ECOC 2024 industry reflections - Final Part
In the final part, industry figures share their thoughts after attending the recent 50th-anniversary ECOC show in Frankfurt. Contributions are from Adtran’s Jörg-Peter Elbers, Lightwave Logic’s Michael Lebby, and Heavy Reading’s Sterling Perrin.
ECOC exhibition floor
Jörg-Peter Elbers, senior vice presendent, advanced technology, standards and IPR, Adtran, and a General Chair at this year’s ECOC.
ECOC celebrated its 50th anniversary this year. It was great to see scientists, engineers, and industry leaders from all around the globe at a vibrant gathering in Frankfurt.
ECOC dates to September 1975 when the inaugural event – dubbed the “European Conference on Optical Fiber Technology” – was held in London. In the early days, the focus was on megabit-per-second transmission for telephony applications. Now, we are advancing to petabit-per-second speeds to meet AI and cloud services demands.
This year’s ECOC explored various cutting-edge topics, including 1.6 and 3.2 terabit-per-second (Tb/s) transceivers, multi-band and spatial division multiplexing (SDM) transmission, and innovations in access and home networks. Other discussions centred on the merits of linear drive versus regenerated optics, pluggable modules versus co-packaged engines, and the latest IP-over-DWDM architectures and technologies for the coherent edge.
The 50 years of ECOC symposium celebrated the amazing progress of optical communications in the past and painted a promising picture for the future.
David Payne, one of the luminary speakers, stated that hollow-core fibre would enable a new generation of WDM transmission systems (“amplifier-less”) with simpler terminals and higher fibre capacity. In a post-deadline paper, Linfiber reported a hollow-core fibre deployment with a fibre loss lower than solid-core fibre and progress on manufacturing and deployment issues, critical for mass-market adoption.
In the ECOC plenary session, Arista’s Andy Bechtolsheim discussed the race to build AI clusters for generative AI learning and inference. He emphasized that the next generation of hyperscale AI data centres could contain a million AI nodes requiring more than 3GW of electrical power—comparable to the output of a vast nuclear plant. These data centres present opportunities for millions of cost-efficient, low-power terabit-per-second optical interconnects.
The theme of optics for AI was complemented by exploring AI for optics, with multiple contributions examining how generative AI and agent-based models could streamline network operations. The accuracy, predictability, and the explainability of results remain active research topics.
Another highlight was the optical satellite symposium, which discussed using 100 gigabit-per-second (Gbps) coherent optics for satellite communications. While inter-satellite links in commercial low-earth orbit (LEO) constellations use coherent transceiver technology, the use of optical ground links is still in its infancy. Panelists emphasised the challenges of maintaining cloud-free line-of-sight conditions and compensating for atmospheric turbulence to ensure continuous communication. They agreed that combining adaptive optics with time diversity (e.g., by interleaving) offers the best solution for turbulence mitigation, though it adds latency.
Other discussions covered fibre sensing for infrastructure and environmental monitoring and the commercial potential of quantum technologies, sparking much interest and heated debate in this year‘s Rump Session.
As ECOC 2024 concluded, it was clear that the conference not only celebrated five decades of advancement in optical communications but also set the stage for future innovations and challenges.
Dr. Michael Lebby, CEO, Lightwave Logic
As the Chair of the Market Focus at ECOC’s Industry Exhibit, I can say that this year, we had probably the best sessions in ECOC’s 50-year history. For three days, each seat was taken at the Market Focus, which featured wall-to-wall programming on commercial trends, technologies, and roadmaps in optical communications.
Presentations at the market focus sessions supported the big-show exhibition themes. Many talks focused on modules and subsystems. Lightwave Logic showed polymer silicon slot modulators with reliability data operating at 200Gbps with less than 1V drive, with initial results of polymer-plasmonic modulators operating with open 400Gbps eyes. While 400Gbps lanes are still on the roadmap, there were many discussions on what technologies could reach this level of performance, especially modulators. Polymer-plasmonic-based modulators seem to be the leader, with optical bandwidths exceeding 500GHz.
While incumbent technologies are hard to displace, the emerging area of co-packaged pluggables is gaining interest among suppliers, especially for the terabit-per-second data rates sought. While progress was impressive, the reach of silicon photonics modulators for 200Gbps and beyond was a show floor concern.
NewPhotonics discussed how to double data rates using its integrated optical equaliser, while others, such as Pilot Photonics, conveyed the exciting progress with comb laser arrays. Several speakers discussed the metrics of standards that support the AI/ machine learning trends for data centre operators and how optics can support the drive to higher data rates and lower power consumption.
Areas of power consumption driven in part by digital signal processor (DSP) evolution were discussed. The interesting perspective is that if coherent optics are to be developed to serve the edge of the network, then using electronics to help the optics may not be enough; the optics need to perform better so that the electronics can be scaled down to reduce power consumption. It is a trade-off at the heart of many approaches to bring coherent optics to compete with direct-detect solutions for pluggable transceivers.
