Transport Commerce - Convergence Revisited

Will Intersection of Optics, IP Finally Realize Promise of a Single Network?

The four separate network types carriers commonly operate today include IP networks, which are based on IP routers and deliver Layer 3 IP services; switched networks, which deliver Layer 2 services such as ATM and frame relay; TDM networks, which provide transport and grooming of Layer 1 leased line services; and optical networks, which provide capacity and bandwidth management.

Chart:Growth of Network Traffic 1999-2003

Overlay networks are expensive to build from scratch. Many competitive carriers began their expansion of data services by offering IP services. In anticipation of an expected deluge of IP traffic into the network, carriers have ramped up investments in IP networks. According to analyst firm RHK Inc. (www.rhk.com), by the year 2003, service providers will have invested more than $70 billion in core routing and transmission equipment for new IP-optimized networks. Unfortunately, however, the revenues from IP services delivered into these networks will only approach $25 billion in 2003. So, clearly, more sources of revenue are needed to justify the IP/optical buildout. Supplementing IP with other services will accelerate the payback. For example, offering frame relay service over IP represents a significant opportunity. The worldwide revenue for public frame relay service is expected to grow to $14.1 billion by 2002, according to the Vertical Systems Group (www.verticalsystems.com).

By taking advantage of the latest advances in IP QoS MPLS and service transformation technology (the conversion of non-IP services to IP), service providers can converge other network services onto the evolving IP/optical network. By adopting IP/optical transport, service providers can tap into a massive revenue pool for ATM, frame relay, IP and TDM private line services, estimated to reach $75 billion in 2003, according to RHK and Vertical Systems Group.

The optical Internet is being embraced by virtually all large communication carriers. Backbone operators see IP-based transport as a way of streamlining their operations. They are taking advantage of IP QoS and a new class of ultra-reliable edge routers to capitalize on the low operating cost, high bandwidth, and better flexibility of the IP/optical environment. Mirroring this transition in the backbone environment, local carriers can streamline their operations by using IP as the common transport infrastructure for network services. And with all of this IP/optical bandwidth coming to the service edge, delivering services over IP is a low-cost way for competitive carriers to expand their footprint without having to build overlay networks.

How It Works

The optical Internet is a two-layer architecture that is based on a converged IP/MPLS services layer and an optical layer for transport (see "The Optical Internet" diagram). It leverages the IP/optical networks already being deployed, adding a multiservice capability at the edges of the services layer. It is designed to support the explosive growth of IP services and to help carriers further justify the costs of deploying IP networks.

The optical Internet turns the conventional network structure inside out. Instead of transporting IP or frame relay on top of the ATM and TDM networks, IP/MPLS transport becomes the convergence layer for all services. With the optical Internet architecture, services are transformed into IP packet streams at the edge. The traffic is routed over the IP/MPLS core. The packets are then rendered in their native service formats at the other edge.

On the Edge

An essential component of the optical Internet architecture is the aggregation service router. Placed at the edges of the services layer, this new class of service edge product is designed to support high densities of multiservice traffic (ATM, frame relay, IP and TDM) at the edge. These popular revenue-generating services are transported over the IP/MPLS core.

Chart:The Optical Internet

The aggregation service router is a fault tolerant platform that performs wire-speed packet processing to classify and transform traffic in real time, even on high-speed optical links. Services such as frame relay and leased line are adapted for transport over IP, while maintaining the integrity of service-specific characteristics such as alarms and timing.

The core of the service layer consists of ultra-high capacity switching/routing platforms from companies like Avici Systems Inc. (www.avici.com), Cisco Systems Inc. (www.cisco.com) and Juniper Networks Inc. (www.juniper.net). The development of these core gigabit and terabit IP/MPLS switch/routers continues to focus on speeding packet delivery and enhancing the QoS capabilities needed for multiservice IP-based transport.

Aggregation service routers may be augmented with service creation devices from vendors such as CoSine Communications Inc. (www.cosinecom.com), Nortel Networks Corp. (www.nortelnetworks.com), Redback Networks Inc. (www.redback.com) and Spring Tide Networks Inc. (www.springtidenet.com). The primary focus of these devices is to provide the computing power to support value-added subscriber services such as firewalls and IP security.

Two trends are driving the need to support higher subscriber densities in the CLEC's PoP. The first is the rapid growth of network traffic, which will be predominantly IP. Second, the FCC's (www.fcc.gov) recent ruling that requires LECs to offer unbundled access to local circuits with the enhanced extended link makes CLEC access to the DS-1 loop easier and more affordable than ever. As a result, there will be a lot more T1-based traffic coming into the CLEC PoP.

