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Luminous Close to Qwest Deal

Light Reading
Supercomm News Analysis
Light Reading
5/29/2001

Luminous Networks Inc., a company building telecom equipment for Ethernet-based metropolitan networks, plans to announce a series of enhancements to products at the Supercomm 2001 trade show in Atlanta next week. But the real news is that the company is closing in on a large contract with Qwest Communications International Corp. (NYSE: Q), according to sources close to the company.

The deal with Qwest, possibly in the neighborhood of $100 million, would be an important one for Luminous, which has been searching for a big U.S. customer. Qwest has stated previously that it expects its Ethernet business to generate approximately $2 billion, which could be a boon for Luminous.

Such a deal would also ratify the demand for the new class of Ethernet equipment that Luminous is addressing, which is based on the emerging resilient packet ring (RPR) standard. Other companies like Cisco Systems Inc. (Nasdaq: CSCO), Nortel Networks Corp. (NYSE/Toronto: NT) , Lantern Communications Inc., Dynarc, and Force10 Networks Inc., are working on similar RPR-based technology.

RPR is being developed by the Institute of Electrical and Electronics Engineers Inc. (IEEE) to give Ethernet fault-tolerance features such as 50 millisecond restoration, making it a more suitable alternative to Sonet technology in telecom networks.

“There has been some reluctance by carriers to deploy Ethernet rings, because they don’t believe Ethernet protection schemes are as evolved as Sonet,” says Scott Clavenna, president of PointEast Research LLC and director of research at Light Reading. “This is the first time a pure Ethernet solution has been chosen for the access. It’s definitely good news for the RPR companies and a big endorsement.”

Full details of the Qwest contract are not likely to be announced for at least another month, say sources. While the contract hasn’t been finalized, sources say that Qwest has already initiated its first purchase order for products in the Luminous PacketWave M-Series, which have been shipping since December.

While the company works on the deal, it is also busy upgrading its products. Today it announced a whole raft of enhancements to its gear in preparation for the Supercomm trade show being held in Atlanata next week (see Luminous Upgrades PacketWave).

Luminous has been at the forefront of standardization efforts and has been working with the IEEE working group to come up with the 802.17 standard. It also helped found the Resilient Packet Ring Alliance to promote the technology. But because RPR is not yet a standard, Luminous will be implementing the technology in a proprietary form it calls resilient packet transport (RPT).

Luminous has used this technology as the basis for its PacketWave M-Series switches. Today’s product announcements should help the company differentiate itself from other companies developing RPR-like technology and from Ethernet companies like Riverstone Networks (Nasdaq: RSTN) (which has also announced support of an RPR-like technology), Extreme Networks Inc. (Nasdaq: EXTR), and Foundry Networks Inc. (Nasdaq: FDRY).

Luminous will be increasing the capacity of its M-Series products from 1 Gbit/s in both directions to 2.5 Gbit/s in both directions, but company officials claim that service providers will get 5 Gbit/s of bidirectional capacity. Using Cisco’s method of packing the ring, called spatial reuse, they can double that capacity again to 10 Gbit/s.

Lantern, which isn’t expected to ship a product until Q3 this year, claims it can support 10 Gbit/s of capacity in each direction, for 20 Gbit/s of capacity between the two directions. It also will use a spatial reuse system allowing it to have capacity in the 40-Gbit/s range.

Luminous is adding support for gigabit Ethernet interfaces, OSPF, and MPLS. In the first release of the product, Luminous only supported 10/100-Mbit/s Ethernet. This limited its deployments, as Ethernet switch vendors like Extreme, Foundry, and Riverstone targeted the same users with gigabit Ethernet, says Jay Shuler, vice president of marketing at Luminous. Support for OSPF has been added to route traffic onto the gig-E uplink, he adds.

Luminous also plans to add a blade for DWDM, which will give it an additional 16 wavelengths for carrying traffic. By adding this function, it eliminates the need for separate optical transport gear from companies like Nortel, Ciena Corp. (Nasdaq: CIEN), ONI Systems Inc. (Nasdaq: ONIS), and LuxN Inc., says Shuler.

“The advantage of integrating this functionality into one box is that it minimizes wiring between boxes, creates a lower footprint, and it costs less than other solutions,” says Shuler. “We don’t compete directly with ONI and the other transport companies, but it will nibble away at their sales.”

To go along with the new features and functionalities, the company has also announced a smaller, cheaper product designed for multitenant buildings called the C-Series (the “C” is for compact). The new C-Series is a trimmed-down version of the M-Series and is targeted at the multitenant or BLEC business. While the two products offer the same switching capacity, they differ in density and size. Instead of supporting 12 slots, the new box has only four.

“It looks like the M-series cut in half and turned on its side,” says Marion Stasney, senior analyst with the The Yankee Group.

- Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com

For more information on Supercomm 2001, please visit the Light Reading Supercomm 2001 Preview Site.

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cfaller
cfaller
12/4/2012 | 8:21:47 PM
re: Luminous Close to Qwest Deal
If the Qwest deal goes through for Luminous, this could (emphasize 'could') set a couple things in motion:

1) Metro Ethernet equipment validation: so far, CLECs and emerging providers have been the only ones to embrace metro ethernet. An RBOC implementing this will give a boost to the entire sector, not just Luminous.
2) Metro Ethernet service validation: metro ethernet providers have been spending a lot of money, with little to show for it. There will be less doubters of the service if Qwest makes a huge push on it.
3) Bandwidth demand turnaround?: If Qwest makes a big push for this service, we'll finally know if end users really want this service. So far, this remains to be seen. If end users do see this as a valuable service, then this could possibly signal a new jump in demand for bandwidth.

Comments?
LightCycle
LightCycle
12/4/2012 | 8:21:38 PM
re: Luminous Close to Qwest Deal
Good points.

> this service, we'll finally know if end users
> really want this service. So far, this remains
> to be seen. If end users do see this as a
> valuable service, then this could possibly
> signal a new jump in

Ultimately it boils down to a question of economics. If it makes economic sense, then users will go for it (especially during these times).

For an RBOC like Qwest to make the economics work, that in itself says something. Still, the scale of this is worth tracking.
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