Infinera Declares WDM War

It's here. After three years of secrecy, hype, and rumors, Infinera Inc. is pulling back the curtain today (see Infinera Claims Breakthroughs).

Will the startup change the world? Probably not. But its long-haul WDM system, starting its first carrier trials in the third quarter of this year, just might uproot the current thinking surrounding optical networks.

Infinera's system, called the DTN, can do both Wavelength Division Multiplexing (WDM) and add/drop multiplexing (ADM). The radical part is that Infinera does this by forcing every wavelength through an optical-electrical-optical (OEO) conversion.

That's a break from mainstream WDM thinking, where OEO is considered cumbersome. "The fundamental assumption of this industry for the last seven years has been that OEO was expensive," says Infinera CEO Jagdeep Singh. "The whole industry has been organized around trying to get rid of OEO."

To cheapen OEO -- in a good way -- Infinera designed two densely packed indium phosphide (InP) chips, one for transmission and one for receiving. Each crams 10 channels of 10-Gbit/s OEO processing into a space less than 5 mm2 -- in the case of the transmitting chip, that's 10 lasers, 10 modulators, waveguides, and an optical multiplexer.

The integration saves money by throwing out the packaging of each element. A laser chip, for example, costs $20 to $50. But the packaging and assembly to complete a discrete laser can raise the price to $1,000, Singh says.

"The reason OEO is expensive is that you have lots of discrete components, each one of which has a significant packaging cost," says Singh. "If you take all those elements and integrate them onto a single monolithic piece of indium phosphide, it dramatically reduces the cost."

Wielding these chips on its linecards, the DTN can pack 40 channels of 10-Gbit/s traffic into a half-rack chassis, Infinera officials say. That means 80 channels per rack. By contrast, the basic version of the CoreStream Agility from Ciena Corp. (Nasdaq: CIEN) takes two racks to handle 80 channels (see Ciena Launches CoreStream Agility).

The compactness is nice, but why obsess about rescuing OEO? Because the alternative, purely optical transport, is a headache.

Digital electronic signals don't have to hit precise levels; all that matters is that the voltage is in the right ballpark for a "0" or a "1." Optical signals aren't like that. They're processed in analog form, meaning metrics such as the power level must be controlled to precision. And a wavelength that gets added or dropped at one node can affect power levels on channels throughout the network.

That means a WDM network has to be planned meticulously, and it takes torturous fine-tuning to install. Moreover, the network has to include components to control the light: dispersion compensators, gain-flattening filters, and the like. OEO avoids the tweaking and the extra components, making for a simpler network.

But what really makes the DTN interesting is one side effect of its OEO nature. Carriers using the DTN can change add/drop assignments at will, simply by swapping out linecards, without having to do the planning or tweaking associated with all-optical WDM. That could be Infinera's trump card, because it means DTN is not only cheap, but gives carriers a level of flexibility they've never had.

Life Underground
Infinera's mystique comes from keeping all this a secret for so long. The 200-employee company raised $150 million and a priceless amount of buzz since launching as Zepton in 2000. (See Infinera's Amp-less Ambition, Infinera Shoots for the Moon, and More on Infinera (née Zepton).)

Infinera has the credentials to make a change in WDM. Singh was formerly head of Lightera Networks, the startup whose acquisition turned Ciena into a WDM powerhouse. He's surrounded himself with bigwigs from the components world, such as Dave Welch, the CTO of SDL Inc., which was sold to JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU); and Fred Kish, who headed the InP semiconductor efforts at Agilent Technologies Inc. (NYSE: A).

It's hard to fully predict the DTN's impact, because Infinera won't discuss prices, and no carrier has tested the system outside of Infinera's labs. But it doesn't take Columbo to figure out who stands to be hurt from all of this.

"Ciena's got to be afraid of it," says Scott Clavenna, chief analyst for Heavy Reading, Light Reading's paid research arm. "If [the DTN] works, the economics are so radical that it would be hard to come up with a reason why someone would buy a traditional WDM system."

That's trouble for anybody in the WDM camp, but it gets worse for Ciena. Because the DTN's chips include crossbars, the system can do wavelength switching, bringing it into partial overlap with Ciena's CoreDirector. CoreDirector does STS1 (51 Mbit/s) switching as well, but it's being used for wavelength switching about 70 percent of the time, Clavenna says, "so it sort of hits Ciena in two directions."

Certain components could be affected, too, because the DTN doesn't need dispersion compensators and similar devices. And its OEO nature means the signal can be regenerated at every node, which could spell trouble for amplifiers and ultra-long-haul equipment.

Singh downplays all these effects and lays no claim to usurping anyone. "It's not a battle of technologies. What we're doing is a new tool that, when coupled with the network that's already available, will allow carriers to build more cost-effective networks."

It should play in Peoria
In fact, the DTN will probably be used as an add-on at first, exploiting its ability to make add/drop decisions easy. That's going to make it useful for delivering services to second-tier cities, the kind that weren't otherwise economical for traditional WDM drops, Infinera officials say. Carriers can use a DTN to drop just one wavelength to a place like Albuquerque, adding more if demand for services grows.

Those kinds of incremental changes might be Infinera's best business for a while. The company's product arrives at a time when long-haul sales are relatively slow and not likely to explode. Moreover, long-haul isn't price elastic; a carrier won't stock up on WDM nodes just because someone holds a Memorial Day sale.

Then there's the question of competition. Singh might be correct in claiming no one else has achieved Infinera's level of chip integration, but some companies are trying. Clavenna says he's heard of projects put on hold during the recession that are thawing now.

