Why Sonet Chips Are Sexy

About 20 years ago, when I was a junior reporter in McGraw-Hill’s London bureau, I was given an assignment that had all the hallmarks of being really boring. I was asked by Business Week to check out the nail industry in the U.K., for a story that someone else was writing about a new nail making machine.

To cut a long story short, I couldn’t get the major nail manufacturers to talk to me and eventually I discovered why: I’d hit on a scoop. The price of nails was controlled by a global cartel that was under investigation by anti-trust authorities.

There isn't a Sonet/SDH chip cartel that we know of (yet). But the moral of this little anecdote – that boring sounding things sometimes are quite the reverse – applies to Sonet/SDH chipsets, the subject of a report by Simon Stanley published this month by Light Reading Insider, Light Reading’s subscription research service.

From some perspectives, it might be hard to get excited about the latest developments in merchant Sonet/SDH chipsets. After all, it’s all geeky stuff, isn’t it? You’ve probably heard enough about GFP (Generic Framing Procedure), VCAT (Virtual Concatenation), LCAS (Link Capacity Adjustment Scheme), and putting add/drop muxes or digital crossconnects or chipped beef on a chip.

However, you probably haven’t heard much at all about the impact of Sonet/SDH silicon developments on what’s happening to telecom infrastructure. I think it’s HUGE and far from boring. In fact, I’d go as far as to say that the advances in this field have probably had more impact than many of the more fashionable technologies such as Ethernet and Multiprotocol Label Switching (MPLS).

To see what I’m getting at, think back a few years. Not so long ago, the big Sonet/SDH equipment vendors invested enormous sums of money in the development of their own chipsets and sold the average Sonet/SDH multiplexer for corresponding wads of cash – hundreds of thousands of dollars in some cases.

Then along came semiconductor companies like PMC-Sierra Inc. (Nasdaq: PMCS) with off-the-shelf chips that changed the whole landscape. In the Light Reading Insider report, Stanley provides a detailed competitive analysis of no fewer than 30 Sonet/SDH chipsets from 10 vendors.

Competition among these vendors has driven chip prices down to an average of a few hundred dollars, and that's had a dramatic impact on Sonet/SDH equipment vendors. They’ve stopped developing their own silicon because they can’t come close to matching these prices with home-made stuff. In a growing number of cases, they’re outsourcing the design of the whole guts of their Sonet/SDH boxes – the combination of chips and software – to specialist companies such as Denmark’s Tpack A/S and the U.K.’s Murton Consultancy & Design Ltd..

I'm over-generalizing a bit here, according to Scott Clavenna, Heavy Reading chief analyst and author of a recent report on The Future of Sonet/SDH. "I think these new chips in many cases help data vendors more than they do traditional Sonet/SDH vendors," he says. "If you're building a new Sonet/SDH switch from scratch, there is still reason to spin your own ASIC to keep a competitive lead. Nortel did so with their OME 6500, and it bought them greater density and scale than they could find on the merchant market.

"All the same, it does illustrate a telecom product development trend that values software innovation above hardware innovation," adds Clavenna.

All of this has resulted in plummeting prices for Sonet/SDH equipment. Chris Murton, head of Murton Consultancy & Design and a regular moderator of Light Reading Webinars, says the price of an average Sonet/SDH multiplexer now costs in the "low thousands" of dollars.

And that’s only part of the story. All of chips in the Light Reading Insider report are also “next-generation” Sonet/SDH. In other words, they address the shortcomings that Sonet/SDH used to have when it came to handling data – furnishing the wrong size pipes, labor-intensive provisioning processes, and so on.

The latest developments take things a stage further on this front:

  • The arrival of chips boasting “Transparent” as opposed to “Frame” GFP means that next-gen Sonet/SDH gear can now handle any protocol, not just Ethernet – which opens up big opportunities for carriers wanting to deploy storage services. Stanley names three vendors offering such chips in his report.

