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360networks Touts Global Mesh

Light Reading
News Analysis
Light Reading
11/30/2000

360networks Inc. (Nasdaq: TSIX; Toronto: TSX.TO) claims to offer the world's first global optical mesh network, based on switches from Sycamore Networks Inc. (Nasdaq: SCMR). Analysts say ultimate success remains to be seen.

In fact, the network's still in beta and not yet global. Nor is it the first: At least one other carrier, Europe's Storm Telecommunications Ltd., already claims a multicountry optical mesh network (see $13M Deal for MFN, Storm Telecom). But none of this is stopping 360networks from staking its claim.

"We have this network today -- with beta customers, but we're doing it today," said Stephen Baker, 360networks CTO in a conference call presentation this afternoon. He said the service is now based on a network of sixteen Sycamore switches in North America and Europe, which will expand to 60 switches by next summer and to 120 switches worldwide by the end of 2001. The European/North American mesh will support gigabit Ethernet when it becomes commercially available, he said.

The Sycamore SN 16000 switches in the new network interact with a core of DWDM-enabled OPTera Long Haul 1600 Optical Line Systems from Nortel Networks Corp. (NYSE/Toronto: NT). The Nortel switches are set up to offer static pipes to the Sycamore switches, which configure the bandwidth dynamically via special software. (More on that later.)

In today's call, execs from 360networks and Sycamore described the advantages of this setup. Topping the list is the ability to provision and manage multiple alternative pathways end to end between network nodes -- either by automatic setup ahead of time or via on-the-fly instructions from carriers or their customers. In contrast, today's Sonet- or SDH-based carrier networks rely on centrally managed, point-to-point connections that often must be manually configured one by one by specially trained technicians.

Analysts agree that the future of carrier networking is a mesh. "For carriers who are really focused on dynamic provisioning and service intelligence, the mesh is a must," says Christopher A. Nicoll, director at Current Analysis.

In theory at least, the difference in flexibility between point-to-point and meshed circuits is significant enough to improve the efficiency of a carrier's network 50 to 100 times, 360networks and Sycamore say -- and that can change the nature of its business.

"It's a move from merely creating capacity to generating revenue from that capacity," said Dan Smith, Sycamore's president and CEO, who flew in for today's presentation. An optical mesh, Smith says, adds "IP intelligence" that lets carriers tailor requests for service to meet specific functions. Carriers can offer customers a bandwidth increase just to accommodate a one-time event in the network, for instance. Or they can offer incremental levels of circuit redundancy -- and charge customers accordingly.

360networks admits it's not at that level just yet, but claims to be further along than competitors such as Global Crossing Ltd. (Nasdaq: GBLX) and Level 3 Communications Inc. (Nasdaq: LVLT).

360networks says the difference between its network and those of its competitors is that it can be dynamically provisioned end to end. Up to 15 different levels of customers (a carrier's carrier, a subcarrier, and multiple ISPs, for instance) can all use the same switches to configure circuits -- without any central management system. In contrast, other carriers may have optical mesh networks on their backbones, but specific customer requests are still supported via Sonet rings at the network's edge.

Sycamore achieves its mesh through management software that deploys special signaling to activate switch settings. Sycamore has been trying (unsuccessfully so far) to get the signaling it uses in its switches adopted as an industry standard (see Sycamore Stuck on Signaling Standard). Still, that software reportedly helped it win the contract with 360networks over competitors like Ciena Corp. (Nasdaq: CIEN) (see Sycamore Ships Its Optical Switch).

Despite all the breakthroughs (real and alleged), some industry sources are hedging their bets about the new network. "I can't believe it. Honestly, I don't think they have what it takes," says one Wall Street analyst, who asked not to be named. "There's no such thing as a meshed network. The technology to make Sonet self-healing isn't even in place. [360networks] has no way to manage multiple enabled services. They still have to run the services over separate connections. Also, they don't interoperate with other vendors' gear."

So far, 360networks and Sycamore are undeterred by the naysayers. And they say they're part of an inevitable new wave of service providers set to win over incumbents. "Nothing stands still in this business," said 360networks CEO Greg Maffei.

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com

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