The IP team at Alcatel-Lucent (NYSE: ALU) plans to develop its own deep packet inspection (DPI) capabilities that can be integrated into the vendor's edge routers, according to Basil Alwan, president of the vendor's IP business.

Alwan, who has just been handed additional responsibilities following a revamp of AlcaLu's Carrier Business Group, told Light Reading "there's good reason to invest" in DPI capabilities. "Investing in [DPI] makes a lot of sense and is part of our roadmap. We are going to do a lot with that technology," though nothing has yet been officially announced, he added. (See AlcaLu Expands Alwan's Role.)

AlcaLu currently has a number of partnerships to cover any current carrier customer requirements for DPI capabilities, including relationships with CloudShield Technologies Inc. and Sandvine Inc. . With these partners, AlcaLu can meet the needs of service providers that want to identify P2P traffic on their networks and offer security-based managed services. (See AlcaLu, Cloudshield Partner and BB Forum: Gateway Goals for Carriers.)

But the giant vendor is to develop its own capabilities as carriers begin to use DPI capabilities to implement more complex service management and service delivery strategies.

"Going forward, being able to bill based on applications and services is going to be very important for carriers," said Alwan. "Over time there are likely to be business models that rely on the differentiated treatment of services. There's a limited amount of that now… but we see demand for that in the future."

Alwan sees DPI as an important part of AlcaLu's network architecture propositions -- the Triple Play Service Delivery Architecture (TPSDA) for fixed-line access and the Mobile Evolution Transport Architecture (META) for wireless networks. (See AlcaLu Targets Wireless Backhaul and AlcaLu Goes to BBWF.)

"We're looking at it from a carriers' point of view. We're going to the table with a network proposition, with TPSDA and META, not a product proposition," states Alwan.

Alwan's statements come as major carriers have begun to acknowledge the growing importance of DPI, and as some of the DPI sector's specialists note a marked uptick in their quarterly revenues. (See IP Traffic Smarts Hit Berlin.)

Recent financials from Sandvine and bullish statements from Ellacoya Networks Inc. suggest an increase in the levels of carrier capex being spent on DPI gear, with only Allot Ltd. (Nasdaq: ALLT) currently bucking that growth trend. (See Allot Shares Sink on Forecast, Allot's All Alone in Forecast, and Sandvine Posts Earnings.)

That growth trend is backed up by the findings from a new Light Reading Insider report, Deep Packet Inspection: Vendors Tap Into New Markets. (See The Greening of DPI.)

In that report, analyst Simon Sherrington notes that spending on DPI equipment has risen significantly during the past year: "Investment in DPI is a global phenomenon, and demand for DPI capability will grow as carriers upgrade their networks and as customers continue to use more and more bandwidth-hogging applications," such as Web-based video services. "Consequently, the market for DPI technology and DPI-based applications is expected to grow substantially over the next few years."

The analyst's report also shows that one of AlcaLu's chief rivals has a significant headstart in the DPI market.

While the sector has, until now, been populated by specialists such as Allot, Cloudshield, Ellacoya, Sandvine, and Procera Networks , Cisco Systems Inc. (Nasdaq: CSCO) is the major exception, having bought its way into the DPI market in 2004 with the acquisition of P-Cube. (See Cisco Plucks P-Cube for $200M.)

While other major equipment vendors are waking up to the potential of DPI, Cisco has already integrated its DPI technology (Service Control Engine) into its routers, and now claims to have 400 service provider customers for its packet inspection equipment worldwide. Sherrington notes that Cisco claims its DPI-related business grew more than 30 percent sequentially in the third quarter of this year.

— Ray Le Maistre, International News Editor, Light Reading