The cost of providing direct wavelength services over fiber in the metro area are falling fast, said Thomas Alexander, President & CEO of LuxN.  His company’s access solution uses active optical technology and DWDM to enable GigE and other services for business customers.  Compared with optical technologies for long haul networks or conventional SONET equipment, metro optical technology is far cheaper.  And with the availability of leased dark fiber, Alexander calculates the return on investment to be very favorable for next generation metro platforms.  LuxN’s WavSystem platform supports metropolitan Gigabit Ethernet or Fibre Channel over point-to-point, cascaded multi-drop, access ring, and redundant star network configurations.  The system extends to 70 km without amplification and supports 16-channel WDM, fixed optical add/drop multiplexing, and optical path protection switching.  Things to look for this year include 32-channel DWDM capabilities and extended ranges.

Given the choice of fiber, DSL or cable modem service, which would you choose for your home?  Most people intuitively understand that fiber is the long-term access solution, said Darryl Ponder, Chairman and CEO of Optical Solutions Inc., while the others are just interim steps.  It is only a question of when we will have fiber-to-the-home, not if.  The technical advantages of fiber for residential service are not in doubt – high quality television services, premium cable services, multiple life-line phone numbers, super fast Web access, vast scalability for future applications, etc.  Cost has been the primarily obstacle for fiber deployments, but this is changing due to much cheaper optical couplers and splitters, simplified splicing technology for field workers and greater availability of cheaper fiber cabling.  Ponder argues that now is the time to deploy fiber not only in new housing developments but also to apartment buildings, established single family home neighborhoods and even rural residences.  He expects the early adopters to be housing developers, independent telephone operators, and entire towns and cities that are fed up with the local monopolies.  Ponder’s company has deployed 5,000 residential PON nodes to date, however he expects to see major FTTH projects get under way this year.
April 18, 2001

NGN VENTURES:  METROPOLITAN NETWORKING - EMERGING OPTICAL ARCHITECTURES
According to Dr. John McQuillan, we know that metropolitan networks are moving from SONET to a more data centric approach, from ring to mesh topologies, and from WDM to DWDM.  These changes all offer opportunities for metro system companies.  However, far too many metro networking competitors have been funded by “overly enthusiastic venture capitalists,” and the market will not grow enough to support them all.  In the multi-service melting pot of metro networking, there will clearly be some winners and losers.

Raj Shanmugaraj, President & CEO of Astral Point, said that the biggest portion of carrier capital spending over the next few years will come from ILECs, who will focus on metro systems, and will buy many Digital Cross Connect Systems (DACS).  The metro networking challenge is to provide bandwidth management to bridge the distinct needs of the access network and metro core, while reducing provisioning costs.  The solution is not to simply create fat pipes.  Carriers need managed bandwidth and will continue to devote a lot of energy to existing services.  “In spite of the hype and the hope, low speed services will financially prop up the carrier market” in the near term.

To enable the new services that the industry is hoping for, equipment must be in place in the metro area to enable them.  Alnoor Shivji, President & CEO of Cyras, believes that this requires the ability to provision bandwidth on demand in real time for short periods of time, to work with existing protocols and offer intelligence from the edge to the core.  Shivji says that the emerging technologies that will enable this are Next Generation SONET and Gigabit Ethernet, which are pervasive and proven.  NG SONET will send data traffic in native form with no repackaging, and far less overhead than existing SONET.  In addition, the system companies cannot abandon existing ring based topologies.  They must take an evolutionary approach and supply equipment that works with a combination of ring and emerging mesh topologies.

SONET is breaking under the strain of current network demand, and cannot sufficiently scale to meet future needs, says Dr. Near Margalit, Chairman and CTO of Zaffire.  Optical systems offer better scalability, cost advantages of optical amplification, and cost efficiency for multiplexing large bandwidth OC-xx signals.  Optical systems also have disadvantages, including more complex physical problems, challenging fault isolation, and inefficient multiplexing of lower bit rate signals.  This makes end to end all optical networks in the metro environment impractical.  Metro systems must integrate both optical elements, for optimal transport functionality, and electronic technologies for grooming and edge services, to create the most efficient metro system.

Dr. Ralph Ballart, VP of Broadband Infrastructure & Services at SBC Technology Resources, feels that a big growth area for ILECs will be managed wavelength services that carry things like Gigabit Ethernet and 10GE.  This will be the next step in managed private line services.  Ballart said that carriers need to buy DWDM systems to make the delivery of these services more efficient.  He observed that equipment that carries Ethernet is “cheap” relative to other equipment.  If SONET systems remain much more expensive, there will be a big incentive to migrate to Ethernet networks.  But if new SONET systems can take advantage of the good features in SONET today, and do so in a more cost effective way, then evolutionary SONET networking systems will be embraced.  Ballart also expects that metro networks will continue to rely on rings for the near future, but that this will change over time.  SBC is already requiring that all equipment it buys have an evolutionary path to mesh topologies.  Ballart also said that SBC’s nearly one million DSL subscribers are starting to have a big impact on SBC’s network planning.  However, he said that current ATM access to the network from DSL backhaul is something that SBC remains comfortable with at this time.  Under SBC’s Project Pronto, the company is working to make DSL available to 80% of its customers.
April 18, 2001

