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40 Gig Finds Friends

Light Reading
News Analysis
Light Reading
12/23/2003
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Is 40 Gbit/s becoming fashionable again? In recent weeks, two subsystems startups have picked up funding for OC768 work, and one claims its parts will be in a live network next year.

Last week, StrataLight Communications grabbed $19.5 million in third-round funding from investors including TL Ventures (which led the round), ComVentures, The Photonics Fund, and U.S. Venture Partners.

Meanwhile, CoreOptics Inc. recently closed its own Series C, grabbing $15 million from prior investors Atila Ventures/ETV, Crescendo Ventures, High Tech Private Equity GmbH, and Techno Venture Management GmbH. (See 40-Gig Startup Gets $19.5M and CoreOptics Closes $15M Series C.)

Both startups use electronics to make a 40-Gbit/s optical transmission come out cleanly. Physical problems such as Chromatic Dispersion and Polarization Mode Dispersion (PMD) garble high-speed signals -- a challenge addressed by lots of component manufacturers during the bubble. More than 30 of them are listed in a Light Reading report entitled 40-Gig Forecast, published in May 2001. Since then, however, many startups in this field have disappeared (among them Catamaran, Gigatera, LaserComm, Opto Speed, Phaethon, Qusion, and Yafo).

In a sense, StrataLight and CoreOptics were lucky to emerge on the downhill side of the bubble. In StrataLight's case, the timing helped the company stay modest, with a headcount around 30 and a modest $1 million lab buried in the San Jose, Calif., suburbs, CEO Terry Smith says. Officials at CoreOptics's U.S. office did not return Light Reading's phone calls.

Still, it takes cash to reach 40 Gbit/s. CoreOptics's second round was worth $21.5 million, and StrataLight bagged $22.2 million in its first round (see CoreOptics Closes $21.5M). StrataLight's second round was not publicly announced.

Research on 40 Gbit/s has continued during the downturn. ElectroniCast Corp. sees a smattering of OC768 laser modulator sales in 2003, a telltale sign that someone's producing prototypes. At least a couple of 40-Gig component startups -- ClearSpeed Technology Ltd. and Mintera Corp. -- are actually hiring staff, according to their Websites.

Some specialty components are arriving as well. Corning Inc. (NYSE: GLW), for example, is preparing a fiber that can take care of PMD at 40 Gbit/s, removing the need for dispersion compensators. Corning is planning to announce the fiber next quarter, says Stephen Montgomery, analyst with ElectroniCast. Corning representatives did not return a call for comment.

StrataLight isn't releasing many product details, but the company claims it's involved with field trials that should lead to deployment in live networks next year. "There's one network in Europe that's going to use our 40 Gbit/s in the summer," says StratLight's Smith.

StrataLight's trick is that its 40-Gbit/s line cards can be inserted directly into 10-Gbit/s slots. Smith says his company's chips produce a 40-Gbit/s signal "thin" enough to fit inside the 50GHz spacing commonly used for OC192 DWDM; the signal won't bleed into neighboring channels, which would cause interference.

The trick lies in the electronics rather than the optics. "It's a lot like what's been going on in the DSL [digital subscriber line] space. It's all about coding models and modulation schemes," Smith says (see ADSL, Take 2+).

This doesn't mean an OC768 is about to flood long-haul networks. StrataLight's initial 40-Gbit/s implementations are aimed at short-reach connections, moving data from one box to another within a central office. In long-haul, OC768 will be too expensive, compared with multiple channels of OC192, says Esmeralda Swartz, vice president of marketing for core router vendor Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7).

"The way in which carriers will get to 40 Gbit/s will be the aggregation of [installed] OC192 or even OC48 [lines]," Swartz says. "Think about how long the transition from OC48 to OC192 took. A lot of the backbones haven't been upgraded to 10 Gbit/s, especially outside of the U.S."

In fact, much of the cry for 40 Gbit/s is coming not from network owners, but from router vendors who want to add the speed grade to their feature lists, Swartz says. For the next year or two, she believes carriers will be more obsessed with "making IP actually profitable" than with jumping to 40 Gbit/s.

Still, if StrataLight's products work as claimed, they could allow carriers to keep their equipment and still be able to add one line at a time. Smith is hoping that cost-conscious pitch will make 40 Gbit/s more palatable.

But wait -- it gets weirder. Analyst Montgomery has heard some vendors muse about skipping 40 Gbit/s altogether to deploy 80 or 160 Gbit/s. The logic would be that by the time the recovery hits its stride, researchers will have prepared the next step beyond OC768, so why not dive right in?

"We have seen modulators go into that market," Montgomery says. Some 160-Gbit/s research emerged this year, in fact (see Siemens Claims 160-Gbit/s Milestone and Mitsubishi Looks to 160-Gbit/s Future).

