Haim Volinsky Issue: Europe 2003
Article no.: 9
Topic: Bringing Businesses Up to Speed
Author: Haim Volinsky
Title: Vice President
Organisation: Spediant Systems
PDF size: 92KB

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Article abstract

Telco capital spending has shrunk due to the global slowdown. The optical revolution has not yet come and because of the need to cut costs and the collapse of competitive carriers, it is not likely to happen soon. In Eastern Europe and the CIS, xDSL broadband solutions that make the use of existing infrastructure are a realistic solution for service providers and national institutions. Ethernet using multi copper pair solutions is a viable low cost solution for broadband, particularly for SMEs.

 

Full Article

The Market Throughout the past two years, due to the slowdown in the global economy and doubts concerning when the upswing will occur, Telco’s capital expenditures have shrunk dramatically. This has resulted in the reduced Telco market values and the almost total collapse of much of the telecom vendor industry. Investment in optical fibre infrastructure – both trenching and optical equipment installations has been one of the most negatively impacted segments. A Still-to-Come Optical Revolution It now appears that predictions and promises of greater speed were premature. Deployed optical networks will not be moving from10 Gbps to rates of 40 Gbps any time soon. This reality has shaken the IT world which had taken for granted the continued pace of Moore’s Law, resulting in faster processors, larger memories and bigger disks. At the same time, the shift from OEO (Optical Electronic Optical) conversion to an all-optical network has suffered a serious setback. What’s more, the penetration of WDM (Wave Division Multiplexing) technology from the WAN to the metro area has not materialized, as ILECs (Independent Local Exchange Carriers) decided they had enough fibre in the core and most CLECs (Competitive Local Exchange Carriers) have vanished from the scene. By 2010, 60% of US businesses will still not be served by fibre, according to industry analysts. In remote or rural areas, the outlook for widespread fibre deployment is even more limited as there is less financial incentive to undergo the lengthy process of trenching and installing miles of fibre optic cables. Unrealized Potential of Broadband Access With most DLECs (Data Local Exchange Carriers) out of business, the DSL industry is nursing its wounds. Although cable MSOs is moving ahead with broadband deployment, most businesses are being “left out in the cold.” Optical access innovations, including PONs (Passive Optical Networks), Ethernet over fibre, and lower-cost SONET, are promising but, to date, have not been widely deployed, as incumbents have curtailed spending and postponed new initiatives. Many industry players had mistakenly anticipated extensive implementation of low-cost broadband access to enable new multimedia services and the rapid transformation of the web into a platform for commerce and entertainment. Appetite for Bandwidth Having said all of the above, when it comes to the global data explosion, bandwidth demand continues to outpace supply throughout the world. The current equipment industry slowdown has not caused business customers to cut back on bandwidth demand (vis a vis projections). Instead, unrealistic market expectations have resulted in over-building, over-manufacturing and over-capitalization. Industry analysts estimate that growth in bandwidth demand will be sustained until the end of the decade. According to the most conservative projections, Internet traffic is doubling every 15 to 18 months. Network Bottlenecks Numerous bottlenecks affect the public data network, but last mile access continues to be one of the major stumbling blocks that downgrade performance and prevent the delivery of high rate broadband services. Apart from the top 15 metro markets in the US, most local networks still use POTS (Plain Old Telephone Service) for last mile access. Obstacles prevent even top-tier business districts from making the most of fibre. However, with more than 700 million phone lines worldwide, copper – a multibillion-dollar network investment is an almost universal industry asset. As service providers increasingly focus on their bottom lines, and on achieving the best possible ROI (Return On Investment), they seek ways to cost-effectively exploit their existing copper networks for high-speed transport. Innovative Responses Answer the Call In light of the current slowdown, equipment vendors are hard pressed to help carriers satisfy demand growth and maintain profitability by delivering solutions that reduce annual per bit costs. Capital expenditure alone will not suffice. New solutions must reduce operating expenses and enable new revenue generating services. This situation creates an opportunity for companies that can extend the use of the existing copper infrastructure to deliver services in demand today and also, maintain scalability for future high-bandwidth applications. Successful equipment vendors can help carriers meet profitability challenges by delivering transitional products which support legacy services and architectures, but still provide most of the reduced cost and complexity benefits of a full next-generation