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Terabeam Frees Workers, Optics

Light Reading
LR Mobile News Analysis
Light Reading
7/16/2002

Remember Terabeam Corp.? This was high-profile free-space optics company that had plans to build a business shooting data through the air and become a wireless service provider at the same time. Several years ago it drew $450 million in funding from Lucent Technologies Inc. (NYSE: LU). In the past few months it's been quiet.

But in just the past week, the company has announced some news that indicates big changes are afoot.

On Friday the company announced it was cutting 70 employees, 20 percent of its staff, in an effort to reduce costs (see Terabeam Lays Off). This is the third time the company as cut jobs in the past two years. In mid-2000 its headcount peaked at 530; now it is down to 290. Then yesterday, the company announced that it is buying Harmonix Corp., a maker of 60GHz radio frequency equipment (see Terabeam Acquires Harmonix).

At first glance it seems a bit strange that the company would lay off 70 workers and then announce two days later that it is acquiring a new company for an undisclosed amount of money. But these two events are not unrelated.

Terabeam, like other free-space optics startups, is changing its strategy in order to sell to incumbent carriers. Not only has the company nearly abandoned the idea of being both an equipment manufacturer and a service provider, but it is also changing its product strategy and streamlining its operations, says Michael Schwartz, chief development officer and acting CFO.

“The economic climate in the telecom sector is what prompted the layoffs,” he says. “But we’ve been reworking our strategy to focus on products instead of services for a while now. We’re looking to provide end solutions to carriers, and that includes FSO as well as RF technology.”

Specifically, Terabeam is adding Harmonix’s radio frequency products called the GigaLink family. GigaLink operates at the 60GHz frequency. This frequency is ideal for data transmission, because it offers the highest data rates of any RF technology, up to 622 Mbit/s, with the least amount of interference. While free-space optics and RF technology are often seen as competitors, Schwartz says that the GigaLink products will complement its existing Magna and Elliptica point-to-point free-space optics products and give carriers more solutions to choose from.

The two product lines are very similar in functionality. The Terabeam FSO gear transmits at data rates up to 1 Gbit/s. The big drawback to the technology is that fog and low cloud coverage can interrupt transmission. While the 60GHz radios aren’t able to reach 1 Gbit/s yet, they are more resilient to weather conditions. Heavy rain can sometimes be a problem for it, but for the most part the technology is not affected by weather changes.

Terabeam says it plans to sell the two products separately, but customers can buy both products and install them in parallel to add redundancy and resiliency to their networks. For example, a carrier could install the FSO gear for its high data rates and use the 60GHz radios as a backup link.

Other FSO players have seen the value in combining the two technologies. AirFiber Inc. announced a product in May that incorporates 60GHz radio technology into its product line (see AirFiber Penetrates the Fog). But Terabeam and Airfiber have very different ideas about how the technology should be implemented.

AirFiber has integrated the 60GHz radio into its product and added an automatic failover system so that when an FSO link fails, the radio link kicks in. Terabeam says that this adds unnecessary cost to the deployment. Sixty-GHz radios are already two to three times more expensive than FSO gear. Adding a failover mechanism simply adds more cost to the device, says Schwartz. Terabeam’s products rely on inherent failover mechanism already present in most networks. ATM, Sonet, and MPLS all have built-in failover capabilities, he notes:

“Our belief is that our customers can achieve failover using mechanisms in the network. The hybrid solution adds a lot of cost. That seems to be AirFiber’s approach, but we think the network can handle that without adding additional cost to the system.”

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

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