The indication is that direct detection in data centre optics is not waning as quickly as the community once thought and looks to be a mainstay for pluggable transceiver solutions from 800Gbps, 1.6Tbps, 3.2Tbps, and even 6.4Tbps.
A fireside chat explored the opportunities for copper at super short interconnects where the direct-attach copper (DAC) cables dominate. This 1m to 3m range has been evolving to active electrical copper (AEC) interconnects using smart electronics in recent years. Those of us who are solidly in the optics camp, while acknowledging that copper has owned this segment forever, are still hoping that platforms such as silicon photonics could sneak in and take share in the next five years. However, displacing an incumbent technology such as copper will not be easy, especially when metrics such as economies of scale, cost, and reliability come into play.
Several talks looked at next-generation implementations, such as quantum-dot lasers and photonic wire bonding, and driving VCSELs to ever-increasing speeds. Discussions took place that wondered if VCSELs have reached their limit in bandwidth and speed and if electronics could help them push performance further. A common theme evident was the innovative ideas and concepts to address 224Gbps per lane with optical technologies. While it has been generally accepted that this metric is emerging, several companies are still deciding how to address this speed and 400Gbps per lane.
One big takeaway is that if you have a new and innovative platform to enable things like 3.2Tbps transceivers that is disruptive, think very carefully about whether that disruptive technology needs the infrastructure to be disruptive, too.
Sterling Perrin, Senior Principal Analyst, Heavy Reading
Although I’ve attended nearly every OFC show over the past 25 years, this was my first ECOC. Most of my meetings were centred around an IP-over-DWDM project I’ve worked on for several months, including video interviews conducted at the show with the partnering companies: the OIF, Ciena, Juniper, and Infinera. These are all posted on Light Reading.
Building on its work at OFC 2024, the OIF’s pluggables demo at ECOC spotlighted four applications:
- 400ZR and 800ZR,
- Open ZR+ at 400GbE,
- OpenROADM at 400GbE, and
- 100ZR
The expanding scope of coherent pluggable is impressive, and the interop work includes optics that the OIF is not directly defining—such as Open ZR+, OpenROADM, and 100ZR. ECOC 2024 marked OIF’s first interoperability demonstration of 100ZR modules, an application driven by telecom operators as opposed to hyperscalers.
Another key aspect of the OIF’s IP-over-DWDM work demonstrated at ECOC is the common management interface specification (CMIS) for plug-to-host interoperability between routers and pluggable optics. Plug-to-host interop is essential for wider IP-over-DWDM adoption among telecom operators, so the work is timely.
Related to pluggables management in IP-over-DWDM networks, I attended the Open XR Forum’s symposium on the show floor. The organisation is promoting a dual management approach to pluggables that includes host independent management to support pluggables features that aren’t yet supported in the routers or in CMIS.
During a Q&A, Telefonica’s Oscar Gonzales de Dios acknowledged that host-independent management is controversial (including within Telefonica) but said it is the only way to add point-to-multipoint functions on pluggables for now.
Quantum-safe encryption is another area of research interest, particularly quantum key distribution (QKD), and ECOC 2024 was a great place to get up to date. I attended the rump session debate on quantum technologies, expertly hosted by Peter Winzer (Nubis), Rupert Ursin (QTlabs), and David Neilson (Nokia Bell Labs). It was standing-room-only, and I anticipated strong pro-QKD sentiment. I was wrong! The dominant view was that QKD is impractical, technically limited, too expensive, and needs more real customer demand. Several people argued that post quantum cryptography (PQC) algorithms are sufficient to meet the market needs, without the complexity and costs that QKD brings.
For analysts, conferences like ECOC are the most efficient means of quickly learning what’s hot in the industry. Conferences are equally great places to know what is not hot. I didn’t hear the words “5G,” “xHaul,” “fronthaul,” “6G,” or even “mobility” uttered once during the four days I was in Frankfurt.
Will AI spur revenue growth for the telcos?
- A global AI survey sponsored by Ciena highlights industry optimism
- The telcos have unique networking assets that can serve users of AI.
- Much is still to play out and telcos have a history of missed opportunities.
The leading communications service providers have been on a decade-long journey to transform their networks and grow their revenues.
To the list of technologies the operators have been embracing can now be added artificial intelligence (AI).
AI is a powerful tool for improving their business efficiency. The technology is also a revenue opportunity and service providers are studying how AI traffic will impact their networks.
“This is the single biggest question that everyone in this industry is struggling with,” says Jürgen Hatheier. “How can the service providers exploit the technology to grow revenues?”
However, some question whether AI will be an telecom opportunity.
