XO's Not Done Yet With 100G
XO Communications Inc. (OTC: XOHO) has embarked on one of the world's boldest 100Gbit/s network rollouts, arguing that it's taken the 100Gbit/s lead among U.S. operators.
XO's plans have emerged in the past couple of weeks, as the carrier announced it's sourcing network equipment from Nokia Networks and Ciena Corp. (NYSE: CIEN) for deployment across its U.S. long-haul and metro networks respectively. (See XO Deploys First Nationwide 100G Network and XO Adds Ciena to 100G Roster.)
But XO, which has an annual capex spend of about $225 million and generates revenues of about $1.5 billion from its wholesale and enterprise customer base, isn't done yet with its 100Gbit/s plans and is looking for more state-of-the-art technology to boost the performance of its transport and packet services.
XO's CTO Randy Nicklas talked to Light Reading about where the operator is just now with its 100Gbit/s developments and what it's looking at next.
Initial 100Gbit/s moves
The long-haul and metro networks have taken different paths to 100Gbit/s, Nicklas says.
In the inter-city connections, XO had previously upgraded to 40Gbit/s with NSN and also used Infinera Corp. (Nasdaq: INFN) gear for 10Gbit/s wavelengths. But there had been no demand for 40Gbit/s in the carrier's 40 or so metro markets. (See XO Upgrades With Infinera and XO Sweats Its Optical Assets .) Now, Nicklas explains, there's demand for 100Gbit/s across the board, hence the long-haul upgrade with NSN and the metro deployments of Ciena's 6500 platform.
"We think it's important to have metro systems that are 100Gbit/s capable. ... It's important in the long-haul and the metro" to help reduce the costs of provisioning large volumes of 10Gbit/s Ethernet connections, not only to the major carrier hotels but also to data centers that are not on the major transport routes, notes the CTO.
"Ciena's 6500 is often used in long-haul networks but we are using it in the metro," says Nicklas, who notes that XO had previously deployed Ciena's 4200 box widely before its development was "sidelined" following the Nortel unit acquisition that brought the 6500 into Ciena's portfolio. (See XO Picks Ciena and Ciena/Nortel Product Plans Revealed.)
The CTO says there is growing demand for long-haul 100Gbit/s services from wholesale customers such as the large Asia/Pacific and European carriers, cable operators, mobile operators and the major Web services companies such as Google and Amazon. But there's also demand in the metro markets, especially between mobile switching centers and data centers, plus a need to have 100Gbit/s on-ramps to the long-haul network. Economies, prices and savings
There are certainly operating cost advantages to having 100Gbit/s connections -- it's less expensive on the line side (the longer-distance links) than provisioning multiple 10Gbit/s links -- and the cost per bit per mile is reduced at higher channel speeds, states the CTO. And, of course, "now we can light the [100Gbit/s] line speeds for those with really big networks."
In general, building 100Gbit/s networks is becoming more affordable as LR4 CFP (C Form-factor pluggable) transceivers become more commonplace. "These are being sourced now by the router and transport vendors," notes Nicklas.
On the client side (the shorter distances in metro areas), the XO man says there is cost parity between 100Gbit/s and 10 x 10Gbit/s offerings, but the costs of 100Gbit/s capabilities are expected to improve as transceiver costs reduce further.
Naturally, as with all network operators, Nicklas is still far from happy with the costs associated with 100Gbit/s. "We are hammering the vendors on this. We'd like this to happen quicker, as would our customers. The CFP costs are hideous."
It's hard to quantify the operating-cost savings, Nicklas says, but he notes that his team will be able to provision a lot more bandwidth in the future without having to spend any more time or have more bodies. "We'll be able to do a lot more with our existing operations. There's a lot of testing, commissioning and design involved in 10x10Gbit/s circuits. The operations team is excited about provisioning 100Gbit/s cards."
There's also the issue of limited physical capacity being available on the main routes around the U.S., notes the CTO. "There's limited fiber inventory, so we need higher-capacity systems" to manage the growing demand for data capacity. "No one is digging new fiber."
