Sponsored By

Ceyba Goes Ultra-LongCeyba Goes Ultra-Long

Ceyba announces product details and says it has what it takes to overcome the current market challenges

March 4, 2002

4 Min Read
Ceyba Goes Ultra-Long

The ultra-long-haul optical transport market is heating up. While the boom may still be at least a year out, well funded startups are gearing up to introduce the next generation of products.

Last week, Ottawa-based Innovance Networks announced it had raised $55 million (see Innovance Scores $55M). This week, crosstown rival Ceyba Inc. introduced its first product, the C420 Dynamic Optical Networking System, an ultra-long-haul dense wavelength-division multiplexing (DWDM) platform (see Ceyba Targets Core).

Like other ultra-long-haul transport products, the C420 will be able to transmit at distances up to 4,000 kilometers without the need for optical regeneration, which greatly reduces the need for OEO switching in the core. The company claims its platform can save carriers as much as 70 percent in capital costs.

But Ceyba says there are a few differentiators that set it apart from the rest of the pack. For one, Ceyba claims that it will be the first company to deliver an optical transport product that mixes 10-Gbit/s and 40-Gbit/s channels in the same transmission band, allowing carriers more flexibility in how they deploy the product. The 10-Gbit/s interfaces will be available on the product when it ships in June, while 40-Gbit/s interfaces will be available later.

“We are the only ones who will have a product ready for 40-Gbit/s from the start,” says Benoit Fleury, vice president of product marketing at Ceyba. “Corvis realized that 10-Gbit/s was a good idea, but I haven’t heard of any plans to go to 40-Gbit/s. We’ve future-proofed our platform.”Ceyba’s second big differentiator is its monitoring and diagnostic capabilities. Fleury says the product’s diagnostic tool kit is able to monitor bit error rate, forward error correction, and optical time domain reflection. It also includes an optical spectrum analyzer, along with other important measurement tools, all in one testing device. Fleury contends that ultra-long-haul transport technology hasn’t yet taken off in a big way partly because currently available systems lack these attributes.

These differentiators are all very well, but the market reality is that Ceyba is entering a crowded vendor pool in the middle of an economic recession. Not only is this market flooded with competition from incumbent players like Nortel Networks Corp. (NYSE/Toronto: NT) and Ciena Corp. (Nasdaq: CIEN), which sell traditional long-haul transport gear; but Ceyba also faces competition from ultra-long-haul players like Corvis Corp. (Nasdaq: CORV) and other well funded startups, including Innovance and PhotonEx Corp.

To make matters worse, the market for long haul, as well as ultra long haul, seems dead in the water. The industry is coming off a two- to three-year period of massive network buildouts that left many carriers with a capacity glut. As a result, carriers have drastically reduced their spending on long-haul gear. For example, both Qwest Communications International Inc. (NYSE: Q) and Sprint Corp. (NYSE: FON) have practically frozen all spending on their long-haul networks (see Qwest Slowdown Spooks Investors). Williams Communications Group (NYSE: WCG), a carrier that spent millions on long-haul gear during the boom -- and is now contemplating bankruptcy -- is expected to cut spending by at least another 25 percent (see Williams Ponders Bankruptcy).

All players in this market, including the big ones, Nortel and Ciena, have felt the pain (see Ciena: Outlook Dim). Corvis, the only company that has actually begun shipping ultra-long-haul gear, reported revenues of only $15.2 million last quarter (see Corvis: How Low Can It Go?). And revenues are expected to be flat to down for at least the next two quarters.

Fleury suggests that Corvis’s concept hasn't failed: It was merely too far ahead of the market.

“Their timing was off,” he says. “They came out with a product as the market was collapsing, but we have a fairly large window to deploy our product.”

It could be argued that Ceyba and other startups -- like Innovance, which now has raised over $130 million, and Photonex, which has over $178 million -- will actually benefit from the market slowdown.

“If you have cash to last you for the next couple of years, the downturn actually buys you some more time to get customer traction,” says Rick Schafer an analyst with CIBC World Markets.

Ceyba has raised over $93 million in funding and expects to have its product generally available for customer shipments in June of this year. But company executives say they don’t really expect to ship products in significant volume until at least the end of 2002 or the beginning of 2003.

According to Fleury, most carriers are only using about 70 percent of their lit fiber capacity. But traffic is still growing at about 100 percent per year, which means that in another year, these carriers will need to turn up capacity on more of their fibers.

“On average, you have to figure they will be exhausting lit fiber capacity in the next 12 months,” he says. “This gives us a chance to get our feet wet and start small -- then we can flesh out customer deployments.”

— Marguerite Reardon, Senior Editor, Light Reading

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like