“The current hype around AI has very little to do with telcos and is focused on hyperscalers and specifically the intra-data centre traffic driven by AI model training,” says Sterling Perrin, senior principal analyst at HeavyReading. “There is a lot of speculation that, ultimately, this traffic will spread beyond the data centre to data centre interconnect (DCI) applications. But there are too many unknowns right now.”
AI survey
Hatheier is chief technology officer, international at Ciena. He oversees 30 staff, spanning Dublin to New Zealand, that work with the operators to understand their mid- to long-term goals.
Ciena recently undertook a global survey (see note 1, bottom) about AI, similar to one it conducted two years ago that looked at the Metaverse.
Conducting such surveys complements Ciena’s direct research with the service providers. However, there is only so much time a telco’s chief strategy officer (CSO) or chief technology officer (CTO) can spend with a vendor discussing strategy, vision, and industry trends.
“The survey helps confirm what we are hearing from a smaller set,” says Hatheier.
Surveys also uncover industry and regional nuances. Hatheier cites how sometimes it is the tier-two communications service providers are the trailblazers.
Lastly, telcos have their own pace. “It takes time to implement new services and change the underlying network architecture,” says Hatheier. “So it is good to plan.”
Findings
The sectors expected to generate the most AI traffic are financial services (46 per cent of those surveyed), media and entertainment (43 per cent), and manufacturing (38 per cent). Hatheier says these industries have already been using the technology for a while, so AI is not new to them.
Sterling Perrin
For financial services, an everyday use of AI is for security, detecting fraudulent transactions and monitoring video streams to detect anomalous behavior at a site. The amount of traffic AI applications generate can vary greatly. This is common, says Hatheier; it is the use that matters here, not the industry.
“I would not break it down by the industries to say, okay, this industry is going to create more traffic than another,” says Hatheier. “For financial services, if it is transaction data, it’s a few lines of text, but if it is video for branch security, the data volumes are far more significant.”
AI is also set to change the media and entertainment sector, challenging the way content is consumed. Video streaming uses content delivery networks (CDNs) to store the most popular video content close to users. But AI promises to enable more personalised video, tailored for the end-user. Such content will make the traffic more dynamic.
Another example of personalised content is for marketing and advertising. Such personalisation tends to achieve better results, says Hatheier.
AI is also being applied in the manufacturing sector. Examples include automating supply-chain operations, predictive maintenance, and quality assurance.
Car manufacturers check a vehicle for any blemishes at the end of a production line. This usually takes several staff and lasts 10-15 minutes. Now with AI, the inspection can be completed as the cars passes by. “This is a potent application that could run on infrastructure within the manufacturing site but use a service provider’s compute assets and connectivity,” says Hatheier.
The example shows how AI produces productivity gains. However, AI also promises unique abilities that staff cannot match.
Traffic trends
If the history of telecoms is anything to go by, applications that drove traffic in the network rarely lead to revenue growth for the service providers. Hatheier cites streaming video, gaming, and augmented reality as examples.
However, the operators have assets at network edge and the metro that can benefit AI usage. They also have central offices that can act is distributed data centres for the metro and network edge.
Hatheier says users have an advantage if they consume AI applications across a fibre-based broadband network. But certain countries, such as Saudi Arabia and India, mainly use wireless for connectivity.
“AI applications will need to adapt to what is available, and if people want to consume low-latency applications, there is 5G slicing,” says Hatheier. “At the end of the day, there is no way around fibre.”
Optical networking
Government policy regarding AI and regulations to ensure data does not cross borders also play a part.
“It’s an important decision criterion, as we saw in the survey response,” says Hatheier. “So private AI and local computing will be an important decision factor.”
Another critical decision influencing where data centres are built is power. “We see all the gold rush in the Nordics right now with their renewable power and cool climates,” says Hatheier. “You don’t need to cool your servers as much, and it requires a lot of connectivity.”
However, as well as these region-specific data centre builds, there will also be builds in metropolitan areas using smaller distributed data centres.
“Let’s say there are 20 sizable edge or metro compute centres for AI, and you would need three or four to run a big training job,” says Hatheier. “You will not create a permanent end-to-end connection between them because sometimes there will not be four that need to work together, but five, seven, and 11.”
Such a metro network would require reconfigurable optical add-drop multiplexer (ROADM) technology to connect wavelengths between those clusters based on demand to keep sites busy, to avoid expensive AI clusters being idle.
These are opportunities for the CSPs. And while much is still to happen, such discussions are taking place between systems vendors and the telcos.
For Heavy Reading’s Perrin, the more telling opportunity is the telcos’ own use of AI rather than the networking opportunity.
“As a vertical industry, telecom is not typically a leading-edge adopter of any new technology due to many factors, including culture, size, legacy infrastructure and processes, and government regulations,” he says. “I don’t believe AI will be any different.”
