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Tellabs, White Rock Getting Cozier

The relationship between White Rock Networks and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) is sweetening, Light Reading has learned. Tellabs is in the process of adding the Richardson, Texas, startup's technology to more of its products and is considering making an investment in the company, according to sources close to Tellabs.

According to one source, a joint product development deal may be in the works whereby Tellabs would take an equity stake in White Rock. So far, though, nothing's been signed, as the companies hash out the details.

How did things get so cozy? Let's review a bit of history.

Tellabs and White Rock have worked together for several years. Their first fling came at the NFOEC conference in July 2001, where Tellabs hooked its 6100 optical transport system to White Rock's VLX2010 OC48 Sonet add/drop multiplexers for a technology demonstration.

Legend has it that sometime later that summer, Tellabs had discussed acquiring the startup for in excess of $300 million. Both companies deny that an offer was made, but neither would say how far along the talks progressed.

What is clear, however, is that a $300 million kitty in mid 2001 would have been a nice score for White Rock. The company's valuation, according to one White Rock insider, dropped to about $100 million after its Series C round, which was announced in November 2001. The company had carried a $125 million valuation after it raised a $30 million Series B round sometime in 2000.

Before its Series C round was raised, White Rock hadn't yet shipped product to a paying customer. In fact, the company is said to have lost a possible order at Allegiance Telecom Inc. (Nasdaq: ALGX) in early December 2001 because its VLX2010 system wasn't ready yet. White Rock's staff was already smarting then, insiders say, because the company had announced just weeks earlier that it would be cutting salaries by 10 percent beginning on December 17, 2001.

Tellabs announced it was buying Ocular Networks for $355 million in cash and options in November 2001, but that buy didn't interfere with White Rock. While Ocular gave Tellabs VT grooming capabilities, White Rock was still needed to do DS3 and OC-n traffic aggregation onto an OC48 or OC192 backbone. Thus, Tellabs became White Rock's first paying customer.

All this history points to White Rock's January 2002 announcement of an OEM agreement with Tellabs, which could not have come at a better time. That agreement enabled White Rock's VLX2010 OC48 (2.5 Mbit/s) and VLX2020 OC192 (10 Gbit/s) Sonet add/drop multiplexers (ADMs) to be bundled with the Tellabs 6100 dense wavelength-division multiplexing (DWDM) system and its 6500 optical transport switch (see Tellabs Takes a New Tack).

The two companies talked about Tellabs making an investment in White Rock during the months leading up to the OEM agreement, sources say. An investment was not made at the time, but Tellabs did spend between $1 million and $2 million to help integrate the two companies' products.

White Rock declined to comment for this piece.

"For competitive reasons, we don't discuss our future business plans," says a Tellabs spokeswoman.

Gone Fishing There's no telling where the Tellabs and White Rock relationship will end up, but its clear that the Tellabs OEM agreement was a pivotal moment for the startup. It's also clear that having other vendor partners has helped White Rock tremendously. Case in point: White Rock is also nurturing a relationship with Mahi Networks Inc. (see Mahi and White Rock: Just Good Friends).

According to Chris Rust, Mahi's CEO, Mahi and White Rock are selling together at three carrier accounts so far. "We really like their (VLX)2020," says Rust.

He says there's nothing exclusive between the two companies, adding that Mahi's emphasis is on pairing up with whichever metro products fits the needs of a particular customer.

Last year, Light Reading reported that Qwest Communications International Inc. (NYSE: Q) was considering using Mahi's access switch, which is designed to aggregate Sonet and Gigabit Ethernet within a metropolitan area's largest points of presence. What Mahi's switch lacked was the ability to aggregate T3 interfaces, which White Rock can do using its VLX2020 OC48 box with a DS3 tributary, the report said.

"We're just two small companies that are looking to satisfy specific customer needs in the hopes of moving some metal," Rust says.

That, in a nutshell, summarizes the hustle and bustle of today's startup market. The small guys are looking for partners that can carry them through the thin years. White Rock may have found one.

— Phil Harvey, Senior Editor, Light Reading
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gea 12/5/2012 | 12:41:12 AM
re: Tellabs, White Rock Getting Cozier I don't know the specifics about White Rock reliability, OSMINE, or NEBS. But what I can say is that the little White Rock stackable SONET boxes represent one future for SONET that we will see in larger number (and even if someone posts that the White Rock boxes suck for whatever reason, my point here is that WHite Rock's approach will make someone--probably White Rock--proliferate).
Starduster2 12/5/2012 | 12:41:10 AM
re: Tellabs, White Rock Getting Cozier I worked with White Rock, while with Tellabs before getting laid off. They have a great product line up, and the folks from White Rock are top notch. I wish them all the best of luck even though I'm still a laid off telecom guy.
jamesbond 12/5/2012 | 12:41:08 AM
re: Tellabs, White Rock Getting Cozier I don't know the specifics about White Rock reliability, OSMINE, or NEBS. But what I can say is that the little White Rock stackable SONET boxes represent one future for SONET that we will see in larger number (and even if someone posts that the White Rock boxes suck for whatever reason, my point here is that WHite Rock's approach will make someone--probably White Rock--proliferate).
-------------------------------------------

Gea,

is it possible to describe the interfaces on
the white rock box? Also how do the boxes
connect with each other?

