May 2001

Changing The Business Of Networking

BY TONY RYBCZYNSKI

This is what optical Ethernet is all about: taking the power of Ethernet and combining it with the power of optical networks, and putting them together to finally eliminate the bottleneck between the LAN and the WAN. In the next three to five years, optical Ethernets will be extensively deployed in and between major metropolitan areas (e.g., the top 50 to 100 cities in North America), through a combination of private and managed service-based options. Outside of these environments, IP VPNs will become the workhorse for remote site, road warrior, telecommuter, and partner communications, replacing classical services over time.

STIRRINGS OF A REVOLUTION
The workhorse in the LAN is Ethernet, which has displaced token ring, FDDI, and ATM in the last few years as the technology of choice in LAN/campus networks. This has happened because it has the right price/performance, is understood by more people, and has evolved to be better through switching, faster through 100/1000 Mbps and soon 10 Gbps, and wider through long reach optical solutions that allow it to span metropolitan areas. The latter capability has allowed enterprises to start to build their own optical Ethernets (though they didn't call them this) to interconnect campus sites through Gbps Ethernet running over dark fiber for distances up to 70 km.

More recently, large enterprises led by financial service providers have built inter-site optical systems based on dense wave division multiplexing (DWDM), leveraging the capability of this technology to carry any optical signal on a wavelength (e.g., 100/1000 Mbps Ethernet, mainframe, and storage networking payloads such as ESCON, FiCon, and Fibre Channel, broadband video, and ATM). For example, one financial institution uses DWDM to interconnect a number of data centers, server farms, trading floors, and a handful of other sites around New York City. The key benefits achieved by this financial institution are bandwidth capacity on demand, flexibility, and agility in serving evolving application needs and ultra-high reliability. So again, while the business case was driven by mainframe and storage networking, the ability to seamlessly extend Ethernet across these sites is a realization of an optical Ethernet.

Service providers have offered metropolitan transparent LAN services for a number of years for 10/100 Mbps Ethernet. These have had limited success for a number of reasons, primary among these being the fact that they were built initially on FDDI and more recently on ATM. Both these technologies did little to eliminate the price/performance bottleneck between LANs and WANs by requiring complex encapsulations of Ethernet onto FDDI and ATM respectably. They have also started to offer managed DWDM-based optical services, in response to enterprises wishing to avoid the complexity of doing it themselves.

A REVOLUTION IN ENTERPRISE NETWORKING
Carriers around the world have deployed literally millions of miles of fiber optic cables, both in metropolitan and wide area networks. Ryan, Hankin, Kent's market data for 1999 states that the combined North American market for DWDM and SONET was $10.7 billion. SONET is a multiplexing standard that allows multiple electrical channels to be multiplexed onto a single fiber and does this in an extremely reliable way.

While DWDM represented 32 percent of the market in 1999 (much of which is used to carry SONET) and is growing at a rate of 84 percent (compared to 49 percent for SONET), the installed base of SONET systems is immense, as a relatively mature technology. In fact, for years many large enterprises have been operating metropolitan SONET rings to connect their major sites for low and high-speed circuit traffic. One big change over the last few years, and a key enabler of optical Ethernets, is the increased focus on optical networking in metropolitan areas. For example, in North America there are over 1.5 million fiber miles deployed. Already, 40-50 percent of business sites in the top tier cities in North America (e.g., New York City, Los Angeles, Chicago, Toronto) are within one mile of a fiber route, and an estimated 10,000 business sites are connected via fiber for broadband (greater than T1) access to Internet, ATM, frame relay, and private line services.

So what's new? Optical Ethernet integrates Ethernet switching into the SONET world, and combines this with Ethernet on DWDM and Ethernet on fiber, to provide a highly scalable, robust protocol independent Layer 2 solution to interconnect enterprise urban sites (in many cases representing 90 percent of employees and 60-80 percent of enterprise sites). Like switched Ethernet in the LAN, optical Ethernet supports dynamic learning, while managing broadcast domains; it's much more than Ethernet over point-to-point fiber. Optical Ethernet is Ethernet end-to-end and is fundamentally based on the economics of Ethernet switching and optics. Optical Ethernets provide the reliability of optical ring systems, through a technology called Resilient Packet Rings. They are highly scalable in multiple dimensions: number of nodes, number of virtual LANs (vLANs), number of customers (for carrier managed services), reach (inter-city), and speed (to 10 Gbps). Optical Ethernets eliminate the bottleneck between the LAN and the WAN for all sizes of corporations and all levels of government.