Hatheier points to the survey’s finding of general optimism that sees AI as an opportunity rather than a challenge or business risk.
“We have seen very little differences between countries,” says Hatheier. “That may have to do with the fact that emerging countries get as much attention of data centre investment than more developed ones.”
OFC 2024 industry reflections: Part 2
Gazettabyte is asking industry figures for their thoughts after attending the recent OFC show in San Diego. Here are the thoughts from Ciena, Celestial AI and Heavy Reading.
Dino DiPerna, Senior Vice President, Global Research and Development at Ciena.
Power efficiency was a key theme at OFC this year. Although it has been a prevalent topic for some time, it stood out more than usual at OFC 2024 as the industry strives to make further improvements.
There was a vast array of presentations focused on power efficiency gains and technological advancements, with sessions highlighting picojoule-per-bit (pJ/b) requirements, high-speed interconnect evolution including co-packaged optics (CPO), linear pluggable optics (LPO), and linear retimer optics (LRO), as well as new materials like thin-film lithium niobate, coherent transceiver evolution, and liquid cooling.
And the list of technologies goes on. The industry is innovating across multiple fronts to support data centre architecture requirements and carbon footprint reduction goals as energy efficiency tops the list of network provider needs.
Another hot topic at OFC was overcoming network scale challenges with various explorations in new frequency bands or fibre types.
One surprise from the show was learning of the achievement of less than 0.11dB/km loss for hollow-core optical fibre, which was presented in the post-deadline session. This achievement offers a new avenue to address the challenge of delivering the higher capacities required in future networks. So, it is one to keep an eye on for sure.
Preet Virk, Co-founder and Chief Operating Officer at Celestial AI.
This year’s OFC was all about AI infrastructure. Since it is an optical conference, the focus is on optical connectivity. A common theme was how interconnect bandwidth is the oxygen for AI infrastructure. Celestial AI agrees fully with this and adds the memory capacity issue to deal with the Memory Wall problem.
Traditionally, OFC has focused on inter- and intra-data centre connectivity. This year’s OFC clarified that chip-to-chip connectivity is also a critical bottleneck. We discussed our high-bandwidth, low-latency, and low-power photonic fabric solutions for compute-to-memory and compute-to-compute connectivity, which were well received at the show.
It seemed that we were the only company with optical connectivity that satisfies bandwidths for high-bandwidth memory—HBM3 and the coming HBM4—with our optical chiplet.
Sterling Perrin, Senior Principal Analyst, Heavy Reading.
OFC is the premier global event for the optics industry and the place to go to get up to speed quickly on trends that will drive the optics industry through the year and beyond. There’s always a theme that ties optics into the overall communications industry zeitgeist. This year’s theme, of course, is AI. OFC themes are sometimes a stretch – think connected cars – but this is not the case for the role of optics in AI where the need is immediate. And the role is clear: higher capacities and lower power consumption.
The fact that OFC took place one week after Nvidia’s GTC event during which President and CEO Jensen Huang unveiled the Grace-Blackwell Superchip was a perfect catalyst for discussions about the urgency for 800 gigabit and 1.6 terabit connectivity within the data centre.
At a Sunday workshop on linear pluggable optics (LPO), Alibaba’s Chongjin Xie presented a slide comparing LPO and 400 gigabit DR4 that showed 50 per cent reduction in power consumption, a 100 per cent reduction in latency, and a 30 per cent reduction in production cost. But, as Xie and many others noted throughout the conference, LPO feasibility at 200 gigabit per lane remains a major industry challenge that has yet to be solved.
Another topic of intense debate within the data centre is Infiniband versus Ethernet. Infiniband delivers high capacity and extremely low latency required for AI training, but it’s expensive, highly complex, and closed. The Ultra Ethernet Consortium aims to build an open, Ethernet-based alternative for AI and high-performance computing. But Nvidia product architect, Ashkan Seyedi, was skeptical about the need for high-performance Ethernet. During a media luncheon, he noted that InfiniBand was developed as a high-performance, low-latency alternative to Ethernet for high-performance computing. Current Ethernet efforts, therefore, are largely trying to re-create InfiniBand, in his view.
The comments above are all about connectivity within the data centre. Outside the data centre, OFC buzz was harder to find. What about AI and data centre interconnect? It’s not here yet. Connectivity between racks and AI clusters is measured in meters for many reasons. There was much talk about building distributed data centres in the future as a means of reducing the demands on individual power grids, but it’s preliminary at this point.
While data centres strive toward 1.6 terabit, 400 gigabit seems to be the data rate of highest interest for most telecom operators (i.e., non-hyperscalers), with pluggable optics as the preferred form factor. I interviewed the OIF’s inimitable Karl Gass, who was dressed in a shiny golden suit, about their impressive coherent demo that included 23 suppliers and demonstrated 400ZR, 400G ZR+, 800ZR, and OpenROADM.
