Light Reading Exposes Privates

Once again, Light Reading's editors have reduced all the blood, sweat, tears, and cash that our industry pours into its startups into a nifty little file we affectionately call Light Reading's Top Ten Private Companies. The List's mission, as always, is simple: Survey the telecom private company landscape and try to handicap which companies are headed for liquidity. Light Reading uses an assortment of popular metrics such as funding, revenues, customer connections, and reseller deals to help figure out which companies are most likely to either go public or get bought.

In addition to the usual facts and figures, though, Light Reading also picks companies using our network of well-placed sources, our access to top-notch industry research from Heavy Reading, some subjective assessments -- such as, "Does the CEO's breath smell?" -- and a few cases of contemplative refreshment.

It's that combination of unique industry insight and world-weary gut feeling that has made the Top Ten Private Companies List a hotbed of debate in years past. Occasionally we find unloved gems that the top-tier VC world appears to shun (see WaveSmith Networks), and yet other times we fall under the spell of the Silicon Valley glamour boys who turn out to be duds (see... well, that list is too long to publish here). The current List is a more eclectic mix than usual, with one gigantic Asian equipment conglomerate, a sleepy phone switch vendor, and a big money, big hype, transport company.

The companies on the List this time around are (in alphabetical order): You'll have to actually read the List to find out the order, why we made each pick, and what companies came close. But if the very List itself stirs you, feel free to let us have it on the boards below or in the following poll:

As with everything published on Light Reading, the feedback loop is ongoing. If you have a comment on the companies picked, the ones missed, or the list in general, you may also send a note to [email protected].

— Phil Harvey, News Editor, Light Reading

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Scott Clavenna 12/5/2012 | 1:47:20 AM
re: Light Reading Exposes Privates Doug,

Good points. I think Infinera has addressed the first one by including optional low-cost optical amps (booster, inline and pre) to give some flexibility in span length, and to provide an option for traversing a hut optically if there is no anticipated add-drop anticipated ever (middle of the desert or the like). They definitely have to prove the low-cost claims, however.

On the second point, my guess is that they will not focus on RBOCs initially (or IXCs like MCI, who believe in the all-photonic future), but look to regional operators, Euro city carriers, and those folks building networks to serve Tier 2/3 metros. This is a potential area of opportunity for Infinera since they can support lots of add-drop on a regional network without much advance network planning.

The question is what's riskier: waiting for RBOCs and fighting their religious wars or going after the remain facilities-based regional CLECs and euro city carriers to build a footprint and prove the economics? Neither choice really makes you jump out of your seat, but the promise of this technology is keeping investors committed and relatively sanguine on the prospects.

douggreen 12/5/2012 | 1:47:20 AM
re: Light Reading Exposes Privates Scott,

Going after smaller regional carriers sounds good in theory. My experience is that startups are at a disadvantage. Larger companies can put together "package" deals that include installation, training, and other types of equipment. Smaller carriers also often depend on using well known equipment to legitimize themselves to their own customers.

I wish them luck, however. I've been there.
whyiswhy 12/5/2012 | 1:47:19 AM
re: Light Reading Exposes Privates If you only need to send 10 channels of 10G 100 km, you reduce or eliminate the need to include much in the way of dispersion compensation and the like.

That's the hype. It's true but not the whole truth. Whole truth is more like: Nobody wants to do 10 channels, they want to do 80 channels (broad brush I admit). And 80 channels means there is another layer of AWG (loss) involved, and the distance shrinks to about 80Km at best with NZDSF.

Anything else needs an EDFA (or gag, Raman), and what have you gained cost-wise or simplicity-wise?

This is at its best a Metro-ring technology, not something for LH. I agree with Doug, the architecture for that was decided awhile back: ROADM's with express channels.

I reiterate: Infinera should go to 50 micron MM, 10G Ethernet, and sell to enterprizes who are much less picky about reliability and qualification....they just need cheap.

If they can get a foothold there due to lower price, they can grow into LH from the bottom up. China and India would eat it up, if the price was low enough. It's a classic low ball approach, but not one VCs like one bit, since they have to stick in there with operating losses for many years.


stephenpcooke 12/5/2012 | 1:47:17 AM
re: Light Reading Exposes Privates Scott,

Doug has added some perfectly valid points that I now don't have to. It is obvious that he HAS been there.

I will add my 30 second analysis for posterity anyway...