network. Copper Comes to the Rescue The demand for bandwidth is driven mainly by small to medium-sized enterprises (SMEs). Staffed by anywhere from 30 to 300 employees, SMEs can be either independent companies or satellite offices of larger organizations. Many are located in Tier 2 or Tier 3 cities, where there is little – if any – fibre in the local loop. Today, in Central and Eastern Europe these customers are squeezed into E1 or DSL bandwidths because the vast majority of the local loops in the region do not use fibre. The use of multiple copper pairs, though, does enable service providers to offer more than enough bandwidth, for instance, to run Native Ethernet at 10 Mb/s at a distance of more than 3.6KM from the central office. Bandwidth-hungry businesses may want and need more, but their demands (and budgets) do not justify a fibre connection. The ability to get smaller jumps in bandwidth will satisfy them for the time being, whether that bandwidth is in the 4 to 5 Mb/s range or up to and beyond 10 Mb/s. Multi copper pair solutions can be adapted easily to provide requested and differentiated service rates based on the number of pairs used and the distance from the Central Office. Maximizing Earlier Investment There are several ways to serve last-mile customers, but for established service providers the most feasible solution is to increase the existing copper infrastructure capacity. When the use of existing copper is compared to options such as new fibre installation, free space optics, satellite or broadband wireless, copper is the low-cost choice. This is especially true when installation and maintenance costs are taken into consideration in addition to the skills and training needed by installers. Novel Approach Multi-Loop DSL (MLDSL) builds on current standardized technology to address the issues involved in supporting smaller enterprise customers. The concept is simple: to use multiple copper pairs and inversely multiplex the data across the pairs for greater reach and bandwidth. Rather than treat each copper pair individually, MLDSL handles multiple copper pairs as a logical bundle, making intelligent decisions regarding bandwidth allocation and reactions during changing link conditions. Why Should Service Providers Be Interested? Which services would carriers be able to extend, or launch, with more copper-based bandwidth at their disposal? Immediate answers to the question can be found in the Ethernet arena, where a multi-pair copper solution can provide the 10 Mb/s needed for native-rate networking. Carriers could then offer services and advantages such as: – Local area network extension – Connecting all of a customer’s regional offices so that all would appear to be on the same LAN. Customer payoff: everyone can expect similar performance and access to all network resources – Intranet or Extranet virtual private network – Linking a customer’s remote intranet sites or enabling links to their suppliers, business partners, or customers – Internet access – Creating a dedicated connection for the customer to an ISP’s local point of presence There is a strong argument for the rollout of Ethernet services, given customer demand as well as the economic scenario for carriers. Infrastructure equipment costs for Ethernet are lower than for frame relay or ATM, and nearly all networking equipment and hosts connect via Ethernet. Using an Ethernet service for interconnections would simplify network operations, administration, management, and provisioning. In establishing their own business case for high-bandwidth copper solutions, service providers need to study several key factors. Among the most significant, they need to analyze up-front costs along with the time it will take to achieve a return on investment. In an era of limited shareholder confidence, cash flow has become more important than a long-term investment. Multi-pair copper equipment should be able to generate income as soon as installation is complete. Moreover, even though the solution is scalable, it should be cost-effective right from the first subscriber. The total return on investment period should be no longer than a few months, even after factoring in all maintenance, administration, equipment and other costs. Standards Evolution Industry leaders are currently developing an MLDSL multiplexing scheme, and studies of standards have been initiated within IEEE 802.3, ANSI T1E1.4, ETSI, and ITU. We believe that the standard for MLDSL will be based on existing DSL standards, mainly on the SHDSL (symmetric high-density DSL) standard – transport of up to 2.3 Mbps over a single copper pair, spectrally compatible with other services in the same copper bundle. Inverse multiplexing is implemented in such a way that mission-critical data traffic is transported transparently, with low latency and suitability not only for data, but also for voice traffic. Conclusion High-speed broadband availability, especially for SMEs, impacts national productivity and economic growth. Studies show that GDP (Gross Domestic Product) can be boosted by provisioning cost-effective, true fibre-speed services, based on existing copper infrastructure. This could be a realistic solution for Service Providers and National Institutions in Eastern Europe and the CIS seeking ways to grow their market share and improve their economies.