Lastly, quantum safe networking popped up several times at Mobile World Congress this year and the theme continued at OFC. The topic looks poised to move out of academia and into networks, and optical networking has a central role to play. I learned two things.
First, “Q-Day”, when quantum computers can break public encryption keys, may be many years away, but certain entities such as governments and financial institutions want their traffic to be quantum safe well in advance of the elusive Q-Day.
Second, “quantum safe” may not require quantum technology though, like most new areas, there is debate here. In the fighting-quantum-without-quantum camp, Israel-based start-up CyberRidge has developed an approach to transmitting keys and data, safe from quantum computers, that it calls photonic level security.
Infinera buying Coriant will bring welcome consolidation
Infinera is to purchase privately-held Coriant for $430 million. The deal will effectively double Infinera’s revenues, add 100 new customers and expand the systems vendor’s product portfolio.
Infinera's CEO, Tom FallonBut industry analysts, while welcoming the consolidation among optical systems suppliers, highlight the challenges Infinera faces making the Coriant acquisition a success.
“The low price reflects that this isn't the best asset on the market,” says Sterling Perrin, principal analyst, optical networking and transport at Heavy Reading. “They are buying $1 of revenue for 50 cents; the price reflects the challenges.”
Benefits
According to Perrin, there are still too many vendors facing "brutal price pressures" despite the optical industry being mature. Removing one vendor that has been cutting prices to win business is good news for the rest.
For Infinera, the acquisition of Coriant promises three main benefits, as outlined by its CEO, Tom Fallon, during a briefing addressing the acquisition.
The first is expanding its vertically-integrated business model across a wider portfolio of products. Infinera develops its own optical technology: its indium-phosphide photonic integrated circuits (PICs) and accompanying coherent DSPs that power its platforms. Having its own technology differentiates the optical performance of its platforms and helps it achieve leading gross margins of over 40 percent, said Fallon.
Exploiting the vertical integration model will be a central part of the Coriant acquisition. Indeed, the company mentioned vertical integration 21 times in as many minutes during its briefing outlining the deal. Infinera expects to deliver industry-leading growth and operating margins once it exploits the benefits of vertical integration across an expanded portfolio of platforms, said Fallon.
Having a seat at the table with the largest global service providers to strategise about where their business is going will be invaluable
Buying Coriant also gives Infinera much-needed scale. Not only will Infinera double its revenues - Coriant’s revenues were about $750 million in 2017 while Infinera’s were $741 million for the same period - but it will expand its customer base including key tier-one service providers and webscale players. According to Fallon, the newly combined company will include nine of the top 10 global tier-one service providers and the six leading global internet content providers.
Infinera admits it has struggled to break into the tier-one operators and points out that trying to enter is an expensive and time-consuming process, estimated at between $10 million to $20 million each time. “[Now, with Coriant,] having a seat at the table with the largest global service providers to strategise about where their business is going will be invaluable,” said Fallon.
Sterling Perrin of Heavy Reading The third benefit Infinera gains is an expanded product portfolio. Coriant has expertise in layer 3 networking, in the metro core with its mTera universal transport platform as well as SDN orchestration and white box technologies. Heavy Reading’s Perrin says Coriant has started development of a layer-3 router white box for edge applications.
Combining the two companies also results in a leading player in data centre interconnect.
“Coriant expands our portfolio, particularly in packet and automation where significant network investment is expected over the next decade,” said Fallon. The deal is happening at the right time, he said, as operators ramp spending as they undertake network transformation.
Infinera will pay $230 million in cash - $150 million up front and the rest in increments - and a further $200 million in shares for Coriant. The company expects to achieve cost savings of $250 million between 2019 and 2021 by combining the two firms, $100 million in 2019 alone. The deal is expected to close in the third quarter of 2018.
If a company is going to put that integrated product into their network, it’s a full-blown RFP process which Infinera may or may not win
Challenges
Industry analysts, while seeing positives for Infinera, have concerns regarding the deal.
A much-needed consolidation of weaker vendors is how George Notter, an analyst at the investment bank, Jefferies, describes the deal. For Infinera, however, continuing as before was not an option. Heavy Reading’s Perrin agrees: ”Infinera has been under a lot of pressure; their core business of long-haul has slowed.”
The deal brings benefits to Infinera: scale, complementary product sets, and the promise of being able to invest more in R&D to benefit its PIC technology, says Notter in a research note.
Gaining customers is also a key positive. “Infinera is really excited about getting the new set of customers and that is what they are paying for,” says Vladimir Kozlov, CEO of LightCounting Market Research. “However, these customers were gained by pricing products at steep discounts.”
