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Aurora Accesses $30M

Light Reading
News Analysis
Light Reading
7/26/2002

What’s it take for an optical networking startup to get funding these days? Try mentioning the words "access and cable."

A prime example of this is Aurora Networks Inc. Earlier this week, the Santa Clara, Calif., startup announced it has closed a $30 million round of funding, bringing the total amount raised to $60 million (see Aurora Raises $30M).

While the company is technically an optical networking startup, its focus in the cable access market is what drew the attention of investors, according to the new lead investor Steve Diamond of the Sprout Group.

“We haven’t done an investment in an optical company in over a year,” he says. “It’s still a very interesting technology, and we think the market will eventually come back, but we are being very cautious right now.”

Diamond says that access equipment is still very hot, and he adds that equipment startups in cable networks are even hotter. While many carriers in the telecom industry are struggling financially, the market malaise hasn’t seemed to hurt cable operators as much.

“Cable capex [capital spending] is remaining strong, compared to the telco side of the market,” he says. “They are the only ones still buying in volume.”

The cable industry has done very well over the last couple of years battling the telecom providers for broadband customers. While DSL installments have floundered, cable modem deployments have flourished. Currently, in the U.S. there are twice as many cable modem deployments as there are DSL deployments. By 2005 the gap is expected to close a bit, but cable MSOs (multiservice operators), which have access to nearly 70 percent of American households, will still lead. According to a report published by the Yankee Group last year, cable modems are expected to be in 15.7 million households by 2005, while DSL is only expected to be in about 10.5 million homes (see Yankee Likes Cable).

But cable operators have only completed the first phase of their technology upgrades, which allows them to provide two-way communication for data services (see Yankee: Cable MSOs Must Upgrade). The next wave of upgrade is just around the corner, according to research from Yankee. Now, MSO’s are looking to increase capacity on their networks in order to provide services like voice over IP (VOIP) and video on demand.

One way to do that is to increase the capacity of the "services node," which serves as the bridge between the fiber and coaxial portions of the hybrid/fiber coaxial (HFC) network common in MSO plants. Typically, an HFC network runs fiber between a "hub" and the service node, which is placed in an neighborhood where the services are accessed. At the service node, the signal is then converted to an electrical signal and delivered to a home or business over coaxial cable.

Here's where Aurora comes in. It is marketing equipment that uses a combination of DWDM and FDM (frequency-division multiplexing) placed at the services node. Between the hub and the node, Aurora uses DWDM to split the broadcast signal into 16 individual wavelengths. Each of those wavelengths carries service like high-speed Internet access to a smaller subset of the broadcast network. Once the signals hit the traditional HFC network, FDM is used to pack the information onto the HFC cable and send it into people’s homes.

Aurora is hoping to lower the costs of the equipment so that MSOs can deliver services nodes closer to the customers. It is designing equipment that can serve roughly 200 homes. Compare this to the 500 to 2,000 homes served by traditional broadcast cable services. But in reducing the service area, the boxes would deliver more capacity by sharing network resources among fewer people. The company also claims its gear is less expensive and more reliable than radio frequency amplifiers, which are used in traditional cable networks to help transmit signals over large geographic areas.

John Dahlquist, vice president of marketing for Aurora, says that the advantage of this technology is that it offers customers more capacity for services like VOIP and video on demand. And unlike passive optical networking (PON) technology or fiber-to-the-home (FTTH), fiber doesn’t need to be physically extended to the curb or even directly into the home. He concedes that because the service nodes are actually servicing fewer customers, it means more fibers need to be laid between the MSO hub and the service node. But still, he says, much less fiber needs to be laid than with PON or FTTH. And he adds that MSO cable operators can also eliminate RF amplifiers, which are expensive to maintain and power, bringing the cost in line with existing cable infrastructures.

”Adding more optical nodes only comes out to be a few percentage points more than the traditional model,” he says. “Because you have to factor in the power and maintenance costs of the RF amplifiers. And because the Aurora nodes can replace several RF amplifiers, less gear is actually out in the field.”

While investors like Diamond may feel that this market is on the verge of an explosion, some analysts covering this space do not. Anand Gao, founder of Gao Communications, an independent technology consultancy, says that optical access technologies have been over-hyped. He contends the demand for fiber-like capacities directly to end users is still at least two years away. He points to slow uptake in DSL and PON adoption as evidence that end users are still not ready for such high-capacity links.

“The truth is, there is not enough demand from end-users to fill these pipes,” he says. “I think it’s still a bit too premature to talk about fiber optics in the access market. It is still very much of a waiting game.”

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com Want to know more? The big cheeses of the optical networking industry will be discussing this very topic at Opticon 2002, Light Reading’s annual conference, being held in San Jose, California, August 19-22. Check it out at Opticon 2002.

Register now and save $500 off the registration fee. Just use the VIP Code C2PT1LHT on your registration form, and deduct $500 from the published conference fee. It's that simple!

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BobbyMax
BobbyMax
12/4/2012 | 10:02:14 PM
re: Aurora Accesses $30M
Unfortunately RBOCs and many other carriers are not interested in in HFC and FTTH technologies. Simoilarties technologies like EPON has been lurking around, but the demand is simply not there. Sible POT services over cable are not needed, at least at this time.
52439
52439
12/4/2012 | 10:02:11 PM
re: Aurora Accesses $30M
so what? Aurora sells to MSOs not RBOCs.
lr_fan
lr_fan
12/4/2012 | 10:02:06 PM
re: Aurora Accesses $30M
Is a quick spell check to hard to do before sending? Wow, that was crytptic.
iamnoone
iamnoone
12/4/2012 | 10:01:58 PM
re: Aurora Accesses $30M
Hmm.... you do not practice what you preach...

-----------------------
Author: lr_fan Number: 3
Subject: Re: RBOCs Not Interested in HFC and FTTH Technologies Date: 7/29/2002 7:41:30 PM


Is a quick spell check to hard to do before sending? Wow, that was >>>> crytptic <<<<.
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