All combined voice, data, fax and video networks are not created equal. Only those carriers with a versatile optical networking infrastructure will rise to the top

The telecom industry is delivering on its integration promises - converged networks now offer broadband network solutions that were just predictions three years ago. In particular, the emergence of competitive local exchange carriers with converged networks has led the industry to create integrated networks for one-stop voice and data solutions.

These converged, integrated networks are rapidly changing how networking solutions are delivered because they have four inherent advantages:

- A clean slate. Service providers have the freedom to build next generation, open-standards networks without regard to legacy systems and not yet fully depreciated capital investments in switched voice systems.

- Just-in-time bandwidth. A scalable, in-service network expansion gives carriers access to increased network capacity when needed, such as during peak usage periods or when bandwidth-intensive applications are operating.

- Superior performance. Service providers can construct their networks for the current marketplace while future-proofing them against technological obsolescence and the need for greatly increased capacity.

- Cost/benefit ratio. A single converged network removes the need to separately run a data network, an IP network, a local network and a voice network, reducing costs and improving efficiency.

Essentially, when a carrier builds a converged network, it also builds a simpler network. Market research shows the industry is moving rapidly in this direction. For example, a study by Yankelovich Partners found that 44% of carrier decision-makers believe that "significant steps toward such simplification will occur in 1999." In particular, they endorse a more data-centric approach where the IP or ATM layer is connected directly to the optical layer.

Carrier spending supports this prediction, with service providers worldwide spending $1.2 billion on wavelength division multiplexing (WDM) equipment in 1998, according to a study by Ovum Research. The most significant finding was that more than 50% of future spending was to be for dense WDM (DWDM) equipment with 16 or more channels. The reason, according to the study, is that "the emphasis will begin to shift toward more sophisticated optical networking applications that emphasize simpler network architectures."

In fact, carriers show no sign of lessening their focus on DWDM and optical networking in the near future. RHK research reveals that the North American DWDM market grew from $1.5 billion in 1997 to $1.9 billion in 1998 and has surged to nearly $3 billion in 1999 (Figure 1). RHK also estimates the worldwide DWDM market at $4 billion in 1999 and believes that the market will continue to show robust growth.

Network designers have made note of these studies, which indicate that optical networking technology - particularly advanced forms of DWDM - will be a primary factor in how CLECs differentiate themselves in the future.

A well-timed solution

One reason for the growing support of developing converged networks is that the timing is right. The enterprise networking environment is undergoing radical change, and carriers are beginning to get a clearer picture of what to expect from tomorrow's network:

- Data traffic is equal to or surpassing voice as the volume leader and most mission-critical aspect of the network.

- The integration of voice and data without protocol conflicts will simplify the migration of legacy communications systems and network applications to next generation transport technologies.

- The explosive growth in intranets, extranets and e-business will require a convergent infrastructure with minimum latency to assure responsiveness.

- Bandwidth-intensive applications are much more cost-effective when the network provides just-in-time bandwidth management options.

- Converged networks will provide competitive rates because of lower construction outlays and operating costs.

Although all converged networks are capable of combining voice and data traffic, not all are the same behind the scenes in terms of transport technology. What separates the advanced integrated communications providers (ICPs) from the CLECs nearing network capacity is the commitment to optical networking over an advanced fiber optic infrastructure. This places the growing number of ICPs at a distinct competitive advantage over those with legacy backbone architectures. They operate robust networks that are capable of increasing capacity on short notice and of introducing technological enhancements and optical advancements because they adhere to open standards.

Universally, the biggest problem the new converged telcos face is accurately forecasting future bandwidth needs because of rapid growth and sporadic demand for services. Service providers need to predict how the industry can reach that delicate balance, ensuring that the appropriate capital outlay is made for infrastructure and keeping the network capable of meeting future bandwidth requirements. With transmission speeds doubling every nine months, it's essential to create an infrastructure with the ability to provide large amounts of bandwidth on short notice at a reasonable cost.

Optical networking benefits

The answer to this forecasting dilemma is DWDM. This technology gives ICPs the flexibility they must have to stay ahead of the transmission growth curve. For example, Ciena's 16-channel MultiWave Sentry system allows long-haul converged networks to turn up all 16 colors on a pair of fibers and run OC-48 channels over each color. Likewise, Ciena's Firefly DWDM optical transport is designed for short-haul, point-to-point applications. The direct connection capabilities of this short-haul and long-haul DWDM equipment enable a company such as GST Telecommunications to integrate its network optically without the use of Sonet multiplexers or regenerators (Figure 2).

The alternative is costly because it requires the carrier to light up 16 separate fiber pairs. DWDM gives service providers the ability to light each of these 16 colors as demand warrants, which can be accomplished in less than 60 days. Without optical networking, adding an OC-48 circuit over existing dark fiber takes between six and nine months.

Optical networking has other significant advantages beyond its fast transmission expansion. ICPs can mix Sonet, ATM, frame relay and high-speed IP traffic on a common optical network, while eliminating the intervening synchronous layer on ATM and IP networks. For example, Figure 3 shows GST's existing and planned voice and data network in the western U.S.

This simplifies the network architecture and enables just-in-time bandwidth as customers require additional bandwidth for specific time periods or applications. Because it is common for CLECs to receive unexpected demands for large amounts of capacity, it is important for service providers to examine the ability of their network infrastructure to deliver additional capacity on short notice.

Another benefit of optical networking is that it reduces the capital required to add additional capacity, and the overall savings are passed down to the customer. There is a one-time cost for amplifiers, and the DWDM equipment provides significant savings every time additional optical networking capacity is activated on the 16 colors available in each fiber pair. The equation is simple: For the first two DWDM optical networking channels, there is a premium of about 20%. Beyond two channels, the cost savings for the other 14 channels are considerable when compared with standard transmission technology.

Convergence reaches the MAN

Another factor differentiates converged network providers. This is the measure of how well their optical networking infrastructures simplify the converged network architecture beyond the backbone and into the metro area network (MAN).

The ability to migrate proven DWDM backbone technology into metro-area CLEC networks is relatively new. When this is done, there is no need for Sonet multiplexers or regenerators (see story on page 56). This saves customers and carriers money while providing superior throughput and reliability to other local ring fiber architectures in the MAN. The installation of optical networking on existing infrastructure also frees up fiber that is inefficiently used, permitting as many as 16 OC-48 channels over what previously was one OC-48 channel.

Deploying optical networking technology in the MAN brings the benefits of converged networks down to the customer premises. The obvious advantage is the ability to bypass the incumbent LEC (ILEC) and the access charges it collects. An almost equal advantage is better reliability and performance. This end-to-end optical infrastructure supports advanced services such as bandwidth on demand. As an end result, the next generation optical network helps carriers reach customers at minimal cost with maximum services and reliability.

ICPs now are able to meet the enterprise's bandwidth needs over an infrastructure that maximizes high-speed IP, ATM and frame relay transport. Enterprises choose a converged network based on three main criteria. First, successful converged networks must include a robust network infrastructure, such as DWDM optical networking backbone technology, which is necessary to make the converged network versatile and largely future-proof. Second, the service provider must bring DWDM optical networking technology into the metro area. This provides the ability to bypass the ILEC, while offering improved customer economics and greater versatility of services. Finally, the service provider must offer just-in-time bandwidth management.

The future almost is upon us. Network providers will be required to offer services that give customers the ability to expand and contract capacity. Providing these flexible bandwidth services will be essential as applications become more sophisticated and integral to everyday business operations.