When deployed in the CLEC PoP (see "Reaching the Edge" diagram), the aggregation service router can replace multiple pieces of switching gear typically deployed with overlay networks (frame relay and ATM switches, and in some cases digital cross-connects) to terminate a large volume of T1 and T3 lines. Aggregation service routers in the PoP enable CLECs to take advantage of the optical Internet's lower cost and complexity, while growing and enhancing subs-criber services (ATM, frame relay, IP and private lines).

Chart:Reaching the Edge

Example Applications

Providing in-building IP services is a big growth area for CLECs. Frequently CLECs are deploying DSLAMs in the basement of a building and providing in-building DSL access to each business. While today's DSLAMs are using frame relay or ATM on the network uplink, new IP-enabled DSLAMs are on the horizon. At the premises, CLECs are using integrated access devices to deliver voice and data services. Customer traffic flows through the DSLAM and is transported over DS-3 across the SONET access ring to the CLEC PoP. Another alternative is to provide T1 access to the IP-enabled IAD with a M1/3 mux in the basement, serving IP over T1 access. At the CLEC PoP, VoATM or VoIP voice traffic is converted to the PSTN by a voice gateway.

Another big opportunity for CLECs is to take advantage of the FCC ruling on the enhanced extended link (EEL). The EEL consists of an unbundled DS-1 loop, the path through multiplexing and concentrating equipment, and dedicated transport. Now CLECs can provide a single T1 connection from the customer premises through the LEC end office to the CLEC's PoP location (see "Reaching the Edge" diagram).

This ruling is significant because it allows new entrants to serve customers without having to collocate in every CO in the incumbent's territory. This opens up a set of new opportunities for CLECs to achieve a higher concentration of subscribers in their PoPs without having to resort to the expensive low-volume collocation strategies.

As a result, there will be a substantial increase in T1 traffic coming into the CLEC PoP. CLECs need a scalable platform to handle this influx. Higher concentrations of subscribers at a single point allows CLECs to migrate to an integrated IP architecture in a more cost-effective fashion then ever before.

Chart: Expanding the CLEC Footprint

While enabling the IP evolution, the aggregation service router also delivers the full range of traditional services. It works side by side with overlay networks, providing smooth integration with existing service-specific networks. It also grows into the future, enabling the migration of all revenue-generating services to the next-generation IP/optical networks.

The benefits of the optical Internet extend beyond the areas that may already be served by a CLEC. It can play a key role in the CLEC's expansion strategies. When entering new markets, CLECs have a choice of replicating the traditional overlay approach or they can take advantage of the new market's greenfield opportunity. New market deployment can be addressed more cost-effectively by building the optical Internet service edge, instead of replicating overlay networks. With the aggregation service router's multiservice capabilities, new PoPs can be seamlessly merged with markets that are already being served (see "Expanding the CLEC Footprint" diagram).

Expanding the Portfolio

Being able to offer highly differentiated services is of paramount importance in the competitive local exchange space. With the optical Internet architecture, CLECs can offer a full portfolio of services. They can even enhance these services to gain a competitive edge:

* IP-Enabled Frame Relay (IPFR)--By taking frame relay into the IP connectionless environment, service providers eliminate the meshed permanent virtual circuit (PVC) requirement that results in a so-called "N-Squared" problem in traditional frame relay networks. Traditionally, for N sites, the number of PVCs that must be maintained is equal to N x (N-1). IPFR uses IP addresses, rather than frame data link connection identifiers (DLCIs), to route traffic through the network. This approach requires only a single DLCI to each customer site. IPFR simplifies the network, makes it easier to provision and manage the service, and allows the service to scale to a greater capacity.

* Frame Relay Emulation Service (FRES)--This service enables the transport of native frame relay (i.e., frame relay frames regardless of payload protocol) over IP or IP/MPLS. It can be offered on the same access facility with IPFR, letting subscribers with non-IP legacy protocol traffic meet all of their frame relay connectivity needs.

* IP Circuit Emulation Services (IP CES)--Using IP CES, the aggregation service router (ASR) transports native private line circuits over IP or IP/MPLS backbones. IP CES preserves all private line service characteristics such as end-to-end timing integrity and alarm reporting. In addition to the traditional nailed-up private line service, on-demand private line services can be offered. A leased line circuit can be routed from point A to point B for an hour, and then rerouted to another location during a different hour.

Alex Dobrushin is vice president of marketing for Amber Networks (www.ambernetworks.com). He can be reached at alexd@ambernetworks.com.

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