Hatteras Plans Switch-Hitting Ethernet
Here's an idea: instead of having to pick between delivering broadband connections over copper or fiber optic networks, why not just do both?
That's Hatteras Networks Inc.'s game plan.
The startup, which announced its plans for the first time today, will build a platform that can deliver 10-Mbit/s or 1-Gbit/s Ethernet over either copper wiring or fiber optic networks, respectively.
On the copper side, the product will deliver 10 Mbit/s of bandwidth using a DSL technology called Symmetric High Bit Rate Digital Subscriber Loop or G.SHDSL. This latest version of DSL is defined by the new International Telecommunication Union (ITU) Global Standard G991.2, which was finalized in February 2001. It delivers voice and data services by providing high symmetric data rates with guaranteed bandwidth and low interference with other services.
On the fiber side, the Hatteras platform will offer speeds of up to 1 Gbit/s. Because it's Ethernet, service can be doled out in 1-Mbit/s increments, serving customers who need bandwidth somewhere between the T1 (1.5 Mbit/s) and T3 (45 Mbit/s) levels. To deliver these services, Hatteras is putting Ethernet straight over fiber.
Rolling both elements into a single platform makes a lot of sense, given that only an estimated 10 percent of businesses are connected to fiber. With carriers continuing to cut capital spending, it is unlikely that they will dig deep into their pockets to pay for laying new fiber any time soon.
"They aren't just doing optical Ethernet. They've chosen a new space and new technology," says Michael Howard, principal analyst and founder of Infonetics Research Inc.. "I think that's a good strategy, since carriers are only looking at equipment that fits into their current infrastructure."
Currently, service providers deploying Ethernet services must support two separate networks to accommodate both fiber and copper customers. Companies such as Adtran Inc. (Nasdaq: ADTN), Alcatel SA (NYSE: ALA; Paris: CGEP:PA), and Lucent Technologies Inc. (NYSE: LU) already offer DSLAMS and T1 multiplexers. Traditional Ethernet switch/routing companies, such as Cisco Systems Inc. (Nasdaq: CSCO), Riverstone Networks Inc. (Nasdaq: RSTN), Extreme Networks Inc. (Nasdaq: EXTR), and Foundry Networks Inc. (Nasdaq: FDRY), are offering solutions for the fiber side.
Traffic from fiber and copper customers is often aggregated at the same central office, where the carrier has set up two separate network management systems and two teams of professionals to manage the networks and handle traffic coming from the two access types. Hatteras' solution would eliminate these redundancies.
Another advantage of G.SHDSL is that it can be deployed nearly twice as far from the central office as SDSL, which is limited to a maximum distance of 18,000 feet. Although the technology starts at 2.3 Mbit/s, Hatteras says it can achieve even higher data rates by coupling copper cables together.
Companies such as 3Com Corp. (Nasdaq: COMS), ADC Telecommunications Inc. (Nasdaq: ADCT), Arescom Inc., Cisco, and Paradyne Networks Inc. (Nasdaq: PDYN) have already been selling G.SHDSL solutions for a couple of years. According to Infonetics Research Inc., 5,000 customer premises devices were sold in 2000, and over 40,000 were sold in 2001.
"This is not a brand-new, unproven technology," says Howard. "It’s been around in products and proven that it works, and that makes a big difference to incumbent carriers."
Hatteras also has an experienced management team. Collectively, these executives have been a part of 17 startups, 14 of which have had successful exits by either going public or being sold. Tom McPherson, president and CEO of Hatteras, was at Rapid City until it was acquired by Bay Networks and then went to Nortel Networks Corp. (NYSE/Toronto: NT) when Bay was acquired. Matt Squire, the company’s CTO, had been with Bay Networks and IBM Corp. (NYSE: IBM), and most recently left Extreme Networks to come to Hatteras. Kevin Sheehan was VP of marketing with Packet Engines when it was sold to Alcatel.
So far, the company has secured $28 million in funding from top VC firms like Bessemer Venture Partners, ComVentures, and Columbia Capital (see Hatteras Closes Second Round).
Even with what looks like a promising solution, Hatteras still has a tough road ahead. While the access market in general is hot, DSL and copper-based products have seen a more severe dropoff in revenues over the past few quarters than cable modem and fiber-based products, according to the latest report from the Optical Oracle (see Optical Oracle: Access is Gold ). — Marguerite Reardon, Senior Editor, Light Reading
Editor's Note: Light Reading is not affiliated with Oracle Corporation.