Infinera Adds to Euro Footprint

Infinera Corp. (Nasdaq: INFN) claimed another European customer today, announcing German regional carrier EWE TEL GmbH as its latest customer on the Old Continent. (See EWE TEL Picks Infinera.)

Little in the way of detail has been announced, but as EWE TEL, which runs its own infrastructure, serves only 300,000 customers in Northwest Germany, the purchase order is hardly likely to have a dramatic impact on Infinera's top line. The engagement with EWE TEL is being handled by systems integrator NK Networks & Services, which is now acting as the vendor's sales and marketing partner in Germany, Austria, and Switzerland. (See Infinera Names Euro Partner.)

It's another sign, though, that Infinera is emerging as a rival in Western Europe to the established optical set: Regional and long-haul optical networking contracts are often contested, and subsequently won, by a core group of vendors including ADVA Optical Networking , Alcatel-Lucent (NYSE: ALU), Ciena Corp. (NYSE: CIEN), the former Marconi part of Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. , Nokia Networks , Nortel Networks Ltd. , Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA), and Transmode Systems AB .

Infinera has three other named customers in Europe: German ISP Freenet AG , pan-European carrier Interoute Communications Ltd. , and Level 3 Communications Inc. (NYSE: LVLT), which provides connectivity to EWE TEL outside its service region in Germany. Infinera says it has other European customers it can't currently name. (See Freenet Deploys Infinera, Infinera Reaches Level 3, Infinera Muscles Into Interoute, and Level 3 Signs EWE TEL Deal.)

While the vendor, which has seen its share price rise more than 50 percent to $24.41 since it began trading on Nasdaq earlier this month, lacks an announced Tier 1 operator customer in the region, it's not short of vocal support from its European users. (See Infinera Goes Out – And Up.)

Interoute's CTO, Matthew Finnie, has praised the capabilities of Infinera's technology on a number of occasions. He says his engineering team is finding that the vendor's DTN platform "does exactly what it says on the tin," and that it can be deployed and put into commercial services within just a few months. (See Infinera Muscles Into Interoute.)

That speed of deployment, coupled with a simple-to-manage provisioning capability, means Interoute can respond to its wholesale customers' demands for capacity in a matter of days instead of weeks or months, claims Finnie, who says demand for bandwidth is "going through the roof." (See Interoute Offers Rapid Capacity.)

Level 3 is equally effusive about Infinera's technology. At a recent Light Reading event in London, Uwe Nickl, the carrier's European VP of marketing, noted there was a lack of "disruptive technology advances" between 1998 and 2004, but the situation changed in 2005 with the introduction of photonic integrated circuits (PICs), the basis of Infinera's platform. (See Infinera PICS Up at ECIC.)

The deployment of platforms based on PICs "dramatically reduced the [per bit] costs of transport," said Nickl, who claimed that reduction was as high as 70 percent. "Carriers must invest in the latest disruptive technology. You need the lowest-cost infrastructure… It's all about economies of scale."

That kind of economics has certainly attracted the attention of major carriers, with BT Group plc (NYSE: BT; London: BTA) CTO Matt Bross having stated last year that he's tracking Infinera's developments. (See Infinera Numerates Its Numbers.)

In addition, Light Reading understands that BT now has first-hand insight into how Infinera's platform performs in the field. Level 3, one of a number of wholesale carriers providing BT with capacity in Europe, is believed to have lit some BT fiber on the U.K. incumbent's behalf using Infinera's DTN platform.

Neither BT nor Level 3 were able to confirm that particular use of Infinera's technology by the time this article was published, while Infinera says it can't comment on any relationship with a carrier until it issues an official announcement.

Further details of Infinera's business in Europe may emerge when the company issues its second-quarter earnings report. While no date has been set for the announcement, it's likely to be around late July or early August, as the vendor's current quarter ends June 30.

In the first quarter of 2007 Infinera recorded a net loss of $19.8 million from revenues of $49.2 million. (See Infinera Builds in Q1.)

— Ray Le Maistre, International News Editor, Light Reading

materialgirl 12/5/2012 | 3:06:14 PM
re: Infinera Adds to Euro Footprint The ability for INFN to electrically process optical signals sounds like it adds flexibility, and therefore operational speed. However, what about transmission distance? In their March analyst meeting, LVLT management went on about how they designed their network for 100km regeneration spacing, saying how it beat 40km regeneration. Meanwhile, CIEN management talks about 2000km reach. Not sure how pure that is.

However, it sounds like INFN works like a charm if you have designed your network for 100km regeneration spacing. If not, it sounds like an adoption hurdle. Thus, newbies will adopt it faster than legacy vendors.
fiber_r_us 12/5/2012 | 3:06:13 PM
re: Infinera Adds to Euro Footprint The "100km" number is Level(3)'s hut spacing not the regenerator spacing. That is, 100km is the nominal distance that their huts are spaced along the fiber routes. This is true for Level(3)'s original fiber routes they built in the late 1990s. The routes they subsequently acquired from other carriers have shorter spacings. Legacy carriers tended to target 80km "hut spacing" (or even 70km for WilTel - which is now part of Level3). Really old routes (like pre-divestiture ATT stuff) may have had 40km spacing (but you might skip sites to get 80km).

These "huts" are merely physical buildings that one may place equipment in. In the context of optical transport equipment, the hut may be used as an optical amplification site or as a OEO regeneration site. Any major carrier with a large nationwide (or international) footprint will have hundreds (or thousands) of these hut sites.

Whether a particular site is equipped with just amplifiers, or requires the addition of regeneration equipment in addition to amplifiers, is dependent on the architecture of the particular vendor's equipment, the specifics of the exact fiber route upon which the equipment is being deployed, and the overall network design.

Thus, for Ciena (and most other ULH players), terminal equipment is typically placed at the "ends" of routes (usually in major city COs), (R)OADMs with terminal equipment are used at smaller cities for Add/Drop, and optical amplifiers are used at all other sites. Regenerators are only used when the maximum optical system length has been reached (aka - the unregenerated reach - 2000km claimed for Ciena) and no terminal was needed.

This basic design results from the costs associated with the traditional transport system design; where:

$ for Amplifier sites << $ for ROADM sites << $ for Terminal/Regen sites

Thus, the cheapest network designs tend to involve using as many amplifier and ROADM sites as possible while minimizing Terminal/Regen sites.

Infinera's economics tries to change this model by combining the Terminal/ROADM/Regenerator functions into a lower-cost version through component integration. In doing so, Infinera has sacrificed unregenerated reach (down to 300-400km) and thereby increased the number of regenerator sites. All of the other sites are still amplifier sites; as Infinera's amplfiers are still significantly cheaper than the regenerator. If this were not true, Infinera would simply place regenerators at every site (every ~80-100km).

So, practically any optical transmission system could be deployed on Level(3)'s 100km spacing, but, some may have a better price/performance than others. There is simply a fundamental tradeoff between increasing the hut spacing and the resulting unregenerated reach of any optical transmission system. The longer the hut spacing, the shorter the unregenerated optical reach for a given system design.

Optimizing a fiber plant, system design, and network design for cost keeps the PhD network planners employed.
eramk 12/5/2012 | 3:06:13 PM
re: Infinera Adds to Euro Footprint Should be 100km optical amp spacing; which aligns with the original Nortel OC192 DWDM gear. I wouldn't be so quick to discount adoption; would LVLT and others not still be eager to lease fiber and hut space?
fiber_r_us 12/5/2012 | 3:06:12 PM
re: Infinera Adds to Euro Footprint would LVLT and others not still be eager to lease fiber and hut space?

Level(3) no longer sells dark fiber to potential competitors.
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