As for service pricing, Nicklas notes that there are "occasionally some unrealistic customer expectations that 10 times the capacity will come at only 2.5 times the price."
Next steps – more vendors?
Ciena won't be the only vendor in XO's 100Gbit/s metro networks, states Nicklas. "We have a multi-vendor strategy to keep everyone honest and to keep the prices down. In metro WDM, Ciena is dominant in our network and it's been a great supplier, but we have alternative suppliers. In the metro, that's Cisco Systems Inc. (Nasdaq: CSCO) and we're working on qualifying its M6 platform [the ONS 15454 M6 Multiservice Transport Platform]" for 100Gbit/s.
Nicklas, however, didn't name-check Transmode Systems AB , which was recently added to XO's metro transport system supplier roster. (See XO Shows Some Love for Transmode.)
In the long-haul, XO currently has NSN and Infinera, but the company isn't necessarily just sticking with those two vendors. Having kick-started its 100Gbit/s rollout with NSN, Nicklas and his team have now issued an RFP (request for proposal) for a full long-haul network build based on 100Gbit/s Coherent technology.
"It's been issued to everyone -- eight vendors in total," including Alcatel-Lucent (NYSE: ALU), Ciena, Fujitsu Network Communications Inc. and Huawei Technologies Co. Ltd. , as well as long-haul incumbents Infinera and NSN, notes the CTO. "This will give us the latest in price," but is not the last word in the process, he notes. (See Infinera CEO Campaigns for Growth.)
It's worth noting that XO has checked out Infinera's 100Gbit/s developments in the past. (See Infinera 100G Checkup.) In the IP domain, XO currently uses Cisco and Juniper routers, but Nicklas is looking for upgrades that are more geared toward 100Gbit/s capabilities. The operator currently has Cisco's CRS-3 in its network "and we expect a follow-on to that," and it also uses Juniper Networks Inc. (NYSE: JNPR)'s MX960. "The [Juniper] PTX -- that's an interesting device," notes the CTO. (See Juniper Makes Its Packet-Optical Move and XO Picks Juniper.)
What's also caught Nicklas's eye is Alcatel-Lucent's latest core router release. "These new routers are all much bigger and they bring down the port costs," he notes. (See Alcatel-Lucent, Juniper Get Core-Router Upgrades.)
He's not so keen on the switch fabric interconnect concept, though. "Bigger single machines are better," he notes.
And while he didn't talk about it during this call, Nicklas is also keeping an eye on the potential of software-defined networking (SDN) protocol OpenFlow. (See XO Takes a Shine to OpenFlow.)
Going nationwide with 100Gbit/s is giving XO a head start -- up to 12 months, reckons Nicklas -- over its rivals, most notably its main wavelength services competitor Level 3 Communications Inc. (Nasdaq: LVLT).
"Level 3 doesn't have 100Gbit/s yet. It uses Infinera's DTNs, which could possibly be used for 100Gbit/s, but that's not an economical way to do it. We have the DTNs too, but neither us nor Level 3 is using that box for 100Gbit/s. They [Level 3] have a lot of Huawei equipment -- maybe they'll do it with Huawei. I don't know. But we think we're ahead of them."
Verizon Communications Inc. (NYSE: VZ), meanwhile, has been pushing ahead with 100Gbit/s, but Nicklas believes that's on limited routes rather than nationwide, "and I haven't seen it made commercially available to external customers, so I think we have a better footprint than Verizon [in 100Gbit/s]." (See Verizon Loves Its 100G and Verizon Deploys Ciena's 100G.)
As for AT&T Inc. (NYSE: T), "it tends to remain silent. And they bet on 40Gbit/s in a big way, so..." (See EENY 2010: AT&T Gets to 40G.)
All told, the CTO reckons XO is leading the way in the U.S. "We've stolen a march on our rivals," he concludes.
— Ray Le Maistre, International Managing Editor, Light Reading