What is vital for Infinera is that it delivers its upcoming 2.4-terabit Infinite Capacity Engine 5 (ICE5) optical engine on time. The ICE5 is expected to ship in early 2019. In parallel, Infinera is developing its ICE6 due two years later. Infinera is developing two generations of ICE designs in parallel after being late to market with its current 1.2-terabit optical engine.
Infinera is really excited about getting the new set of customers and that is what they are paying for
But even if the ICE5 is delivered on time, upgrading Coriant's platforms will be a major undertaking. “It sounds like they are going to fit their optical engines in all of Coriant’s gear; I don’t see how that is going to happen anytime quickly,” says Perrin.
Customers bought Coriant's equipment for a reason. Once upgraded with Infinera’s PICs, these will be new products that have to undergo extensive lab testing and full evaluations.
Perrin questions how moving customers off legacy platforms to the new will not result in the service providers triggering a new request-for-proposal (RFP). “If a company is going to put that integrated product into their network, it’s a full-blown RFP process which Infinera may or may not win,” says Perrin. “Infinera talked a lot about the benefits of vertical integration but they didn’t really address the challenges and the specific steps they would take to make that work.”
LightCounting's Vladimir KozlovLightCounting’s Kozlov also questions how this will work.
“The story about vertical integration and scaling up PIC production is compelling, but how will they support Coriant products with the PIC?” he says. “Will they start making pluggable modules internally? Will Coriant’s customers be willing to move away from the pluggables and get locked into Infinera’s PICs? Do they know something that we don’t?”
While Infinera is a top five optical platform supplier globally it hasn’t dominated the market with its PIC technologies, says Perrin. “Even if they technically pull off the vertical integration with the Coriant products, how much is that going to win business for them?” he says. “It is one architecture in a mix that has largely gone to pluggables.”
Transmode
Infinera already has experience acquiring a systems vendor when it bought in 2015 metro-access player, Transmode. Strategically, this was a very solid acquisition, says Perrin, but the jury is still out as to its success.
“The integration, making it work, how Transmode has performed within Infinera hasn’t gone as well as they wanted,” says Perrin. “That said, there are some good opportunities going forward for the Transmode group.”
Infinera also had planned to integrate its PIC technology within Transmode’s products but it didn't make economic sense for the metro market. There may also have been pushback from customers that liked the Transmode products, says Perrin: “With Coriant it looks like they really are going to force the vertical integration.”
Infinera acknowledges the challenges ahead and the importance of overcoming them if it is to secure its future.
“Given the comparable sizes of each company’s revenues and workforce, we recognise that integration will be challenging and is vital for our ultimate success,” said Fallon.
Ciena shops for photonic technology for line-side edge
Part 3: Acquisitions and silicon photonics
Ciena is to acquire the high-speed photonics components division of Teraxion for $32 million. The deal includes 35 employees and Teraxion’s indium phosphide and silicon photonics technologies. The systems vendor is making the acquisition to benefit its coherent-based packet-optical transmission systems in metro and long-haul networks.
Sterling Perrin
“Historically Ciena has been a step ahead of others in introducing new coherent capabilities to the market,” says Ron Kline, principal analyst, intelligent networks at market research company, Ovum. “The technology is critical to own if they want to maintain their edge.”
“Bringing in-house not everything, just piece parts, are becoming differentiators,” says Sterling Perrin, senior analyst at Heavy Reading.
Ciena designs its own WaveLogic coherent DSP-ASICs but buys its optical components. Having its own photonics design team with expertise in indium-phosphide and silicon photonics will allow Ciena to develop complete line-side systems, optimising the photonics and electronics to benefit system performance.
Owning both the photonics and optics also promises to reduce power consumption and improve line-side port density.
“These assets will give us greater control of a critical roadmap component for the advancement of those coherent solutions,” a Ciena spokesperson told Gazettabyte. “These assets will give us greater control of a critical enabling technology to accelerate the pace of our innovation and speed our time-to-market for key packet-optical solutions.”
Ciena have always been do-it-yourself when it comes to optics, and it is an area where they has a huge heritage. So it is an interesting admission that they need somebody else to help them.
The OME 6500 packet optical platform remains a critical system for Ciena in terms of revenues, according to a recent report from the financial analyst firm, Jefferies.
Ciena have always been do-it-yourself when it comes to optics, and it is an area where they have a huge heritage, says Perrin: “So it is an interesting admission that they need somebody else to help them.” It is the silicon photonics technology not just photonic integration that is of importance to Ciena, he says.
Coherent competition
Infinera, which designs its own photonic integrated circuits (PICs) and coherent DSP-ASIC, recently detailed its next-generation coherent toolkit prior to the launch of its terabit PIC and coherent DSP-ASIC. The toolkit uses sub-carriers, parallel processing soft-decision forward-error correction (SD-FEC) and enhanced modulation techniques. These improvements reflect the tighter integration between photonics and electronics for optical transport.