NGN VENTURES:  METROPOLITAN NETWORKING - ETHERNET’S NEXT GIG
The Internet and Ethernet are the same thing, according to Bernard Daines, President and CEO of World Wide Packets.  Ethernet is the most widely deployed networking technology in the world, making it a low cost, high volume, simple, well understood, and widely compatible networking solution.  Other broadband edge options, he says, are already outdated.  Daines believes that “tin can and string “ DSL, HFC, and PON will never be able to handle the new, “pent-up” high bandwidth applications.  The FCC’s requirement for High Definition television alone ensures there will be a flood of data that only Ethernet can handle.  Furthermore, Daines believes that if telephone and cable carriers do not transition to Ethernet via fiber to the home, electrical utilities and municipalities will do so, and in fact, have already begun.

Basi Alwan, Chairman, President and CEO of TiMetra Networks, believes that SONET will remain a formidable force for existing fiber networks.  For new fiber, however, TiMetra is betting that a packet switched Ethernet Service Network will be the better solution.  This network must be secure, work in metro to global installations, scale to more than a Gigabit, and offer granular bandwidth allocation with SLAs.  While there are some existing switches or routers that can address some of these Ethernet Service Networks, to scale them in size and capacity requires purpose built solutions.  Alwan feels that these new systems need to leverage the technology and cost advantages that Ethernet offers at the edge and that MPLS offers for switching at the core. TiMetra aims to bridge this gap.

Peter Wagner, General Partner of Accel Partners, noted that private line and voice businesses are still huge for carriers, and “SONET is perfect for this.”  While there are some compelling reasons to consider a metro Ethernet architecture, a carrier must be confident that they will have substantial and concentrated customer demand for Ethernet before ripping out the SONET infrastructure.  Wagner also observed that the window for funding new metro DWDM companies seems to have closed for now.  He believes that investors will want to see how this market develops before many new companies are funded.
April 18, 2001

AOL TOPS 29 MILLLION USERS, AVERAGE DAILY USAGE RISES TO 70 MINUTES
America Online has surpassed 29 million members worldwide, up by 2 million members for the quarter.  Average daily usage is up to 70 minutes, compared with 64 minutes last year.  The company noted strong subscription growth in the US, Europe and Latin America.  The AOL network is now handling a peak of 1.7 million simultaneous users, handling 150 million e-mails daily, serving 7.3 billion Web URLs daily and handling 656 million instant messages.  http://media.aoltimewarner.com/media/cb_press_view.cfm?release_num=55251842
AOL, April 16, 2001

EXCITE@HOME ISSUES WARNING: REVENUES AND EARNINGS REDUCED, SEEKING MORE CASH
Citing the increasing weakness of the online advertising environment, Excite@Home announced that it expects to report significantly lower revenues, greater operating losses and more rapid use of cash than previously forecast for the balance of 2001.  The company expects to report quarter-end cash and short-term investments totaling approximately $105 million, compared to $201 million at December 31, 2000.  Excite@Home said that its core broadband business is strong, but its narrowband media business is suffering, and it will focus its financial and human resources on its core business.  The company is taking several steps to conserve cash and raise further funds for its broadband business, including reducing its operating expenses, revising the company’s backbone fiber agreement with AT&T, securing additional debt and/or equity financing, and selling or restructuring its media operations that do not directly supporting the company's broadband strategy.  Excite@Home warned that if it does not achieve its targeted expense reductions and raise at least $75 million to $80 million by June 30, there would be a material adverse impact on the company's operations and liquidity.  http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ATHM&script=411&layout=0&item_id=166803
Excite@Home, April 17

• Worldwide subscribers to the @Home cable modem service totaled 3,200,000 as of March 31, 2001, an increase of approximately 450,000 or 16% from 2,750,000 at December 31, 2000.  These figures exclude all subscribers of Cablevision Systems Corp., with whom Excite@Home has decided to terminate its relationship.  Excite@Home said that the vast majority of Cablevision subscribers did not utilize Excite@Home's network or content services and did not generate revenue for Excite@Home.