  • Some of the latest Sonet/SDH mapper/framer chips, notably from Galazar Networks Inc. and TranSwitch Corp. (Nasdaq: TXCC), also support “Low Order” VCAT (see PMC, TranSwitch Get Edgy). This means they can provision channels in 1.5-Mbit/s chunks, rather than the 50-Mbit/s chunks of “High Order” VCAT. The arrival of these chips, at seriously low prices, has led to a spate of announcements of new “multiservice edge aggregation devices” that aim to extend carriers’ Sonet/SDH networks into customer sites. (For examples, see Marconi Scales Down Its Edge, Transmode Branches Out, and Telco Launches Sonet Gear.)

  • Similarly, semiconductor vendors like Parama Networks Inc. and PMC-Sierra are putting digital crossconnects (DCS) onto low-cost chips, which is encouraging the development of other products. Seranoa Networks Inc., for instance, uses a little DCS chip to embed a crossconnect into its VPN aggregator, and Mangrove Systems Inc. is doing something similar with its data access box. (See Seranoa Tackles Backhaul Bandwidth and Mangrove CEO Goes Gaga Over GFP.)
The bottom line is that the combination of low chip prices and big advances in technology has given Sonet/SDH a huge new lease on life – and a broad array of applications in carrier networks. A few years ago, it was being written off as hopelessly unsuitable for the modern Internet age. Since then, it’s remained dependable (which is probably what people mean by boring) but has caught up and overtaken a lot of other technologies, in my view.

So, have I made my case? Let’s take a little poll to see.

— Peter Heywood, Founding Editor, Light Reading

To subscribe to Light Reading Insider and get a copy of Simon Stanley's report – "Next-Gen Sonet/SDH Chip Survey" – please click here.

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JoeBagadonuts 12/5/2012 | 1:27:21 AM
re: Why Sonet Chips Are Sexy Actually, this is a not so thinly veiled plug for a paid content piece, pure and simple. Yeah, the author is sharing a good amount of the findings from the piece but as it has been the case in many instances in the past, LR is using editorial to push sales.
Tony Li 12/5/2012 | 1:27:21 AM
re: Why Sonet Chips Are Sexy
Sorry Peter, but I think you missed some of the point here. In Ye Olden Days, the telecom equipment vendors were able to build their own ASICs and then due to the limited market, charge outrageous premiums for their systems. With deregulation and the advent of the Internet, volumes have increased and there is now a play for commodity parts. We've seen many of the normal merchant silicon players step into this area, as well as a number of VC startups to wrap systems around this silicon. This has been a frontal assault on the franchise that Nortel, Lucent, et. al. have been milking for years, and the assault has been spectacularly successful.

However, to hold SONET as a sacred cow at this point is to cling to the vestiges of those former franchises. SONET can and will endure, if for no other reason than the amount of legacy equipment. However, for it to prosper, it will need to continue to evolve, improve and solve practical problems that need to be solved at the link layer.

At the end of the day, it may well be that SONET turns out to be just another link layer that is subsumed by Ethernet in the ongoing march of simplification, reliability, and cost competitiveness. It may be that SONET has a number of marketing plays piled up on top of it, giving it a case of featuritis that causes it to be useless to all. It's pretty clear that regardless of the path, there will be merchant silicon for all of the relevant link layers, as long as you don't stray too far from the commodity path. That's just good business for the silicon vendors and the system vendors. And there's nothing very sexy about that at all.

Peter Heywood 12/5/2012 | 1:27:18 AM
re: Why Sonet Chips Are Sexy Hi Tony, I wasn't trying to say that Soner/SDH is a holy cow - just that there's more to next gen Sonet than the technology, which is what we've tended to focus on. We've never really drawn readers' attention to the massive reductions in the price of Sonet/SDH gear, or this trend towards big vendors outsourcing the design of their equipment as well as the manufacture of it.

I guess the arrival of Ethernet in carrier networks has led to these changes - and I guess that's now reflected in the results of the poll, where Ethernet has now edged ahead of Sonet/SDH in terms of its impact on telecom nets.

