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Wave Services: Is Growth for Real?

Today's news that Sprint Corp. (NYSE: FON) has won a 10-year contract with Bank of America Corp. (NYSE: BAC) is the latest of several announcements that put the spotlight on wavelength services.

Wave services are important to the future of optical networking because they enable carriers to extend the benefits of optical networks (including faster and easier provisioning) to corporate nets, replacing private lines and cumbersome Sonet links, instead of restricting these features to the core of the network.

The value of the Sprint agreement wasn't provided, but Sprint acknowledges that it's a "multimillion-dollar" deal that calls for the carrier to supply 27 OC48 (2.5-Gbit/s) connections in 13 points of presence over the next decade -- and that it includes wavelength services. The network will handle financial transactions involving over 4,400 Bank of America locations nationwide (see Big Bank Buys Sprint Services).

The bank says the Sprint arrangement does not affect a $70 million, 10-year agreement made with Broadwing Inc. (NYSE: BRW) this past April for a similar wave service deployment (see Bank of America Picks Broadwing). "Sprint and Broadwing will work in tandem, in a load-balancing arrangement," says a Bank of America spokesperson.

Neither Sprint nor the bank are divulging the brand of equipment underlying the plan. While Sprint is a longtime customer of Ciena Corp. (Nasdaq: CIEN) for DWDM gear, that vendor is also keeping mum. Broadwing acknowledges using Corvis Corp. (Nasdaq: CORV) equipment to supply wave services. At press time, the bank had not responded to requests for the particular brand of gear that will terminate the Sprint and/or Broadwing services.

The announcement caps a flurry of recent news hinting at an upsurge in demand for services that use the power of DWDM to provision high-speed data links faster and more cheaply than using Sonet. Here's a rundown of recent events:

  • Also today: Level 3 Communications Inc. (Nasdaq: LVLT) announced a "multi-year, multi-million-dollar agreement" to furnish wave services to Asian carrier REACH (see Level 3 Extends REACH). REACH, a joint venture in which carrier Telstra Corp. is a key player, also acquired Level 3's Asian business in a transaction earlier this year (see Reach to Acquire Level 3's Asian Business). A Level 3 spokesperson says that has nothing to do with the present deal, which is strictly a customer arrangement. Level 3 is using Optera gear from Nortel Networks Corp. (NYSE/Toronto: NT) to supply the service.

  • Oct. 14: Nortel Networks Corp. (NYSE/Toronto: NT) announced that SBC Communications Inc. (NYSE: SBC) will use Nortel's OPTera Metro 5100 on customer premises that terminate the carriers' Multi-Service Optical Networking (MON) wavelength services (see SBC Buys Nortel MSPs). The carrier already had a multi-year agreement to deploy Nortel gear in its central-office infrastructure for the service.

  • Oct. 10: Looking Glass Networks and Tyco International Ltd. (NYSE: TYC; London: TYI) jointly announced they'd provisioned a 10-Gbit/s wavelength circuit linking London, New York City, and Newark, N.J. in "under 10 days" (see Looking Glass Provisions DWDM). According to Looking Glass CFO Sunit Patel, the deal is an example of the ongoing growth carriers are seeing in wholesale wavelength service deals. Looking Glass uses gear from Sorrento Networks Corp. (Nasdaq: FIBR).

Does all this a trend make? Not surprisingly, carriers say yes. While wave services have been around for awhile -- and were indeed a calling card for several providers who later hit the financial skids -- some say demand is only now maturing.

"We're definitely seeing an uptick over the past 60 to 90 days," says Rusty Corne, director of product management at Level 3. His colleague, Cynthia York, director of the wavelength group, agrees. "We are seeing specific applications emerging that waves are suited to," she says. Backhauling traffic on massive cable provider and ISP networks is on the rise, she points out.

Patel of Looking Glass says consumer traffic is driving demand for wave services, which are behind the increase in IP traffic that needs to be backhauled or aggregated.

But at least one observer says it's too soon to see the wavelength bandwagon as a way out of the telecom doldrums.

"There are undoubtedly signs of growth in the market, but carriers don't issue press releases for ATM and OC3 customers like they do every time they sign a new wavelength contract," says David Gross, senior optical networking analyst at Communications Industry Researchers Inc.

Nevertheless, the mini-trend marks a growth curve: Gross predicts the market for retail and wholesale wave services will reach $450 million in 2006, about five times its current level (see Metro DWDM, page 3).

Gross says the majority of wave services will be wholesale transactions like the ones announced by Looking Glass and Level 3, rather than retail in nature, like Sprint's and Broadwing's deal with Bank of America. He says the lack of fiber going into buildings will continue to pose a barrier to corporate wavelength service deployments.

Whether or not there's a trend afoot, it's clear that progress is happening on some levels. "Hard to say if these announcements indicate a real trend for growth, but certainly DWDM transport gear is improving," writes Scott Clavenna, president of PointEast Research LLC and director of research at Light Reading in an email today.

Advances in net management and monitoring have been made, he says, and network planning tools have improved, which make it easier for carriers to deploy DWDM faster and more easily than before, "without disrupting service or requiring a complete reengineering of the optical layer... This greatly enables wave service delivery and support."

— Mary Jander, Senior Editor, Light Reading
www.lightreading.com Want to know more? The big cheeses of the optical networking industry will be discussing service trends like this one at Lightspeed Europe. Check it out at Lightspeed Europe 02.

dljvjbsl 12/4/2012 | 9:32:10 PM
re: Wave Services: Is Growth for Real? This story is demonstrating a strategy that I have heard of since the bursting of the bubble. There is a lot of unused and unsaleable bandwidth out there. Carriers will be willing to dispose of this bandwidth at almost any price just to some revenue. The money they spent on these networks has disappeared into a black hole. Anything they can get in return is better than nothing.

Application companies can now approach users and propose interesting new services. Users can utilize and benefit from them. This has all been paid for by the shareholders of the optical networking vendors and their carrier customers. These shareholders paid to create these networks. Now other groups of shareholders will be reaping the benefits.

One real question in this is whether the amount that these users will be willing to spend on these new services will be enough to support the optical networking infrastructure in the long run.
BobbyMax 12/4/2012 | 9:31:36 PM
re: Wave Services: Is Growth for Real? Even six months earlier it appeared that
wavelength services were going nowhere. Seervices is gaining poularity as it is very inexpensive and reliable service. Some carriers can provide both national and international services. Only drawback with wavelength services is that it does not provide protection as other services do. But protection can be implemented by the users of the service.

Wavelength services are being provided by almost all carriers. Most RBOCS are ready to provide this service.

In three to four years the wavelength services in the US would generate over $2 Billion. This is the most optimistic estimate.
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