General question - Where does the complexity
lie in these boxes? I mean there are chips
available that handle various SONET functions
already. Do these guys design their own
chips or what?

thanks

Light_Show 12/5/2012 | 12:41:06 AM
re: Tellabs, White Rock Getting Cozier gea
I don't know the specifics about White Rock reliability, OSMINE, or NEBS.

Response
Reliability is one of those things that can only be proven with time. Question here is will these puppies in the small footprint stand the thermal challenges over time with the funky heatsinks and small air intakes running full blast as designed now. There is some margins but not much when you consider a clogged air filter, hot room, and some fan failures. I am not saying all three can or will occur together but when things get hot and stay hot for long periods of time performance could degrade causing dribbling errors.
It is believed and reported on their website NEBS and compliance testing success for the VLX2010, VLX2020, VLX210. I guess the DS1 design will be finished up in 2003 and go for NEBS. The sooner the better.
On OSMINE I guess I wonder if Tellabs is helping out here due to expense of the process and where Tellabs will install (Bell Canada)?


jamesbond

is it possible to describe the interfaces on
the white rock box? Also how do the boxes
connect with each other?

Response
There are 2.5Gbps electrical interfaces that connect between boxes (VLX2010, VLX2020, VLX210-DS3) and eventually the DS1 version of the VLX210. This electrical interface does around 40 feet+ reliably and could have done more if it wasn't for the connector design and other factors. But hey its cheap. The VLX2010 is half the bandwidth of the VLX2020 and therefore used half of the 2.bGbps electrical interfaces on the back panel. Each DB15 connections that carries traffic can TX and RX (2) 2.5Gbps electrical (sonet rates). I think the optical line interfaces are already understood for each box. The VLX210 and new DS1 product doesn't have an optical interface and TX/RX data over the electrical interfaces mentioned above.

All components used the first design had to be off the shelf since they didn't have an ASIC team in place from day one. I suspect all companies have ASIC teams working on solutions to replace off the shelf SONET X-connect switching cores and original FPGA designs. It can reduce complexity in layout, cost and power. They do have a ASIC team (hint).
BobbyMax 12/5/2012 | 12:41:00 AM
re: Tellabs, White Rock Getting Cozier This alliance would be successful if Tellabs can integrate its products with that of White Rock. Interoperability and network management integration may prove daunting. If it is to be truly next generation optical transport network it should focus on the architecture of its transport network from the cost perspective. It shold look into providing interfaces with its optical transport network both from the North American and European perspectives. It should also look at the generic framing procedure.
Iipoed 12/5/2012 | 12:40:57 AM
re: Tellabs, White Rock Getting Cozier Yeah a merger would be great for both companies. Of course they will have to figure out who gets the best tee times as I would imagine that white rocks senior management tends to place golf above all else.
gea 12/5/2012 | 12:40:45 AM
re: Tellabs, White Rock Getting Cozier Booby wrote...

"If it is to be truly next generation optical transport network it should focus on the architecture of its transport network from the cost perspective. It shold look into providing interfaces with its optical transport network both from the North American and European perspectives."

Hum...I guess it should operate on electricity and a human being should be able to configure and install it, right?

Booby...next time before you post, think very carefully about whether you are actually saying something useful and nonobvious. And if after careful consideration you are absolutely positive you've got something to say...post it over on Yahoo.
wild_thang 12/5/2012 | 12:40:44 AM
re: Tellabs, White Rock Getting Cozier Golf? Not White Rocks execs.

Lonnie plays a very nice game but hardly finds the time to play. Greg can play but rarely does. In 2+ years I believe he played once. As for Andrew I have never heard that he even plays. I think you must be thinking of other executives, not these guys. Maybe Ron Kelley before he was shown the door.
Light_Show 12/5/2012 | 12:40:41 AM
re: Tellabs, White Rock Getting Cozier Bobby wrote...

"If it is to be truly next generation optical transport network it should focus on the architecture of its transport network from the cost perspective. It shold look into providing interfaces with its optical transport network both from the North American and European perspectives."

Bobby is talking about the SDH aspects of White Rock Networks products. Their boxes are design almost exclusively for North American applications.

Currently, SONET is more widely used in North America, while SDH is more widely deployed in Europe.
SONET and SDH have relatively minor but still important differences between them, mostly in terminology. In many cases, the SDH definitions of some overhead messages are more general in nature, and their SONET equivalents are more tuned to the operating conditions within North
America.

SONET which is an ANSI standard, SDH, an ITU-T standard, and their implementations are slightly different. overhead usage examples that can be different:
AU pointer (H1, H2, H3)
DCC Bytes

Some SONET/SDH implementations utilize some overhead bytes in a proprietary manner.

Synchronization distribution in SONET-based networks is different from distribution in SDH networks. These differences can be very important (timing, jitter, wander).

White Rock has not played their boxes for an SDH environment.

As for low cost I think they are on the ball here for the most part. Maybe to cheap in certain ways.
gea 12/5/2012 | 12:40:38 AM
re: Tellabs, White Rock Getting Cozier "Synchronization distribution in SONET-based networks is different from distribution in SDH networks. These differences can be very important (timing, jitter, wander)."

I am somewhat doubtful about this but could be convinced. Just how is synch distribution different in an SDH network? (As for jitter/wander, the SDH standards differ from the SONET standards only in very minor ways...building to the more stringent requirement would be sufficient, and that's almost a function of the chipsets used.)
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