Cisco Systems is another system vendor that develops its own coherent ASICs and has silicon photonics expertise with its Lightwire acquisition in 2012, as does Coriant which works with strategic partners while using merchant coherent processors. Huawei has photonic integration expertise with its acquisitions of indium phosphide UK specialist CIP Technologies in 2012 and Belgian silicon photonics start-up Caliopa in 2013.
Cisco may have started the ball rolling when they acquired silicon photonics start-up Lightwire, and at the time they were criticised for doing so, says Perrin: “This [Ciena move] seems to be partially a response, at least a validation, to what Cisco did, bringing that in-house.”
Optical module maker Acacia also has silicon photonics and DSP-ASIC expertise. Acacia has launched 100 gigabit and 200-400 gigabit CFP optical modules that use silicon photonics.
Companies like Coriant and lots of mid-tier players can use Acacia and rely on the expertise the start-up is driving in photonic integration on the line side, says Perrin. ”Now Ciena wants to own the whole thing which, to me, means they need to move more rapidly, probably driven by the Acacia development.”
Teraxion
Ciena has been working with Canadian firm Teraxion for a long time and the two have a co-development agreement, says Perrin.
Teraxion was founded in 2000 during the optical boom, specialising in dispersion compensation modules and fibre Bragg gratings. In recent years, it has added indium-phosphide and silicon photonics expertise and in 2013 acquired Cogo Optronics, adding indium-phosphide modulator technology.
Teraxion detailed an indium phosphide modulator suited to 400 gigabit at ECOC 2015. Teraxion said at the time that it had demonstrated a 400-gigabit single-wavelength transmission over 500km using polarisation-multiplexed, 16-QAM (PM-16QAM), operating at a symbol rate of 56 gigabaud.
It also has a coherent receiver technology implemented using silicon photonics.
The remaining business of Teraxion covers fibre-optic communication, fibre lasers and optical-sensing applications which employs 120 staff will continue in Québec City.
Books in 2015 - Final Part
Sterling Perring, senior analyst, Heavy Reading
My ambitions to read far exceed my actual reading output, and because I have such a backlog of books on my reading list, I generally don’t read the latest.
Source: The Age of Spiritual Machines
I have long been fascinated by a graphic from futurist Ray Kurweil which depicts the exponential growth of computing and plots it against living intelligence. The graphic is from Kurzweil’s 1999 book on artificial intelligence The Age of Spiritual Machines: When Computers Exceed Human Intelligence, which I read in 2015.
The book contains several predictions, but this one about computer intelligence vastly exceeding collective human intelligence in our own lifetimes interested me most. Kurzweil translates the brain power of living things into computational speeds and storage capacity and plots them against exponentially growing computing power, based on Moore’s law and its expected successors.
He writes that by 2020, a $1,000 personal computer will have enough speed and memory to match the human brain. But science fiction (and beyond) becomes reality quickly because computational power continues to grow exponentially while collective human intelligence continues on its plodding linear progression. The inevitable future, in Kurzweil’s scenario, blends human intelligence and AI to the point where by the end of this century, it’s no longer possible or relevant to distinguish between the two.
There have been many criticisms of Kurzweil’s theory and methodologies on AI evolution, but reading a futures book 15 years after publication gives you the ability to validate its predictions. On this, Kurzweil has been quite amazing, including self-driving cars, headset-based virtual reality gaming (which I experienced this year at the mall), tablet computing coming of age in 2009, and the coming end of Moore’s law, to name a few in this book that struck me as astoundingly accurate.
Of newer books, I read Yuval Noah Harari’s Sapiens: A Brief History of Humankind (originally published in Hebrew in 2011 but first published in English in 2014). I was attracted to this book because it provides a succinct summary of millions of years of human history and, from its high level vantage point, is able to draw fascinating conclusions about why our human species of sapiens has been so successful.
Harari’s thesis is that it’s not our thumbs, or the invention of fire, or even our languages that led to our dominance over all animals and other humans but rather the creation of fictional constructs – enabled by our languages – that unified sapiens in collective groups vastly larger than otherwise achievable.
Here, the book can strike some nerves because all religions qualify as fictional constructs, but he’s really talking about all intangible constructs under which humans can massively align themselves, including nations, empires, corporations, money and even capitalism. Without fictional constructs, he writes, it’s hard for humans to form meaningful social organizations beyond 150 people – a number also famously cited by Malcolm Gladwell in The Tipping Point.
In fiction, I completed the fifth and final published installment of George RR Martin’s Song of Ice and Fire Series, A Dance with Dragons. I’ve been drawn to this series in large part, I think, because the simpler medieval setting is such a stark contrast to the ultra-high-tech world in which we live and work.
