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Broadwing sheds light on Infinera deal

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In an interview with Telephony this morning, Broadwing offered more details into the deal announced late yesterday in which the carrier is turning over its equipment manufacturing business to Infinera while deploying that vendor’s gear in its network.

Broadwing is deploying Infinera’s DTN optical switch in some of the 22 regional networks that feed into its nationwide optical backbone. There the DTNs will help aging, late-1990s technology from Nortel Networks and Ciena carry the weight of increased capacity, gradually relieving that gear of more and more traffic over time.

“Those [regional] networks have [points of presence] that are relatively close to each other, which is Infinera’s sweet spot,” said Mike Jones, Broadwing’s chief technology officer. “You have terminal equipment, then [a string of three amplifiers], then terminal equipment, which allows you to get a very strong correspondence between terminal equipment and POPs, so you don’t have to put in passive regenerators.”

The DTNs will allow Broadwing to meet what it sees as an increasing demand for wavelength services in smaller markets. With the new gear, Broadwing can add 2.5-Gb/s and 10-Gb/s circuits to markets where the capacity of existing gear is maxed out or where bulking up the legacy gear would be prohibitively costly. Using newer technology, Jones estimated, Broadwing can reach the next level of capacity at about a third of what it would cost to add cards to the legacy Nortel and Ciena gear.

Broadwing began field testing the DTNs several months ago and won’t say how many of the switches it plans to deploy. The carrier is not deploying DTNs to replace the Corvis equipment in its network, but it is evaluating gear from several vendors as potential candidates to replace the Corvis transport gear in its optical backbone. Infinera may or may not be chosen to fill that role.

Although Infinera’s technology was designed as a distinct alternative to all-optical networking, Jones said, Broadwing’s embrace of it does not alter the carrier’s long-standing identity as the proud owner of an all-optical network built on the all-optical technology of its erstwhile chief executive, David Huber.

“If we replaced the Corvis gear in our backbone with something that had passive regeneration--in other words, regenerators where you don’t have pumps--that would change the story,” Jones said. “We are not doing that.”

Likewise, Broadwing’s choice shouldn’t be read as repudiation of the value of all-optical networks, he said. “All-optical means you don’t waste money and resources regenerating where you don’t have a reason to drop [signals]. That remains a valuable concept. It saved us a bunch of money. It has given us better operating characteristics and better economics, and we’re going to preserve it. The next generation of equipment coming from others like Nortel and Lucent incorporates those concepts. [Infinera’s approach] has value. Is it something I’d recommend ubiquitously deploying purely because of that [value]? No.”

Still, Broadwing has been trying to get out of the business of selling all-optical equipment since at least April 2005, after years of watching its revenue erode. As part of the deal announced yesterday, Infinera will essentially take over that business, manufacturing cards for the backbone transport gear originally sold by Corvis and providing maintenance and support for the gear. (As for Corvis’ optical switch, Jones said, “We’ve got as many of them as we need.”) In addition, the 40 or so Broadwing employees that previously served that business will become Infinera employees.

Though Broadwing will retain all the patents for the Corvis technology, Infinera will license the intellectual property pertaining to it, including that related to Raman amplifiers, which might give Infinera’s gear greater reach. Broadwing won’t say how Infinera compensates it for that licensing. “Let’s just say the scope of the deal works for both parties,” Jones said.

At some point, Broadwing expects not to need any more Corvis cards (the carrier doesn’t plan to light any new routes with Corvis gear), and that time is specified in Infinera’s contract, but neither company will disclose it.

The licensing agreement allows Infinera to sell Corvis gear to customers other than Broadwing, but Infinera said it has no plans to do so, and Jones doesn’t blame them. In 2005, Broadwing reported just over $3 million in sales of the Corvis gear, a mathematically insignificant sum relative to the company’s $879 million in total revenue.

“I personally don’t see a lot of future in the construction of new Corvis commons--the frames that hold the different stuff,” Jones said. “It’s a set of technologies that is kind of on the down slope of its technological career. You’ve got a lot of chips and components in the Corvis gear…that are late 90s-type technologies that have been superceded by a new generation of chips and new capabilities in board manufacturing.”

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© 2008 Penton Media Inc.

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