- Be careful about the terms of your NDA. I don't recall seeing anything about electrical muxing on their website.
- VERY few ADMs have electrical interfaces on their high-speed (or 'line') side. Interfacing to ADMs requires things like SONET/SDH compliance, protection switching, link monitoring, alarms, etc.
- The only real interface available is GigE. Either they are mapping it into POS or muxing to 10GigE optical.
- 10G interfaces will only travel 80-100km on modern-generation fiber on PMD-'quiet' spans (ie: last 3-4 years) without external components. This means substantial thought concerning route selection.
- If you need to send 10 channels of 10G 100km you still need to demux the traffic at the other end (ie: you still need the ADM/router/whatever which you could have bought a native optical interface for in the first place). Where is the business case?
- Optical add/drop can be a pain but, with current 2-stage opamps you can select the wavelength to add/drop in the mid-stage and not have to demux the other n wavelengths just to mux them up again. The point is that you still have a single opamp (EDFA) versus a per wavelength regen.
- You have to look at the numbers as well from a carrier point of view. WhyisWhy made some excellent points in this area but I would add things like OSS integration, training of field personnel, etc.
- this has now become a greenfields installation, therefore there is an enormous amount of competition and is nowhere close to EDFA replacement.

The technology seems to have promise, the system is still questionable in my mind, however the only minds that count are those of the carriers (unless they go the component route).
OpticOm 12/5/2012 | 1:47:16 AM
re: Light Reading Exposes Privates Well, the most likely scenario, will be that a big carrier will like the system, but will not be particularly eager to buy from a start-up.
The word about the technology and system would then be passed to an incumbent equipment provider, who will buy Infinera right away.
It happened in the pastGǪ.
And about the most likely buyer(s), I think you can figure yourself...
Scott Clavenna 12/5/2012 | 1:47:07 AM
re: Light Reading Exposes Privates Stephen,

Good point about eletrical interfaces. I miswrote, meaning 1310 nm optical interfaces. And your point there is right. They will in cases have to deal with SONET.

'tis a tough challenge, indeed.

douggreen 12/5/2012 | 1:47:06 AM
re: Light Reading Exposes Privates Scott, et all,

One of the things that I find interesting about Infinera is the similarity of their contrarian approach with that of Lightera. (surprise, surprise, since most of them came from Lightera). While everyone else was talking about all optical switches, Lightera was developing an electrical cross connect with STS grooming. I can immaging this analogy being stressed in Infinera's pitches to investors since Lightera was so succesful.

THe reason that they were right in the case of Lightera was that the technology they were replacing in long haul networks was being used primarily to switch at the STS level. So, the equipment fit in with the existing services better. The carriers had much less to change than they would with optical switches. (It didn't fit in so well with the RBOCs, who needed VT and even DS-0 level switching).

In other words, Lighteras contrarian approach was in line with the carriers existing network architecture versus the prevailing marketing hype.

As much as Infinera (and their investors) would like to think that the same contrarian approach will yeild the same results, they will face an uphill battle. The existing networks have been optimized for the last 8 years around the use of optical amplifiers and OADMs. In many cases, their contrarian approach is now going against the carriers thinking. They are now asking for a change versus trying to accomidate the existing strategy.

That doesn't mean they won't succeed. If the savings are really huge, they might. They face more of an uphill battle than Lightera, however, in spite of some of the similarities in philosopy.

corvisalum 12/5/2012 | 1:47:00 AM
re: Light Reading Exposes Privates a few points re: scott, doug and stephen's comments -

- regarding the claim that they use optional edfa's to provide customized distances. is it possible they need edfa's because their power levels from the lasers are so low they cannot build a system w/o edfa's? do they offer any system with any reasonable span length where they can eliminate edfa's altogether? if edfa's are not eliminated altogether, this takes one key saving they profess to bring to the table.
- do they offer a full suite of transponders? if not, what "real" services can they transport? if you take away the transponder market, what is their real market size?
- i have talked to many folks who have looked at the indium phosphide technology and cannot envision high yields. the yields will dictate if they can truly generate savings for carriers and profits for themselves. it is always easy to build a few devices, go into trial and lose money on the first few systems. if they are banking on improving yields over time, my advice to carriers: run away from them and continue with current approaches.
- finally, given that most of the national size networks have already been built and are not lacking for capacity, why bother solving problems which, while albeit cumbersome (been there, tried doing that), are not relevant?
- if infinera's plan is to go to the rbocs, my advice: be very careful - you don't have the ops support to even start your discussions with them.

- long-haul is no fun, rboc's less so. tier-2 carriers in europe? what is the total market size again?

not to let you misconstrue this post as totally negative :-), i am quite excited if this concept works out (given the personal pain i have gone through in making long-haul systems practical and workable in the field). the business model is what i would worry about.

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