TERAWAVE’S PON ENTERS SERVICE PROVIDER TRIALS
Terawave Communications’ TeraPON passive optical networking system is now in trials with C2C Fiber (Houston, TX); Shaw Communications (Canada); T-Nova Deutsche Telecom (Germany) and Singapore Telecom (Singapore).  In addition, FiberLab, a leading systems integrator based in Taipei, placed a sizeable order for TeraPON equipment to be deployed by several service providers in Taiwan.  http://www.terawave.com
Terawave, April 18, 2001

CHINA UNICOM SELECTS CORNING’S LEAF FIBER FOR OPTICAL BACKBONE
China Unicom, the second largest telecom carrier in China, will deploy several hundred thousand kilometers of Corning LEAF fiber for the optical backbone of its long-haul network.  China Unicom, which serves 20 million GSM subscribers and 40 million paging customers, is building a 150,000-kilometer network, providing points of presence in all major Chinese cities.  Initial phases of deployment begin this year.  Financial terms were not disclosed.  http://www.corning.com
Corning, April 18, 2001

AGILENT INTRODUCES 10GBE WAN TESTING SOLUTION
Agilent Technologies introduced a 10 Gbps Ethernet line interface for WAN serial testing, as well as a dual interface module supporting either OC-192c POS or 10 GbE WAN serial testing, for its IP router test platform.  Both products are expected to ship this quarter.  Agilent is also working on a 10 GbE Local Area Network (LAN) serial interface module for delivery later this year.  http://www.agilent.com/comms/IPTest
Agilent Technologies, April 18, 2001

BEST BUY TO LINK 419 STORES WITH AT&T’S INTEGRATED NETWORK CONNECTION SERVICE
Best Buy Co., a leading retailer of consumer electronics, will link its 419 stores in 41 states using AT&T’s Integrated Network Connection (INC) Service.  The “single box” Integrated Network Connection Service provides up to 48 voice calls and up to 6 Mbps of Frame Relay, IP or Ethernet traffic using Inverse Multiplexing for ATM access technology.  AT&T said more than 20 companies have signed up for its INC solution.  http://www.att.com/press/item/0,1354,3760,00.html
AT&T, April 18, 2001

NETGEAR OFFERS LOW-COST COPPER GIG E NIC AND SWITCH
NETGEAR introduced a low-cost copper Gigabit Ethernet network interface card (NIC) priced at $180 list and a new Gigabit over Copper Ethernet switch with eight auto-negotiating 10/100/1000 Mbps ports and plug-n-play installation priced at $1729 list.  NETGEAR said the low-price and functionality would move Gigabit Ethernet into small business networks.  http://www.netgear.com
NETGEAR, April 16, 2001

D-LINK CUTS COPPER GIGABIT ETHERNET NIC PRICE TO $129 LIST
D-Link launched a Gigabit over Copper NIC priced at $129 matched by a Copper-based Gigabit Switch with eight 10/100 Mbps Auto-Negotiation Ethernet ports and one 1000 Mbps Gigabit Ethernet port priced at $280.  http://www.dlink.com
Dlink, April 16, 2001

TELLABS REPORTS EARNINGS, TERMINATES ITS SALIX NEXT-GENERATION-SWITCHING PRODUCT
Tellabs reported Q1 sales of $772 million, up 21% from $639 million a year ago, driven by demand for Tellabs' core optical networking products.  On a sequential basis, revenues for the quarter declined 24% from the $1 billion in Q4 sales.  First-quarter net income amounted to $123 million, up 13%, from $108 million a year ago and diluted earnings per share were $0.29.  Due to current expectations for lower revenue growth, Tellabs announced cost-cutting measures, including plans to layoff 550 employees, eliminate 450 temporary or contract positions and terminate the SALIX next-generation-switching product effort.  The company now expects 2001 revenues of $3.6 billion to $3.7 billion.  http://www.tellabs.com/news/01news/1q01.shtml
Tellabs, April 18, 2001

• In December 1999, Tellabs acquired SALIX Technologies, a start-up developing a packet voice switching system, for about $300 million in stock.

WINSTAR FILES FOR BANKRUPTCY PROTECTION, LAUNCHES $10 BILLION LAWSUIT AGAINST LUCENT
Winstar voluntarily filed for protection under Chapter 11 of the US Bankruptcy Code.  The company will seek to reorganize, while continuing to provide service to its 30,000 business customers.  The company’s network is connected to some 4,800 buildings.  Winstar has arranged an initial commitment of $75 million for debtor-in-possession financing from a consortium of banks, including CIBC, Citicorp, Credit Suisse First Boston, The Bank of New York and The Chase Manhattan Bank.  Winstar also filed a lawsuit against Lucent Technologies seeking $10 billion in damages and immediate injunctive relief requiring Lucent to specifically perform its contractual obligations under the companies’ strategic partnership.  Winstar said its ability to emerge from the Chapter 11 process is not contingent upon receiving a damage award in the lawsuit.  http://www.winstar.com/press/2001/Templ.asp?fileid=0418012
Winstar, April 18, 2001

• In May 1999, Lucent Technologies and WinStar Communications announced a marketing alliance under which Lucent’s communications, data networking and business telephone systems would be used for WinStar’s Wireless Fiber network.  Lucent would provide network design, integration and up to $2 billion in financing for WinStar’s end-to-end broadband network, domestically and overseas.
• On March 30, 2000, Advanced Radio Telecom, another US provider of fixed wireless access service, filed for Chapter 11 bankruptcy protection, saying it had exhausted all financing alternatives and would power down its network within 30 days.