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Optical/IP

Luminous Cuts Away

Luminous Networks Inc., a startup building metro Ethernet equipment, laid off a little over 20 percent of its workforce earlier this month, according to sources close to the company.

The company confirmed the layoffs but would not divulge numbers. Sources say it's somewhere around 50 employees. This is the second layoff for Luminous in the past six months. The company had another small layoff in December. Currently, there are about 175 people working at the company, says John Hamburger, director of marketing communications.

“We’re fully funded," says Hamburger. "We have a product shipping for revenue. But we had to hedge against the continued market softness, which meant that we had to make some headcount reductions.”

To date, Luminous has raised $148 million in venture funding, $80 million of which it received last June (see Luminous Rounds Up $80M). Hamburger says this should be enough to take it through its next “financial event." And it is shipping products to China Netcom Corp. Ltd. (see Chinese Get Luminous). But Luminous may still have a tough road ahead of it.

The company’s whole value proposition is based upon the adoption of a technology called resilient packet ring (RPR). This technology, which is currently working its way through the Institute of Electrical and Electronics Engineers Inc. (IEEE) standards process, is designed to provide Sonet-like features and protection to Ethernet-based rings (see RPR in the Spotlight). With standardization still at least a year away, some argue that RPR is unnecessary for building out new Ethernet metro networks (see MPLS Spurs Metro Ethernet Debate). Companies like Atrica Inc. say that their devices can offer the same sort of Sonet-like protection in a traditional Ethernet mesh architecture.

Even if RPR takes off, there is still the big question of whether or not RPR should simply be a feature on an existing switch or router or if it requires a standalone box. Luminous seems to take the dedicated box approach, while a number of vendors see it as a feature.

At least four edge routing companies, including Cisco Systems Inc. (Nasdaq: CSCO), Crescent Networks Inc., Redback Networks Inc. (Nasdaq: RBAK), and Riverstone Networks Inc. (Nasdaq: RSTN), have already included RPR-like technology in their platforms (see Taking Routing to the Edge). Cisco reports that it has sold over 10,000 ports of Dynamic Protocol Transport (DPT), its proprietary version of an RPR-like technology.

But Luminous argues that its product is already getting traction in the market. It has announced a contract with China Telecom and claims that it has other international accounts that haven’t been announced yet. Regardless, opponents point out that Luminous still lacks the validation of a large U.S. carrier. Rumors had circulated over a year ago that Qwest Communications International Inc. (NYSE: Q) was looking to test the gear (see Luminous Close to Qwest Deal). But hopes of a Qwest contract have faded as the carrier continues to clamp down on its spending, especially with startups (see Is Qwest Shunning Startups?).

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com
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optical_ring 12/4/2012 | 10:29:22 PM
re: Luminous Cuts Away Are Luminous & RPR Semiconductor Inc., are competiters in RPR?. Your comments Pls.
Bumper_car 12/4/2012 | 10:29:21 PM
re: Luminous Cuts Away I posted this message on another thread, but is applies here as well.

Some of these posting have talked around the subject of money. The real problem for all service providers, old and new, is how to be profitable. It takes a lot of money to build and maintain the transmission service infrastructure, before you start putting services on it. Adding new technology as an overlay to support existing service models just adds to the cost of those existing services.

Value added services like voice switching or the Internet are a lot more complex than simple TDM services. Because of that added complexity, they have to generate more revenue per used core bandwidth than do TDM services. And given the statictical gain, the people with the money are careful about using them.

The back office systems, although some remain in Cobol flat file systems (Those old systems don't cost a whole lot to maintain.) A lot of the back office systems are written in C++ or some other language; Oricle is a major software vendor to the telco industry.

The sales people that sell the services have to make thier commissions. The operations support people that keep it running have to be paid. The executives have make their money. The stock investors demand that they make some money as well.

All of this costs the end customer. In order for value added services to have any kind of profit margin, they are implemented with what is called statistical gain. For example, the Internet normally has a 400 to 1 statistical gain between the end user and the backbone. Voice has anywhere between 10 to 1 to 40 to 1 gain. The difference between Internet and voice is that the Internet service gets degraded while at call busy hour, calls get blocked without degrading the voice quality.

It costs a lot of money to upgrade a physical plant or back office software system. Decentralization costs more in labor costs but does provide a better surviability over a large area, but does not provide surviability in a small geographical area.

The real issue is what does it cost to implement and maintain a service based on a particular technology relative to what customers are willing to pay for it. Right now, TDM is the least expensive for actually used bandwidth of any service. Why do I say that? TDM does not have any statistical gain. If you look at your Internet service, being charged for at a flat rate(primarily because it costs more to bill for usage than it would make) at about $20 per month for a 56k dial up. At 400/1 gain that 56k dial up actually is costing the aggregate of end customers $800 per month. If you check with your local service provider, a TDM 56k line is somewhere around $200-$400 per month, depending on where you are. Yet even at those gain rates, ISPs and NSPs are barely making any profits. Given the level of gain required to be profitable, you can see why most businesses do not put there critical internal data over something like the Internet, not to mention security questions.

