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Optical/IP

Larscom Frames Up Ethernet

Larscom Inc. (Nasdaq: LARS) has spent the last couple years working on a new premise -- that the RBOCs (regional Bell operating companies) want to ramp up Ethernet services, and to do so they will require some simple, low-cost access gear (see Larscom Launches Multiservice Platform ).

Today the company announced just such a product, the Orion 7400, which uses emerging technology such as Generic Framing Procedure (GFP), Link Capacity Adjustment Scheme, and Virtual Concatenation (VCAT) to efficiently pack data from Ethernet, T1, and T3 services into existing Sonet networks, making the rollout of Ethernet more RBOC-friendly.

The launch of the new product marks a corporate makeover for the company, which has been struggling on the public markets for years. In the mid-90s Larscom was an innovator in the Frame Relay and ATM multiplexing market, but growth in that market was soon exhausted and the products were rapidly commoditized. For several years Larscom faced shrinking revenue and its shares now trade under $1.

With today's announcement, the company is attempting to embark on a new chapter of growth. Two years ago, major investors forced the company to bring in a new CEO, Daniel L. Scharre, to help inject new life into the company. Scharre, the former chief of Adaptive Broadband Corp. (Nasdaq: ADAP), installed a new management team, which set off on the current Ethernet services route.

Unlike the vast numbers of next-generation Sonet, Ethernet, and multiservice switching players, however, Larscom is sticking to the low-end customer premises market. It has not announced a larger metro Sonet ADM (add/drop mux), which many startups are rolling out along with their access gear. Larscom plans to work with the incumbent metro-area Sonet gear, touting wide interoperability with major next-generation Sonet players such as Cisco Systems Inc. (Nasdaq: CSCO), Lucent Technologies Inc. (NYSE: LU), and Fujitsu Ltd. (OTC: FJTSY). Many of those companies also market access devices along with their larger ADM equipment. Other startups looking to market Ethernet access devices include Calix Networks, Metrobility Optical Systems, Turin Networks Inc., and World Wide Packets Inc.

The strategy might just work, considering Larscom's approach -- the exact same approach it took in supplying Frame Relay access gear: Make it cost less.

“Larscom has come up with a very interesting alternative to multiservice Sonet boxes that do everything, by selling what looks like a T1 mux product and handling Ethernet for under $5,000,” says Michael Kennedy, president of Network Strategy Partners LLC. “Maybe, like their T1 muxes, this type of product will be a home run.”

The big question for such a product, however, will be how fast RBOCs jump on Ethernet services. Right now the major telcos have been slow to market Ethernet, which ranks behind Frame Relay and T1 services for corporate data connection. Larscom is counting on the fact that RBOCs will need to roll them out to compete with offerings from IXCs like AT&T Corp. (NYSE: T) and MCI (Nasdaq: MCIT).

Larscom officials point out that Ethernet services will be competitive to T1. Although the prices for T1 services and Ethernet are comparable at slower speeds like 1.5 Mbit/s, Ethernet services quickly become much cheaper as the bandwidth increases.

Initially Larscom’s product line will target access at multitenant buildings, at a cost under $5,000. The product can be equipped with 10/100 Ethernet, Gigabit Ethernet, T1, or T3 ports. The boxes will route the service connections over OC3 and OC12 Sonet pipes on the service end.

— R. Scott Raynovich, US Editor, Light Reading

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firstmile 12/5/2012 | 12:02:45 AM
re: Larscom Frames Up Ethernet Does this sound a lot like the product that a start-up by the name of Overture Networks is building? In addition, I think that most of the Overture team was from Larscom.
Anyone know the details here (if there are any)?
fm
wass 12/5/2012 | 12:02:44 AM
re: Larscom Frames Up Ethernet It's going to be a challenge being a point SONET product vendor. If the choice is between a vendor with a strong access point product and a vendor with a complete solution (and maybe a weaker access product), generally the solution vendor will win out (especially if it's a Nortel, Lucent, Fujitsu). Not to say it can't be done, just incredibly challenging.

