Cisco Renews Its SDH Chase

Cisco Systems Inc. (Nasdaq: CSCO) says it's having another crack at the European market for multiservice metro Ethernet equipment. The effort may even result in the development of a new, low-priced product for SDH network operators.

Guido Romagnoli, Cisco's manager of advanced technology in Europe, says there's a growing willingness among the continent's major operators to offer Ethernet services over existing SDH infrastructures as the Ethernet market heats up (see Czechs Check Out Metro Ethernet, Europeans Go Crazy for Ethernet Services, and BT Offers Ethernet Over ATM). "Metro Ethernet is coming of age at last, now that the PTTs are starting to adopt," says the Cisco man, adding that interest from the incumbents means there's real demand in the marketplace. "There's no way they move on anything until there's money available" from the corporate customer base, says Romagnoli.

The vendor is hoping to capitalize on the growing market by developing a product that marries SDH and metro Ethernet at the right price, and at the same time prove to the large national players that Cisco is a technology partner. "Cisco has been involved in supporting many of the alternative operators," such as Sweden's Bredbandsbolaget AB (B2) and Italy's FastWeb SpA, "and that has upset some of the PTTs in the past."

Romagnoli concedes that Cisco faces tough competition in the form of Europe's installed optical vendors, Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Siemens AG (NYSE: SI; Frankfurt: SIE), and their partners when it comes to offering SDH products (see ADVA Scores Metro Deal With DT).

But as the incumbent IP vendor at Europe's major operators, Cisco has the opportunity to "attack and develop the market of incumbents already using SDH" by "using our understanding of the network economics to make it cheaper for the operators" to add Ethernet to their portfolio of services, says Romagnoli. "We have to be very careful about [these] products. They have to be at the right price point."

The SDH version of the vendor's ONS 15454 multiservice transport platform, which Romagnoli describes as Cisco's "optical flagship," appears to have made a limited impact in the European market, though some deployments have been announced (see Dansk Bredbaand to Triple Play and Europeans Build 10-GigE Network). The SDH version was first announced in June 2002 and was subject to a significant software upgrade early last year (see Cisco Sees Euros in SDH ), Cisco (Re)Launches SDH Push).

That upgrade came at the same time as the launch of two new multiservice access devices, the ONS 15302 that sits within enterprises, and the ONS 15305, which can be deployed at large corporate sites or within operator networks and aggregate traffic from multiple 15302s and feed it to the 15454. These access products have also failed to light the candles of Europe's major operators, though some customers have been announced (see Swiss Utility Opts for SDH).

So what is the latest development in the next generation of multiservice access devices? Cisco says it doesn't comment on products that aren't announced, but whatever it is, Cisco will have its work cut out to make an impact, because of the culture and processes within Europe's incumbent carriers, says Geoff Bennett, chief technologist at Heavy Reading.

"When you're talking to the SDH guys at carriers, the transmission team, you're talking to the most conservative people and the ones least likely to be receptive to Cisco. They'll have well established relationships with their incumbent suppliers, such as Alcatel, Siemens, and Marconi," says Bennett.

On top of that cultural hurdle, those carriers may have frame agreements with their SDH equipment providers that could make them even more likely to stick with their existing suppliers. "People forget how important frame contracts are, and the big European carriers might have some obligations to meet as a result of deals struck three or four years ago," adds Bennett.

— Ray Le Maistre, International Editor, Boardwatch