of 100G b/sec connectivity as far back as 2009. This was before the IEEE 802.3 40G/100G Ethernet standard was ratified in the Fall of 2010.

Jeremy Sharp, head of JANET (UK)’s strategic technologies division, said, “We are widely recognised as having a critical role to play in the UK’s future economic prosperity. At a time when research and education is being asked to do more with less, this is a great example of how technology can not only be innovative, but also power innovation.”

Earlier this year, Lightwave reported that Verizon had plans to deploy 100-Gigabit Ethernet technology in its U.S. long-haul network. The carrier will use routers from Juniper Networks and optical transport platforms from Ciena – as its current 100-Gbps optical network link between Paris and Frankfurt.

Verizon to deploy 100 Gbps on three U.S. routes .

Author’s Note: 100G Ethernet has been a focus topic at IEEE ComSocSCV (www.comsocscv.org) meetings in Oct 2010 and next week- July 13, 2011. ComSocSCV June meeting looked at SCU’s Campus Network Architecture and Evolution. All our meetings are free and open to the public.

Will Level 3 with GC Be Able to Compete in the Business Services Market?

Level 3 Communications Inc. announced today that it would buy Global Crossing (GC) in an all stock-for-stock transaction valued at US$1.9 billion (after assumed debt). As part of the deal, which is expected to close by year end, Level 3 will assume $1.1 billion of GC’s debt. The two companies had combined 2010 revenues of $6.26 billion.

The new Global Crossing will continue selling its fiber optic network to other carriers, but also intends to offer a menu of transport, IP and data services, content delivery, data center, collocation and voice services to business customers. Global Crossing will provide capabilities such as managed services, Communications as a Service (CaaS), and inter-continental virtual private networking capabilities.

The combined entity would be a huge fiber optic network operator. It would own thousands of miles of fiber optic cable across 70 countries. Level 3 is strong in North America and Europe, while Global Crossing has a robust presence in Latin America. Global Crossing’s enterprise customers will help Level 3 increase its current client base, which includes major telecommunications, cable and Internet business customers.

The press release announcing the deal makes several bold claims up front:

  • Combination creates a premier global communications provider with extensive network reach, global scale and a comprehensive service portfolio to deliver enhanced capabilities to customers
  • Transaction creates significant value through synergies; results in substantial improvement to balance sheet and credit profile
  • Expected to be Accretive to Level 3 on a free cash flow per share basis in 2013
  • Combination will position Level 3 to better address expansion opportunities in key global markets

For more information, please see: Level 3 to Acquire Global Crossing

Comment:

Level 3 and Global Crossing are two fallen stars of the optical networking boom and bust. Both have been on a steep decline since mid 2000 when the fiber optic bubble burst. Bermuda based Global Crossing filed bankruptcy in 2002, but re-emerged two years later with a new financial backer — Singapore Technologies Telemedia -which currently owns about 60 percent of the company. Level 3 avoided a similar fate with a cash infusion from Warren Buffett’s Berkshire Hathaway. Yet it too has struggled to grow revenue and profits. Last year, losses at Level 3 hit $622 million and reached $176 million at Global Crossing. As profits have eroded, Level 3’s financial situation has grown more precarious. The company’s debt stood at approximately $6 billion in December, 2010 and $1.1B more with this acquisition.

Global Crossing has been moving more into the content delivery market in recent years. It signed a deal in 2009 with CDN vendors Limelight and EdgeCast that gave Global Crossing customers access to their services. Last year, GC purchased Genesis Networks, a video fiber network operator that specialized in providing end-to-end IP video transmission services for major networks.

In North America, the biggest impact would likely be to give Global Crossing’s enterprise and multinational customer base access to Level 3’s metro networks. The combined entity would also participate in the faster growing Latin American market. Given the growth of networked video, e.g. over-the-top (OTT) video and telepresence/ high quality video conferencing, a broader customer base would be a big positive. Netflix uses Level 3’s network to deliver its OTT streaming video to its subscribers. The acquisition may also improve its balance sheet by cutting overall costs.