A WIN-WIN-WIN SOLUTION
Optical Ethernet is a win for networking IT. It eliminates the complexity of mapping and encapsulating LAN connectionless packets onto a myriad of connection-oriented WAN services and technologies. It simplifies the delivery of reliable connectivity on the end-to-end basis, leveraging Layer 1 (optical) and Layer 2 (switched Ethernet) capabilities, and providing speedier recovery from failures than possible at the IP routing level. It simplifies the introduction of QoS capabilities on an end-to-end basis, avoiding the complexity of mapping IP and LAN QoS features onto those of ATM, frame relay, or Internet. This simplification around the well-understood and ubiquitous Ethernet standard alleviates IT staffing and skills retention challenges associated with today's complex networking environments. Optical Ethernet delivers scalable bandwidth, matching the 10/100/1000 Mbps hierarchy in LANs and again simplifying the engineering of today's meshed "spaghetti" nets. Optical Ethernets create the opportunity to make that remote site logically a wiring closet in a central site, this opening the door for reoptimization of routing/router deployment. From a total cost of ownership basis, optical Ethernet will deliver two to four times the bandwidth capacity for 40-60 percent of the cost.

Unlike other networking developments which incrementally enhanced enterprise networking, optical Ethernet is also a significant win for the enterprise as a whole. It is not business as usual. If you think of it as solely a WAN technology, you're missing the point. CXOs today are driving their enterprises to fully leverage e-business technologies and use it to make them more competitive in their space (ERP, SCM, CRM, multi-channel customer care and return on relationship are some of the buzzwords). Whether you're a financial institution, a healthcare institution, an information company, a manufacturer, or government agency, how you extend into e-business is critical. Leveraging people, building a customer-centric culture, rolling out applications, and managing technology all bring huge challenges. Optical Ethernet changes the fundamental assumptions (WAN price/performance and reliability) inherent in how the organization distributes people, applications, and data.

It can enable significantly increased levels of enterprise resource centralization, freeing up remote sites to focus on the business and central resources to focus on strategic application development and deployment. It delivers shorter time-to-market for new applications (by eliminating the networking bottleneck), a key new metric as enterprises shift from transaction-based customer interactions to relationship-based customer collaboration. It delivers business-grade reliability via optics for all users and applications. It also delivers higher productivity for users at non-campus sites, through lower delays via bandwidth and hardware switching. Optical Ethernet also enhances access to business applications by simplifying the underlying networking infrastructure and dramatically decreasing configuration management errors. Finally, it enables the positioning of IT as a true information utility, supporting the needs of business units and application groups (e.g., supply chain management, customer care) managed through end-to-end SLAs.

Finally it's also a win for service providers, who need to profitably meet customer needs. Optical Ethernets have been demonstrated as reducing the costs of networking for service providers by as much as 80 percent. Fundamentally, optical Ethernet allows service providers to offer services that meet the enterprise on its own terms, which is basically Ethernet-based. It can be offered as a carrier managed service, and provides a scalable resilient platform to allow service providers to move up the value chain. This is in response to enterprise needs to outsource a lot of the IT complexity, and thus refocus resources on the real business issues. One key area is centralization and management of gateways to the Internet, including access controls and security. Another is management of routing for a number of business sites on a centralized basis. Personalization of intranet services for employees and partners is another key area. Yet another is the whole area of application hosting and service provisioning (the ASP model) as well as storage management. The low latency, bandwidth, and reliability of optical Ethernets make these practical, eliminating performance bottlenecks so critical to these applications.

THE TOP AND BOTTOM LINE
For CXOs, optical Ethernet can substantially change the total cost of ownership of networks, data distribution, and application processing, open up new opportunities for outsourcing, and free up budget for strategic investments in e-business initiatives such as multichannel customer care and supply chain management. For enterprise networking IT, optical Ethernet can deliver immediate value by significantly increasing the capacity and reliability of the network, while simplifying its operational aspects. For service providers: optical Ethernet is a solution that resonates with enterprise CXOs and positions the service provider for profitably moving up the value chain in response to outsourcing demands of enterprise users.

Accepting the optical Ethernet vision is the first step. Having a total cost of operations perspective of the IT environment provides important business case inputs for ultimately rearchitecting IT around optical Ethernets. Continuing investments in transitioning to IP/Ethernet across the enterprise not only has significant well-documented benefits for the enterprise, but also positions the enterprise to fully leverage optical Ethernets. While pursuing the above, you can start to work with your vendors and service providers to target the first set of sites for optical Ethernet. The benefits of simplification and improved price/performance for these sites is immediate, as you replace complex WAN and MAN connectivity in your routers with high performance optical Ethernet. It's lower cost, trivial to configure, and looks like another link in your campus.

Tony Rybczynski is director of strategic marketing and technologies for Nortel Networks' Enterprise Solutions unit. For more information, visit the company's Web site at www.nortelnetworks.com. E-mail questions or comments to tonyryb@nortelnetworks.com.

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