The issue of IP vs TDM is complex and not going to be resolved overnight. I think that over time, more IP services will be able to charge higher rates in order to get the end user bandwidth up and the gain rates down to improve service reliability, availability, etc. In the mean time, many of the legacy free service providers are failing because the services they provide are too expensive to build and maintain for what the end customers are willing to pay for it.

As someone said "Money talks, everything else walks."
JackOnNet 12/4/2012 | 10:29:19 PM
re: Luminous Cuts Away blue_light,

Do you have any contact information regarding the company you mentioned, RPR Semiconductor, Inc.? Web site, e-mail addresses, phone numbers, etc.

I would appreciate that.
Kirby 12/4/2012 | 10:29:11 PM
re: Luminous Cuts Away Hi ahacket2,
Everthing you said that all true, not a rumor,
The Luminous deeeply in Troubles, They will close the door soon or later, The last Funding they has almost gone with the wind, No good or interesting product at all.
Kirby.
blue_light 12/4/2012 | 10:29:09 PM
re: Luminous Cuts Away Their e-mail Address - [email protected]
jshuler 12/4/2012 | 10:28:46 PM
re: Luminous Cuts Away Put enough smart people in a room, and you can come up with many different ways to accomplish similar objectives.

Actually, we market RPR in the data center environment as a kind of next-gen FDDI at gigabit speeds.

The point is that you can get deteriministic delivery in RPR by setting a high traffic class for individual services and committing the bandwidth (CIR). But the unused bandwidth is can then be completely filled with opportunistic traffic *without* the use of tokens, which have their own issues. RPR has a dual transit path for cut-through traffic so that services such as TDM and packet voice/video can transit in-between nodes unmolested, with trivial latency and jitter (in the low microseconds range).

FDDI is a great protocol. It's just that we decided to use Ethernet as our point of departure as the more popular and lower cost protocol.
jshuler 12/4/2012 | 10:28:45 PM
re: Luminous Cuts Away Scientific-Atlanta is an investor, technology partner, and OEM for Luminous. They re-label Luminous' PacketWave as the S-A Prisma-IP. This has been sold to Cox Communications.

Check the S-A and Luminous website -- this is public information.
jshuler 12/4/2012 | 10:28:45 PM
re: Luminous Cuts Away Thanks Ocular, for your opinon.

RPR runs within SONET or SDH. RPR allows SONET and SDH bigots to derive maximum revenue out of the stranded bandwidth in their network by allowing that bandwidth to be shared between multiple users around the ring and at the same time guarantee SLAs for both TDM and Ethernet based services. In other words, give that last OC12 to RPR, and we can oversubscribe it to any degree in multiple service classes and give arbitrary bandwidth chunks (not just Nx1.5M) to different customers. Any bandwidth not being used by one customer can be used on an opportunistic basis either by best effort customers, or even by other CIR customers, since data bw is traditionally oversubscribed at least 4:1 even for high-quality VPN services such as Frame Relay.

In other words, no more dedicated, point-to-point data circuits that waste bw most of the time. Get at least 4 times the revenue out of each megabit of ring bandwidth. Quadruple your payback.

Sounds pretty good, even to a hard-core SONET/SDH fan, eh?
jshuler 12/4/2012 | 10:28:44 PM
re: Luminous Cuts Away Metro rings definitely need to go more than 80 km. We are being asked for individual span optics that go more than 100 km!

You also need to understand the difference between an Ethernet service which occupies a dedicated TDM circuit whether it is active or not, and a dynamically bandwidth shared resource pool from which services extract bandwidth as-needed, leaving the rest for other customers. Unlike traditional Ethernet, this is done fairly between nodes and customers, and allows SLAs to be guaranteed while sharing and even oversubscribing bandwidth.

Unlike equally if not more complex and proprietary schemes to recapture SONET/SDH bandwidth through virtual concatenation, RPR GUARANTEES NO STRANDED BANDWIDTH. EVER.
jshuler 12/4/2012 | 10:28:44 PM
re: Luminous Cuts Away Very good posting, Light-bulb. A few points in response:

You are right that RPR imposes a bit of cost on a TDM circuit (T1, DS3), but it does allow those circuits to occupy exactly and only that bandwidth in the network. In other words, the equivalent of VT grooming without the need to manage VT grooming. It is much more bandwidth efficient AND easier to manage, since you only manage the endpoints and the TDM bandwidth is simply extracted from the entire bandwidth pool.

Dedicating an OC3 or OC12 to RPR does not take any bandwidth away from any other service. If fact, it makes that bandwidth much more flexible from and bandwidth and service management standpoint, since ANY fraction of it can be occupied by
- TDM service such as T1/E1, DS3, etc.
- Ethernet private lines with or without CIR
- Transparent LAN services

Each of these services can be configured as to traffic class AND protection status in both directions, providing a huge spatial reuse gain, WITHOUT elaborate and labor-intensive time slot management. All bandwidth is dynamically shared, so that even CIR customers give their unused bandwidth back to the ring when they don't happen to be bursting.

Bottom line is that RPR is EASIER to manage, MORE efficient, and allows new services to be deployed, generating more revenue from any given increment of bandwidth.

OSMINE is relevant to exactly 4 companies, who are admittedly addicts, but addicts on the mend. Furthermore, OSMINE can be tricked into managing RPR circuits.
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