Of course, all of these technologies are intertwined ...a lot of the Ethernet that carriers currently provide uses next gen Sonet/SDH

Peter Heywood 12/5/2012 | 1:27:17 AM
re: Why Sonet Chips Are Sexy Joe, I'm pointing to some issues that (a) come from a study we've done and (b) we haven't really covered in LR before.

We have to make a living at LR. One of the ways we do this is to generate high value information that we can sell, and then publish higher-level analysis of the same data for free, in articles on Light Reading.
JoeBagadonuts 12/5/2012 | 1:27:16 AM
re: Why Sonet Chips Are Sexy Peter, I don't have an issue with commercial enterprises making a living but it is my belief that LR will, from time to time, publish advertorials in order to sell newsletters or HR reports.

You did share a good amount of information in your piece so no complaints there.
Kerry Davis 12/5/2012 | 1:27:15 AM
re: Why Sonet Chips Are Sexy I distinctly remember my first day Intro to Engineering class in the fall of 1977. The prof brought in a fiber optic cable and proclaimed that every neighborhood would have FTTH in just a few years. He said the only thing standing in the way was finding a way to splice fiber cuts. Perfectly good assumption at the time. But in 2004 we all know where that stands and why.

Now, I've always been alittle confused by the use of the term "Sexy" when describing technology and business opportunity. Maybe I'm just to visual. But if "Sexy" is loosely synonomous with "great opportunity with intent to stimulate and excite" then I agree with Peter. I think SONET and even copper are both very sexy. Not because the declining price per SONET port makes it that way but because there are new changes and developments like GFP, LCAS and VCAT which are adding value the existing SONET infrastructure and allowing it to move closer to the edge and open up new markets. Doesn't mean Fiber as a physical medium and packets are not "Sexy" as well.

I agree that SONET should evolve and solve new problems as Tony mentions. But just like DSL was invented as a digital transport layer to enhance the value of the existing copper infrastructure, new technologies can and have been developed to enhance the value of SONET. I have written about and think more needs to be done to integrate SONET, Packet, and Multiservice boxes into a single intraoffice switching domain to provide a more scalable and cost effective mix of services.

I took that as the point to this story and yes it is a plug for a paid report but I see nothing wrong with that.

Tony Li 12/5/2012 | 1:27:15 AM
re: Why Sonet Chips Are Sexy If they were the same price, which would you use?

Well, my priorities are: price, simplicity, reliability. Ethernet would get my vote every single time.

particle_man 12/5/2012 | 1:27:15 AM
re: Why Sonet Chips Are Sexy Tony,

I think you may have overlooked something fundemental. Nobody is adopting Ethernet because it is feature-rich, they are doing it because it is cheap. With the new generation of SoC silicon, SONET becomes commoditized.

If they were the same price, which would you use?
Abby 12/5/2012 | 1:27:14 AM
re: Why Sonet Chips Are Sexy >> I have written about and think more needs to be done to integrate SONET, Packet, and Multiservice boxes into a single intraoffice switching domain to provide a more scalable and cost effective mix of services.

Has the internal HR domains (operations) of service providers changed much to accommodate multiservice? To me, this has always been the bottleneck. Does anyone have a good example of where this has happened?
particle_man 12/5/2012 | 1:27:12 AM
re: Why Sonet Chips Are Sexy I used to be involved in Ethernet network management, and given the nature of the protocols, I'd give SONET the nod on reliability. I agree price is the number one factor, once you get everything on a single piece of silicon that becomes a wash - in hardware anyway.

Simplicity cuts both ways I suppose. We keep adding stuff to the ethernet/IP stack to make it behave like TDM and when you do that the resulting complexity is just about the same.

There is also the cost of retooling carrier operations for Ethernet which is non-trivial. This doesn't mean it won't happen, just that there is some capacitance in the cultural change required so it will happen slowly.

I just think there is a lot of life left in SONET/SDH and chip evolution will continue to extend it.
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