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Siemens Sees Ethernet Everywhere

Lays out strategy based on Ethernet displacing ATM in broadband access networks

May 4, 2004

3 Min Read
Siemens Sees Ethernet Everywhere

Siemens Information and Communications Networks Inc. today cast its vote on the issue of whether Ethernet will end up replacing Asynchronous Transfer Mode (ATM) in broadband access networks everywhere.

Siemens believes it will, and it unveiled its strategy for being a big player in the resulting equipment market at the Broadband World Forum, in Seoul, South Korea, today (see Siemens Presents Ethernet DSL Strategy).

The strategy includes Siemens ICN acquiring a 40 percent stake in Dasan Networks Inc., a Korean Ethernet access equipment vendor, for an undisclosed sum.

Dasan is a big beneficiary of Korea's exploding broadband service market. The company's sales have rocketed from $10 million in 2001 to $58 million in 2003. It now has 220 on staff, and its customers include KT Corp., Hanaro Telecom Inc., and Dacom Corp., together with some Japanese carriers.

Siemens and Dasan will jointly develop products. Dasan will develop high data-rate switching systems (VDSL and ADSL II+), and Siemens will develop aggregation switches. A key part of the package, called the Siemens Surpass hiX 5400, is a network management system.

The rollout of higher bandwidth services, requiring up to 50 Mbit/s, is driving demand for Ethernet rather than ATM access networks, according to Bernd Grossmann, director of business development for Siemens ICN's carrier Ethernet solutions. "When you get to higher bandwidth services, the cost of [ATM] bandwidth is too high," he says. "The same technology is going to be used for business and residential services."

Christian Unterberger, Siemens ICN's president of carrier networks, says most invitations to bid for Asia/Pacific broadband networks now call for IP/Ethernet rather than ATM. This applies to the complete connection from users to broadband remote access servers (B-RASs) -- that is, between the user and the DSLAM and between the DSLAM and the B-RAS.

Unterberger expects the same thing to happen in Europe in 12 to 18 months' time. Others aren't so sure.

"Just because it's happening in the Asia/Pacific doesn't mean it will happen everywhere," says Graham Beniston, an analyst with Heavy Reading and author of its recent report, Next-Generation DSL Equipment: The Path to Profitability. Beniston points out that cities in the Asia/Pacific are characterized by high density housing and short line lengths, which make VDSL deployment attractive. This isn't so much the case in Europe and the U.S.

European and American incumbents also have other issues to consider, notes Beniston. They already have huge installed bases of ATM infrastructure, so shifting to new technology could be expensive and disruptive. In the U.S., RBOCs want to generate new revenues by rolling out advanced services, using ATM to ensure quality. They're not convinced that IP/Ethernet is up to that task, even though Siemens says it's got schemes in hand to address this issue.

Issues such as this are likely to mean that the broadband access market remains "pretty fragmented" for the foreseeable future, according to Peter Linder, technical director of LM Ericsson (Nasdaq: ERICY). Ericsson itself has been a big promoter of Ethernet in broadband access networks. It recently clinched a deal with Copper Mountain Networks Inc. (Nasdaq: CMTN) to address carriers wanting to stick with their ATM infrastructures (see Ericsson Mines Copper Mountain).

— Peter Heywood, Founding Editor, Light Reading

Archives of Related Light Reading Webinars:

  • Ethernet Access: The Road to Revenues

  • Increasing ARPU With Mass-Market DSL Development

  • Next-Gen DSLAMs

  • Upstream of the DSLAM: Beating Broadband Bottlenecks

  • Working Text 81: The B-RAS Blueprint

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