Letter From TIC
Light Reading’s Telecom Investment Conference (TIC) couldn’t have gone better this year. New York’s Fifth Avenue glittered with giant snowflakes, Rockefeller Center’s tree was, naturally, unnaturally placed among towering skyscrapers, and people inside The Plaza Hotel actually laughed at my jokes (“BT’s 21st Century Network is perfectly named… It gives them 96 more years to get it accomplished.”) You know things are looking up.
Our theme this year was one of optimism – not to be confused with the desperate hopefulness of recent Decembers (see From MeBay to Quadruple Play). This was grounded confidence, with a few good bar charts to back it up. Spending is returning to the telecom marketplace, and capex-to-sales ratios are returning to the historical mean. Attendance is up at telecom events, and folks are actually sticking around to hear what’s said in the last session, rather than just playing hooky in the hallway until drinks are served.
And, strangely enough, the technology of the day is fiber – the same stuff that got the industry into its recent mess. This time, however, the carriers are talking about access fiber – and they appear to mean what they say.
The threat of annihilation by blood-thirsty cable MSOs, coupled with incredibly shrinking regulations, is finally driving RBOCs to follow through on – and actually exceed – their plans for deployment of fiber into the local loop. They are freaking their suppliers out, asking for so much gear the vendors can’t possibly keep up, and freaking analysts out, who have been conditioned to react to every major fiber access announcement with a yawn, a wink to a colleague, and a quick scribble in their notepad: “Add 10 years to this and I’ll believe it.”
And it wasn’t just fiber that we talked about this year. My opening presentation, predictably upbeat, threw out these catalysts for happy times in 2005:
Second, Ethernet is also a big part of service provider infrastructure plans. Gigabit Ethernet and 10-GigE will become increasingly important within service provider networks for low-cost, high-speed backhaul from DSLAMs, PONs, and metro services. Within cable MSOs, the story is the same: Operators are moving from DVB-ASI to GigE for video transport.
Ultimately Ethernet can be envisioned as the universal data link layer, and a single “universal jack” through which operators provision services on demand, from best efforts to premium, with scaleability to a full Gigabit. As Paul Havala of Fujitsu Network Communications Inc. (FNC) recently said, in all seriousness, “If you don’t know Ethernet, you don’t know Jack.”
Later in the evening, after a wine tasting and costume change, the Leading Lights Awards were presented, and it’s no coincidence that the themes mentioned above played loudest in the winner’s circle (see LR Reveals Leading Lights Winners). Atrica Inc. has the carrier Ethernet story; Vonage Holdings Corp.’s Jeffrey Citron talks the VOIP talk; Acopia Networks Inc. is verging on the virtualized enterprise; Vodafone Group plc (NYSE: VOD) impressed with the magnitude of its 3G rollout; BigBand Networks Inc. is a Triple Play arms merchant...
The amazing thing about the Leading Lights awards, though, is they revealed how much progress has been made in the last year despite such tough times in the industry. Cisco Systems Inc. (Nasdaq: CSCO), for example, managed to spend the last four years or so and $500 million cranking out an impressive next-generation router architecture with its award-winning CRS-1. And it’s now clear that several startups actually have serious customers and revenues and could be suiting up for IPOs in 2005.
2005 does look like a good year indeed, one in which for the first time in four years someone may actually point to a North American operator when touting broadband achievements. As I said before the panelists started their stump-speeches, “I’ve been putting up this slide for four Decembers now, but this time I really mean it.”
Really, I do!
— Scott Clavenna, Chief Analyst, Heavy Reading