One example of the challenge will be number of DCCs that you have to interoperate with. Even though there are "standards," very few vendors truly interoperate and access is one place that this is absolutely critical.

signmeup 12/5/2012 | 12:02:43 AM
re: Larscom Frames Up Ethernet I know several of the folks over at Overture and yes several did come from Larscom. I can say without a doubt that the team Jeff Reedy has put together over at Overture is top notch. As far as the product is concerned, it solves a real problem at a very inexpensive price point, and has gotten very good reviews from several large providers. I do know that the product is here today and is not 'beta' quality - it is ready for deployment and has been for some time.

No, I do not work for Overture, but I can appreciate solid engineering and a good business plan as well as the next guy.
SS7 12/5/2012 | 12:02:43 AM
re: Larscom Frames Up Ethernet It certainly sounds like an OEM....Overture networks products specs are behind a password protected WEB site and the ties with the organization run deep.

If overture is having trouble closing sales, they may have choose the OEM route and LARS is easy pickings BC of the history. Sounds like a neat product - sounds like a cheaper, smaller WRN box.

If it is an OEM, good luck. These deals never really work that well...
firstmile 12/5/2012 | 12:02:41 AM
re: Larscom Frames Up Ethernet sign,
with all due respect...it sounds like you signed up already. If you don't work there, how do you know so much about the product?
Is it an OEM deal or what?
fm
signmeup 12/5/2012 | 12:02:40 AM
re: Larscom Frames Up Ethernet first,

Let's just say that I was in a position to 'evaluate' the product within the last 6 months. As far as an OEM deal, what is it exactly you are asking?

Overture just announced a reseller agreement with NEC that should bring in some Asian customers; I know that Overture has its own US sales team in place.

As far as the technology goes, I don't think Overture is doing anything Larscom can't do, I just think Overture is the first to offer it and do it cost effectively. Overture has several competitors that seem to have figured out the DS-3 off-net extension as well - Jedai Broadband and Ceterus Networks both come to mind.

CuriousGuy 12/5/2012 | 12:02:34 AM
re: Larscom Frames Up Ethernet Sign,

Would like to know what "DS-3 off-net extension" is all about, care to explain? Thanx!
CuriousGuy 12/5/2012 | 12:02:33 AM
re: Larscom Frames Up Ethernet Sign, thank you very much for the information. Much appreciated !!
Curious
signmeup 12/5/2012 | 12:02:33 AM
re: Larscom Frames Up Ethernet >>Would like to know what "DS-3 off-net extension" is all about, care to explain? Thanx!

When a provider does not have fiber to a building or customer, it is considered 'off-net'. Most providers use either a fiber extender or lease some form of DS-x from the LEC in order to reach the customer premise. The problem is that LEC access charges can be extensive (for example, MCI spends 60% or so of its budget on access charges). The other problem is that you have to lease multiple circuits to carry both voice and data from the customer, so you double the access charges incurred.

What the Overture box (and others mentioned in this thread) allows you to do is combine both voice and data across a single circuit using circuit emulation, thereby reducing the number of access circuits required. Because it also includes ethernet services, the provider can not only reduce its access costs, but also offer ethernet-based services such as rate-limited ethernet very inexpensively.

You might ask why not just drop a SONET ADM there and be done with it. Given the amount of capital expenditures occuring, a typical SONET ADM is more than double to triple the cost of a circuit emulation solution. So if you can offer both TDM and Ethernet-based services at 1/3 the cost, you can reach an ROI much quicker, making everyone happy.

Hope this clarifies things a bit.

signmeup
Fiber Lord 12/5/2012 | 12:02:10 AM
re: Larscom Frames Up Ethernet Costs can be "extensive"?

Can reach ROI quicker? You always have an ROI. It may be negative as in this industry which has been run by a bunch of engineers concentrating on technology.
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