"There's a lot of work that's been going on, integration that is sort of lying fallow for some catalyst to get it going. This could be that catalyst," Clavenna says.

Companies would be hard-pressed to match Infinera's achievement, particularly since InP is a difficult material to work with. But if Infinera is that radical, then a close alternative should be enough to nibble away some market share at the low end.

"I've heard there are some other [attempts] out there to build integrated circuits as cheap and as functional. Maybe not quite as compact. So you could still build a system that has hundreds of Gbit/s of capacity," Clavenna says.

— Craig Matsumoto, Senior Editor, Light Reading

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PO 12/5/2012 | 1:51:47 AM
re: Infinera Declares WDM War [#6,particle_man]:Doing regeneration at each node does radically simplify network design. It also allows you to optimize transponder costs which is a big deal. With Moore's law marching on, OEO continues to get cheaper. In the long run this is a good idea, however in the long run we'll all be dead.

Maybe I won't run so far, then. :)

I disagree. Regeneration may in theory make life a bit simpler for a network planner, but you know the difference between theory and practice? In theory there is no difference.

Regeneration at each node increases operating costs and slows deployment: each node must now be bit-rate aware for new services, even if we're only talking about 2R. That means having to deal with timing issues across the network and among the channels.

And the processing requirements and networking implications only get more complex if we start talking 3R.

The cost of the piece-parts doesn't even begin to enter the question.
opticalfuneral 12/5/2012 | 1:51:47 AM
re: Infinera Declares WDM War Infinera smells a lot like Innovance and Ceyba. No matter how good your contraption is the WDM market is just the wrong place to spend your R&D dollars.
Sisyphus 12/5/2012 | 1:51:46 AM
re: Infinera Declares WDM War > .. Infinera smells a lot like ..

Persistence eventually pays off. To a certain degree, part of the gamble these days is that a lot of the stuff that was doomed for 3 years now -with things hopefully tuning around some- now stands a fighting chance. And Infinera has recruited some of the very best minds from the optical bubble (those that aren't retired, that is), and I trust them to know the market and requirements very well.

Anything optical to me still sounds like the Beanie Baby bubble [didn't the 2 coincide? an unexplained phenomenon!], but of course the insider experts may still make $ in either...
shaggy 12/5/2012 | 1:51:44 AM
re: Infinera Declares WDM War there have been good points raised on both side, re timing, bit sensitivity, flexibility, network design, but wouldn't everyone agree it's a step in the right direction?

Miniturization/consolidation of transponder componentry should ultimately lead to lower overall systems costs, provided the reliability and feature flexibility are in place.

If this news were released 3 years ago, it would have put the market in a frenzy. Now all we want to do is bash away with our post-bubble, jaded view on new innovations.

C'mon, guys, at least give them a chance to prove themselves before dismissing them. If they can truly link OEO costs to Moore's law, this could get interesting....

dbostan 12/5/2012 | 1:51:42 AM
re: Infinera Declares WDM War From what I read and hear, this technology is real and is a BIG DEAL.
Times may not be 1999 or 2000, but a disruptive technology is a disruptive technology.
Congratulations to the team and good luck in the future.

I have nothing to do with Infinera...
sevenbrooks 12/5/2012 | 1:51:42 AM
re: Infinera Declares WDM War
Well, its at least highly differentiated enough for people to run some numbers.

Then we will have to see where it fits in the grand scheme of market sizing. That will give us an idea of whether the idea was good enough to make a market or only good enough to be a bolt on product for an existing company or so small that its not worth maintaining.

fiber_r_us 12/5/2012 | 1:51:40 AM
re: Infinera Declares WDM War What kind of optical margin and dispersion tolerance can the product deal with? Since any deployment would have to deal with existing fiber plants, it is difficult to see how a device that only integrates laser/mod/rx and optical mux/de-mux could support many of the existing fiber plants.
whyiswhy 12/5/2012 | 1:51:40 AM
re: Infinera Declares WDM War "C'mon, guys, at least give them a chance to prove themselves before dismissing them. If they can truly link OEO costs to Moore's law, this could get interesting...."

Ask yourself: how much greenfield DWDM is being installed these days? And of that, how many customers are going to be willing to risk one dime on new technology...in this market? And of those, how many are going to be willing to risk one dime on a start-up with un-proven interoperability, no qualified products and no installed base, no matter who their investors are?

And consider that with all the money dumped into them, they would have to re-pave the world twice over to pay back their preferred investors, let alone the common.

Investor prayer: Please, don't let my money fly away!!!!
Employee prayer: Please, let the investors have great pain even considering walking away!!!!

own_your_own_net 12/5/2012 | 1:51:38 AM
re: Infinera Declares WDM War While the old Nortle and Ciena LH systems are truly a pain to operate, the newer ULH DWDM systems basically run themselves. There is little operational advantage to OEO'ing everything. And I don't see a signficant cost savings as EDFAs and DCMs are really cheap these days.
ThurstonHowell3rd 12/5/2012 | 1:51:36 AM
re: Infinera Declares WDM War #11 PO wrote: "And the processing requirements and networking implications only get more complex if we start talking 3R. "

Please explain that logic. The last time I checked with 3R all my timing are resolved. With 3R I recover my S/N ration and eliminate drift (jitter).

If they can truely do a 3R cheaply then its going to put a whole bunch of you "All Optical" "Ultra Long Haul" Engineers out of work. Meaning you won't need a PHD to build and run a network.

Get the costs of operating these networks DOWN and they you'll see a turnaround...
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