Level 3 already has significant shareholder support since Global Crossing’s largest investor -ST Telemedia- has agreed to vote in favor of the acquisition. Once the deal closes, ST Telemedia is to nominate directors to the board, relative to the size of its stake.

Analysis:

Will the combination of two struggling tier 2 carriers enable the combined entity to compete successfully with AT&T, Verizon Business (in the U.S.) and large global carriers like Telefonica (Latin America) and Deutsche Telekom (Europe)? We are skeptical while others are more sanguine.

“This is the start of consolidation,” said Donna Jaegers, an analyst with the research firm, D.A. Davidson & Co. “It’s not enough to firm up pricing overnight, but it’s a step in the right direction.”

Level 3 CEO James Crowe is calling this deal “transformational” for both companies. On the analyst call to discuss the deal, Mr. Crowe was most excited about new sales possibilities for both companies, considering the greater reach of their combined networks. Global Crossing would provide 33,000 fiber route miles outside the U.S. that Level 3 could sell to its global customers, while Level 3 would offer more metro connections for Global Crossing’s North American customers. “What we’ve all been trying to do is get more deals in front of more customers, and the combined set of assets with many more [sales] people touching customers will accomplish that,” Crowe said.

Mr. Crowe told the NY Times in a phone interview, “This will be a company with modern Internet infrastructure, across three different continents, connected by undersea cables that we control.” He also said the potential cost savings could amount to $2.5 billion, with $200 million in the first 18 months. With an improved balance sheet, analysts believe Level 3 could refinance its debt to cut its interest rates $100 million to $200 million per year.

Brian Washburn, research director, network services, for Current Analysis , says the deal is a chance for Global Crossing and Level 3 to reverse the recent negative trends in their financial performance. “All lines of Level 3 business are declining or stagnant and the net losses are not improving,” Washburn said. “Their numbers are trending in the wrong direction. The Global Crossing acquisition is a good move — because they get all the assets, and yes, assume some debt, in a stock swap. But more importantly, Level 3 gets a to-do project — they will spend the next several months shaving costs out of their internal business to increase profitability and get the numbers heading in the right direction, even if overall top-line revenue remains stagnant.”

Arthur Gruen, Chief Economist of Wilkofsky and Gruen thinks that most telecom mergers and acquisitions provide much less “bang for the buck” than industry pundits believe. For sure, the investment banks that arranged the deal make money, but shareholders may not come out ahead. While Mr. Gruen didn’t specifically comment on this Level 3-GC deal, he recently told me that mergers in the media, telecom and retail industries seldom produced the expected cost savings and improved profits. TimeWarner-aol, Alcatel-Lucent are two recent examples of consolidations that didn’t work out.

We’ve observed that acquisition of this scale rarely go smoothly and realize the promised benefits. The consolidation of operations support and network management systems is one huge obstacle. Another is to merge two different corporate cultures. Level 3 will face key decisions regarding its personnel when its workforce is joined with GC’s. Layoffs are inevitable.

This merger of two long haul, fiber based network operators, leaves the new Level 3 without a wireless broadband strategy. If the mobile enterprise that analysts are talking so much about is a reality, then the combined company must offer mobile broadband access to participate in the growth of mobile devices, mobile apps and mobile computing.

For sure, this deal will spark new interest in other fiber based carriers that sell wholesale bandwidth to telecom carriers/ ISPs and also offer hosting, IP VPN and other business class services to enterprise customers. Examples of such facility based carriers include Cogent Communications, Savvis, and XO Holdings.

Bottom line, this merger is an important test for the fiber facilities based telecom industry, which has been plagued for years by overcapacity and weak pricing. It remains to be seen if that condition will persist. It will also be interesting to see if the new entity can succesfully compete with the large (tier one) global network operators previously mentioned.

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Will 2011 Be the Year of Fiber to the Building?

Background:

Stimulated by predictions of exponential Internet traffic growth and advances in DWDM/ fiber optic technology, the dot com and telecom bubble years of 1998-2001 were marked by waves of optical network start-up companies that were very well funded by VCs and Angel Investors. Many of those companies were focused on Metro Optical network access, assuming that incumbent telcos and CLECs would build out their fiber plant all the way to the business customer premises- typically terminated in the basement of an office building in a densely populated metropolitan area. Needless to say, that didn't happen and almost all of those start-ups went out of business.