— Craig Matsumoto, Senior Editor, Light Reading

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materialgirl
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materialgirl,
User Rank: Light Beer
12/4/2012 | 11:08:47 PM
re: 40 Gig Finds Friends
I suspect that with Web services and real-time fail-over, that traffic patterns will change. I am willing to bet that 40Gbps traffic will show up first in metro applications, specifically in disaster recovery and synchronous data backups of fast-growing data stores.
whyiswhy
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whyiswhy,
User Rank: Light Beer
12/4/2012 | 11:09:04 PM
re: 40 Gig Finds Friends
Like 10G, 40G should find early and lucrative applications in (ULH) submarine links. One problem is the world-spanning links have more unused capacity relative to their revenue than terrestrial. Another problem is coastal loops love slower speeds for easy add/drop branches.

None of this spells significant revenue near term. And 40G MM is just plain stupid: hard to make and nobody willing to pay over $150 for a transponder.

So the hope here must be that a large company (Alcatel, KDDI, etc?) will pick them up when things submarine (=ULH) recover. If the companies can say their technology can be used in existing (2.5/10G submarine) ULH links, they might get an exit. Not a great exit, but any exit these days is great.

-Why
signmeup
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signmeup,
User Rank: Light Beer
12/4/2012 | 11:09:04 PM
re: 40 Gig Finds Friends
The new switch fabric on the 12800 may support 40Gbps per linecard, but NONE of the new linecards are able to handle more than 20Gbps. Let's not even get started on the HFR, which requires a reinforced floor and small nuclear reactor to power...

SPecial_Guy
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SPecial_Guy,
User Rank: Light Beer
12/4/2012 | 11:09:05 PM
re: 40 Gig Finds Friends
Some of the better core routers today are able to process 10G well enough that they could release some 40G products based on 4x10G processing techniques. This would be similar to most early 10G offerings.

But, I don't think the router market plans to pursue 40G aggressively with customers. 40G is just the next technology step and it lends credibility to vendors who provide it. I think the healthy vendors are simply using their ability to develop 40G to stomp on their less fortunate competitors.

Fundamentally, particle_man is right, longhaul 40G is a currently a fantasy and shorthaul is expensive at $40k+ a transponder.

What does the current list of system makers for 40G look like, anyway?
AutoDog
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AutoDog,
User Rank: Light Beer
12/4/2012 | 11:09:05 PM
re: 40 Gig Finds Friends
Given that the current big iron Cisco 12800 supports 40G/slot it's almost a given that the upcoming HFR will support a 40G short reach port...

dodo
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dodo,
User Rank: Light Beer
12/4/2012 | 11:09:06 PM
re: 40 Gig Finds Friends
are we still on earth?
OR
the Beagle has landed!

"Skipping 40 for 80 or 160Gbps."


back to earth, mate........
AutoDog
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AutoDog,
User Rank: Light Beer
12/4/2012 | 11:09:06 PM
re: 40 Gig Finds Friends
One passage in this editorial is incorrect:

"This doesn't mean an OC768 is about to flood long-haul networks. StrataLight's initial 40-Gbit/s implementations are aimed at short-reach connections, moving data from one box to another within a central office."

StrataLight builds 40G DWDM transport specifically for LH applications. The passage above mistakenly implies that their product is for short reach, intra-office connections.
SPecial_Guy
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SPecial_Guy,
User Rank: Light Beer
12/4/2012 | 11:09:07 PM
re: 40 Gig Finds Friends
http://www.lightreading.com/do...

I was starting to question Montogomery's qualifications for commenting on 40G when I realized his monumental flip-flop from the above article to today, but then I visited their website and realized I was wrong. This man is a member of the I-E-E-E, how could I have doubted him?

No, but seriously, does this guy ever get anything right? How do people like this make a living? He sells reports that put the optoelectronic transceiver market at $20bil+ in three years.

http://www.lightreading.com/do...

If it's a good living, I want in. Now!
particle_man
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particle_man,
User Rank: Light Beer
12/4/2012 | 11:09:07 PM
re: 40 Gig Finds Friends
Is there a router that can even process packets at OC-768 speeds? Or a backplane for that matter? Maybe if you demux down to 10G or 2.5G, at which point, why were we doing this anyway?

This will live and die on the economics. For LH, getting distance will take heroics (or new fiber - same thing). For short haul, the cheap 10G transponders that are around look pretty compelling.

PM

I suppose it's all in the report........
MrLight
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MrLight,
User Rank: Light Beer
12/5/2012 | 2:37:06 AM
re: 40 Gig Finds Friends
The industry needs to come to grips with the driver for 40G - is it card cost, is it network cost, is it density, is it that a specific network application requires it, like for low delay or is it just to able to brag that you have it in your network.

Personally, I feel it will be LH/ULH network cost first followed by density, such as that needed for interconnecting core routers, followed by product cost, then everything else.

Clearly 40G will prove itself in once it reaches about 2x the cost of 10G. Until then the volume will be limited.

MrLight...
P.S.Hopefully the work on SONET/SDH 40G will make the work to get to the next Ethernet speed jump that much easier.
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