PBT

Nortel Carrier Ethernet assets still up for grabs

Nortel’s CEO resigned as the company reported another steep loss and the auction of the key business proceeds. At this point, only the Carrier Ethernet business remains on the table, and the losses there matched those of the company overall.

We’ve noted that most of the operators we’ve talked to have been skeptical of the prospects for the sale of Nortel’s Ethernet business, given the fact that its prior successes were linked in part to PBT, which has lost momentum in part because of poor strategy on the part of Nortel.

The hope that Ericsson might buy the unit seems at least partially justified, but the question is whether a buyer as conservative as Ericsson could really gain much traction in the space at this point.

Nortel cut back Carrier Ethernet; focuses on optical

Nortel will be cutting back on its Carrier Ethernet investment and focusing more on optical, according to a leaked memo later largely confirmed by the company. The move is an acknowledgement of the company’s Ethernet woes, which buried its early hopes for the success of its PBT technology.

The problem we found with Nortel’s positioning was that the company was unable to make a strong case for PBT in a unified national network like BT’s, and in many metro networks, there’s not enough traffic engineering need yet to justify it.

But the big problem according to both our research with providers and our TCO modeling was the lack of effective operations tools for PBT networks, which by inference means Carrier Ethernet in general. It appears that TCO would be lower for a hybrid MPLS/Ethernet network or an MPLS-TP network because of better operations tools, but there is not yet sufficient information available to model this conclusion.

Nortel also had a major problem explaining its own approach, according to a number of operators we spoke with. The decision to move away from higher-layer protocols to lower-layer ones will be a difficult one to reconcile with long-term profit goals, though, because optical margins are often thinner.

Juniper’s core virtualization strategy is critical for telecom

Juniper announced a new “core virtualization” strategy with the TX Matrix Plus, and the concept is quite interesting. The new capability links the Juniper JCS1200 for hosted-control-plane and the TX Matrix Plus as a large aggregator/on-ramp to create an IP infrastructure that can be partitioned to support multiple independent networks.

This capability is critical for a number of reasons.

• First, it deals effectively with the problem of network operators in separating premium service traffic from the Internet, something that is a security and performance issue everywhere and a regulatory issue in some areas.
• Second, it allows metro evolution to an IP core (something Juniper and Cisco both want, in order to marginalize PBT) by providing a means of keeping traffic there compartmentalized to avoid variations in QoS on key applications, and keeping IP involved in the major area of investment for the next decade.
• Finally, it opens the possibility of a “network-as-a-service” approach by operators, a means of perhaps pulling players like Google or CDNs in as customers.

But for us the big thing is the application of the JCS1200. Juniper is unique in its ability to support hosted control plane behavior, and this sort of thing could be a major element in a service-layer strategy. Juniper now needs to get such a strategy while it still has the lead here.

Ericsson develops packet-optical gear for metro surge

Ericsson is fielding a line of packet optical gear designed to address the expected surge in metro networking. The new products will support a T-MPLS control plane, but Ericsson plans to upgrade to the more modern MPLS-TP and is also considering PBT (PBB-TE).

Metro capacity may be driven by a host of factors in 2009 and 2010 and the operators may be more interested than usual in the optical layer. This has implications on the Carrier Ethernet and IP MPLS wars since optical spending tends to encourage operators to deploy some control plane architecture, and that could then pull through either switches or routers.

Vendors showing up for Carrier Ethernet

NXTcomm 08 was an interesting show, something a lot better than some of the disasters that followed the breakup of the SuperComm partnership, but far less than SuperComm in its prime.

<p>We believe this is due not as much to the show as to the industry; infrastructure doesn’t have buzz any more. In the heyday of the older show, the bubble was in bloom and there was a lot of trade press action around it. Today, publication coverage of infrastructure issues is down because the buyers are all big telcos who don’t do things interesting enough to make the press happy. The big news in the show was the substantial vendor presence in Carrier Ethernet.

 <p>While most of the companies that showed products were objectively doing less than half of what the market would require in terms of features, there was enough support to make it clear that despite the PBT announcement by BT, this technology isn’t going away. We believe, in fact, that the major deployments will begin to roll in 2H09 and that most of the opponents of PBT will end up quietly supporting it by then.

<p>We had 10 interviews with vendors and carriers on our ExperiaSphere initiative and we were thus able to exceed our own objectives for the show. Service management issues and their relationship to standards and to network resources are a key part of the Ethernet picture, and also key for IP/MPLS in any form. In fact, a report we are publishing in the July issue of Newatcher, our newsletter, shows that service and operations management issues with both Ethernet and IP/MPLS result in more swing in total cost of ownership than technology issues do.

Nortel’s Verizon PBT contract sheds light on Ethernet market

Nortel has announced a PBB win at Verizon, the same provider who reportedly said it would not be using PBT. SInce PBT is officially PBB-TE and is a simple upgrade from PBB, we believe the sequence of events here shows the overall lack of media sanity on key technology issues.

First, Verizon’s selection of VPLS over PBT, as reported, was a core network decision not metro, where most of Verizon’s dollars are spent. Second, the “decision” had never been in doubt, as we reported when it was first announced, since Verizon’s core network isn’t even a candidate for Ethernet deployment.

In any event, there is no problem in the Carrier Ethernet market, and IP players may be looking wistfully at the opportunity there before long. Metro buildout is clearly on a faster pace worldwide than core build-out for revenue reasons.

PBT setback follows Verizon and BT announcements

Verizon and BT have both announced their commitment to use MPLS as the service architecture for enterprise services and converged services, abandoning their consideration of PBT for the role. We had reported earlier that BT was being lobbied heavily by Cisco and Juniper to make this move, so the decision there is not a surprise. Further, Verizon had never seriously considered PBT for a region-wide deployment according to our sources; however PBT is still being explored in the metro area. There has been no loss of momentum for PBT trials according to what we are hearing, but there is no question that these two announcements will make things harder for PBT vendors, erasing the groundswell of momentum they had previously enjoyed.

Carrier Ethernet work continues for inter-provider connections

Vendors and the Metro Ethernet Forum (MEF) are working to correct an Ethernet omission that may or may not have much relevance to customer interest or service success—the inter-provider NNI. Ethernet standards have not addressed this issue fully because there has been relatively little interest in using Ethernet for long-haul connections, but some believe that the BT interest in PBT for leased-line and frame relay replacement indicate that Ethernet could have a future at a national/international level. This may also spark more interest in pan-provider service management work being done by the IPsphere Forum.

Service providers increase PBT testing

Telefonica has joined the ranks of operators who acknowledge they are testing PBT. As we have indicated, 10 out of 10 of our service provider survey base is conducting or planning PBT tests, but the majority have still not made their commitment public. We believe that there will be five more public announcements of PBT activity among major national providers in 2008.