Fast Foward to the Present:

On December 29th, the WSJ reported that there's a resurgence of interest in metro optical networks. In an article titled, The Fiber-Optic Networks Regain Some Glow, the Journal states:

“After the telecom bubble burst a decade ago, fiber was a dirty word.” The author writes. “Now, the fiber-optic network business is enjoying a resurgence, particularly for metro fiber, the high-capacity lines that connect a city’s office buildings, data centers and cellular towers to the Internet.”

The WSJ article notes that there have been 14 acquisitions in the metro fiber industry this year alone and 45 since the fiber market began its turnaround in 2006. It states, "The deals have turned a market that once had many small participants and a few giants into one made up of a handful of regional and national players. Analysts say the consolidation has helped stabilize the prices fiber owners can charge customers like banks, phone carriers and universities that lease their networks."

What we found most remarkable about this and similar articles, is that we've never heard of the new breed of fiber facilities based telcos Zayo Group, founded in 2007, was reported to be one of the largest with networks in 27 states and Washington DC. They have acquired 15 smaller fiber optic companies in the short time it has been in existence.

Dan Caruso, CEO of Zayo, was quoted in the article. He said, "People lost so much money during the meltdown that most investors did not want to touch fiber-based telecom." How times have changed!

More on Zayo's value proposition at:
www.zayofibersolutions.com/metro-and-regional-dark-fiber-networks

In an article titled, 2010 Year in Review: CLECs bulk up on fiber and services, FierceTelecom reports that, besides Zayo, two other CLECs were very aggressive in expanding their fiber footprint. In particular, Lightower Fiber Networks, and Paetec (Nasdaq: PAET). The author says that CLECs are using M&A as a way to scale their respective businesses to target new larger business and wholesale opportunities. But we wonder if those bulked up CLECs will be able to compete with the larger players providing telecom services to business customers? Those include AT&T, Verizon, Comcast and TW Cable who are already offering a range of metro fiber bassed services, including "Carrier Ethernet."

Perhaps the most interesting of all the related articles and on-line posts on this topic is one by Rob Powell of Telecom Ramblings, titled Metro Route Mileage Leaders for Competitive Fiber Operators.

That post lists the top 20 metro fiber CLECs, ranked by total mileage for metro loops and laterals, but NOT counting long haul links. To no one's surprise, Level 3 leads the pack with 27,000 metro fiber miles, followed by TW Telecom with 21,000 miles.  Mr. Powell states that the list does not include the incumbents (e.g. AT&T, Verizon) and most cable operators (e.g. Comcast, TW Cable, others) – many of whom would obviously be at the top. Hence, this should be thought of as competitive metro fiber.

Editor's Note:  The Journal article includes a "Finding Fiber" illustration which states that Fibertech Networks has 6,000 route miles of fiber, while the Telecom Ramblings chart shows only 5,380 for that firm.
 
We were also intriqued by FiberLight's December 18th announcement of a new initiative to drive its fiber even deeper into its 21-market footprint .  The company is in the process of identifying an additional 8,000 near-network buildings to serve along the 4,200 route mile footprint it owns and operates.  That's a lot of new buildings that will get fiber based network access!
 
Read more at:  http://www.prweb.com/releases/2010/12/prweb4909464.htm

Rob Powell says that, "We know AT&T and Verizon have piles and piles of it and that the cable MSOs aren’t too far behind." But we wonder, how much of that fiber is actually lit, i.e. available for immediate deployment? And what percentage of business buildings currently have access to lit fiber?  Spurred by intense competition from the CLECs, will those large players light more fiber to big city buildings in 2011 and offer an array of business services that were expected to be available over 10 years ago?

What do you think?  Can competitive carriers alone bring fiber to the building or do the giant telcos and MSOs have to light their dark fiber to make 2011 the year of FIber to the Building?  And is there any place for independent telcos like Surewest?

Special best wishes for a Happy New Year!