Salira Eyes Ethernet Access

Ethernet access player Salira has a strong team and an interesting technology, but is the timing right?

May 23, 2001

4 Min Read
Salira Eyes Ethernet Access

Salira Optical Network Systems Inc. has come out of hiding and has announced it will use Ethernet-based passive optical networking (PON) technology to attack telecommunication applications in the last mile of access (see Startup to Offer IP/Ethernet Access).

PONS use relatively inexpensive "passive" equipment that splits a single strand of fiber and allows the bandwidth to be shared without the use of more expensive "active" components like lasers (see PONs: Passive Aggression). Carriers have seen this as an economical way to roll out fiber-optic networking technology to homes and businesses.

Salira has several things going for it: decent funding, good technology, and a management team filled with some big names. Even though its product won’t be ready to ship until 2002, it will be demonstrating its technology at this year’s Supercomm 2001 trade show in Atlanta, June 4-7.

David House, formerly of Intel Corp. (Nasdaq: INTC), Bay Networks, and Nortel Networks Corp. (NYSE/Toronto: NT), is chairman of the board (he also chairs another startup, Allegro Networks). Herb Martin, CEO of Salira, has worked at Ericsson AB (Nasdaq: ERICY), ESS Technology, Onyx, and The Wollongong Group. And Wei-Gao, CTO and co-founder, formerly worked at Nortel’s Bell Northern Research unit where he helped develop the first OC192/Sonet product.

“They’ve got a good group of people working with them — a real strong management team,” says Alan Bezoza, an analyst with CIBC World Markets. “They have people from Cisco Systems Inc. [Nasdaq: CSCO], Nortel, ONI Systems Inc. [Nasdaq: ONIS], Alcatel SA [NYSE: ALA; Paris: CGEP:PA], and Marconi Communications PLC (Nasdaq/London: MONI). I was impressed.”

Since September, the company has been supporting its 55-person operation with about $7 million in venture funding, which it secured from Vertex Management. But CEO Martin says the company is about to close a $20 million round in the next 30 days, which should keep its development wheels turning.

Unlike companies like Quantum Bridge Communications Inc., Terawave Communications, and Paceon that have developed PONs using asynchronous transfer mode (ATM), Salira has based its product exclusively on Ethernet. Why? For one, Ethernet is the most common IP-based technology.

Secondly, Ethernet PONs are cheaper to implement because they can support more users per unit. For example, Salira claims its gear will be able to deliver nearly eight times the symmetrical bandwidth capability as its ATM PON counterparts. This enables carriers to provision eight times as many customers on a PON circuit and amortize the equipment and fiber costs over a much larger customer base, says the company. Also, Ethernet components are cheaper than those based on ATM, another important factor in keeping initial costs down. Gigabit Ethernet technology also provides a more scalable solution because it can support speeds as high as 1 Gbit/s, while ATM taps out at 622 Mbit/s.

“The Ethernet market in the metro area network is starting to take off,” says Michael Howard, principal analyst and co-founder of Infonetics Research Inc.. “The smaller upstarts are now forcing the bigger players like Qwest Communications International Corp. [NYSE: Q] to announce Ethernet services. It is going to be a big market.”

Other startups like Alloptic Inc., OnePath Networks, and Wave7 Optics Inc. are also developing Ethernet PONs (see Ethernet in the 'Hood ). Salira says its solution is different from what others have proposed, because it says it delivers robust QOS (quality of service), which allows carriers to support differentiated classes of IP services over a PON infrastructure.

But there is one big issue left to tackle: standards. While Salira claims that its first release, scheduled to ship in March of 2002, will support the IEEE 802.1p, IP precedence classification, DiffServ, and multiprotocol label switching (MPLS) standards, these standards are for point-to-point Ethernet implementations and not for PON architectures, which are point to multipoint. This means that whatever standards are used will be adapted in a proprietary way to work in Salira's PON architecture.

ATM PON technology is based on Full Service Access Network (FSAN) specifications, which were developed by the International Telecommunication Union (ITU) over the past ten years and finally adopted last year.

This could be a problem for companies like Salira that want to sell to incumbent carriers. “While carriers don’t get the same capacity they could with Ethernet PONs, and even though it’s probably more expensive, they want standards,” says Bezoza.

The Institute of Electrical and Electronics Engineers Inc. (IEEE) has already created a working group to address these issues, but nothing is expected to materialize by next year when Salira begins shipping its product. Still, the company is confident that carriers will see its value.

“I think with or without a standard, if we offer the same kind of service with EPONs for a lower cost, I don’t think carriers will wait for a standard,” says Rick Li, Salira's vice president of software engineering.

- Marguerite Reardon, Senior Editor, Light Reading

For more information on Supercomm 2001, please visit the Light Reading Supercomm 2001 Preview Site.

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