I thought I had timed the reading to coincide with the release of the 6th book, The Winds of Winter, but I’ve heard that the book is delayed again. Fortunately, I’m still two seasons behind on the HBO series.
Aaron Zilkie, vice president of engineering at Rockley Photonics
I recommend the risk assessment principles in the book, Projects at Warp - Speed with QRPD: The Definitive Guidebook to Quality Rapid Product Development by Adam Josephs, Cinda Voegtli, and Orion Moshe Kopelman.
These principles provide valuable one-stop teaching of fundamental principles for the often under-utilised and taken-for-granted engineering practice of technology risk management and prioritisation. This is an important subject for technology and R&D managers in small-to-medium size technology companies to include in their thinking as they perform the challenging task of selecting new technologies to make next-generation products and product improvements.
The book Who: The A Method for Hiring by Geoff Smart and Randy Street teaches good practices for focused hiring, to build A-teams in technology companies, a topic of critical importance for the rapid success of start-up companies that is not taught in schools.
Tom Foremski, SiliconValleyWatcher
Return of a King: The Battle for Afghanistan, 1839-42 by William Dalrymple. This is one of the best reads, an amazing story! Only one survivor on an old donkey.
P-OTS 2.0: 60s interview with Heavy Reading's Sterling Perrin
Q: Heavy Reading claims the metro packet optical transport system (P-OTS) market is entering a new phase. What are the characteristics of P-OTS 2.0 and what first-generation platform shortcomings does it address?
A: I would say four things characterise P-OTS 2.0 and separate 2.0 from the 1.0 implementations:
- The focus of packet-optical shifts from time-division multiplexing (TDM) functions to packet functions.
- Pure-packet implementations of P-OTS begin to ramp and, ultimately, dominate.
- Switched OTN (Optical Transport Network) enters the metro, removing the need for SONET/SDH fabrics in new elements.
- 100 Gigabit takes hold in the metro.
The last two points are new functions while the first two address shortcomings of the previous generation. P-OTS 1.0 suffered because its packet side was seen as sub-par relative to Ethernet "pure plays" and also because packet technology in general still had to mature and develop - such as standardising MPLS-TP (Multiprotocol Label Switching - Transport Profile).
Your survey's key findings: What struck Heavy Reading as noteworthy?
The biggest technology surprise was the tremendous interest in adding IP/MPLS functions to transport. There was a lot of debate about this 10 years ago. Then the industry settled on a de facto standard that transport includes layers 0-2 but no higher. Now, it appears that the transport definition must broaden to include up to layer 3.
A second key finding is how quickly SONET/SDH has gone out of favour. Going forward, it is all about packet innovation. We saw this shift in equipment revenues in 2012 as SONET/SDH spend globally dropped more than 20 percent. That is not a one-time hit - it's the new trend for SONET/SDH.
Heavy Reading argues that transport has broadened in terms of the networking embraced - from layers 0 (WDM) and 1 (SONET/SDH and OTN) to now include IP/MPLS. Is the industry converging on one approach for multi-layer transport optimisation? For example, IP over dense WDM? Or OTN, Carrier Ethernet 2.0 and MPLS-TP? Or something else?
We did not uncover a single winning architecture and it's most likely that operators will do different things. Some operators will like OTN and put it everywhere. Others will have nothing to do with OTN. Some will integrate optics on routers to save transponder capital expenditure, but others will keep hardware separate but tightly link IP and optical layers via the control plane. I think it will be very mixed.
You talk about a spike in 100 Gigabit metro starting in 2014. What is the cause? And is it all coherent or is a healthy share going to 100 Gigabit direct detection?
Interest in 100 Gigabit in the metro exceeds interest in OTN in the metro - which is different from the core, where those two technologies are more tightly linked.
Cloud and data centre interconnect are the biggest drivers for interest in metro 100 Gig but there are other uses as well. We did not ask about coherent versus direct in this survey, but based on general industry discussions, I'd say the momentum is clearly around coherent at this stage - even in the metro. It does not seem that direct detect 100 Gig has a strong enough cost proposition to justify a world with two very different flavours of 100 Gig.
What surprised you from the survey's findings?
It was really the interest-level in IP functionality on transport systems that was the most surprising find.
It opens up the packet-optical transport market to new players that are strongest on IP and also poses a threat to suppliers that were good at lower layers but have no IP expertise - they'll have to do something about that.
Heavy Reading surveyed 114 operators globally. All those surveyed were operators; no system vendors were included. The regional split was North America - 22 percent, Europe - 33 percent, Asia Pacific - 25 percent, and the rest of the world - Latin America mainly - 20 percent.
Optical industry restructuring: The analysts' view
The view that the optical industry is due a shake-up has been aired periodically over the last decade. Yet the industry's structure has remained intact. Now, with the depressed state of the telecom industry, the spectre of impending restructuring is again being raised.
In Part 2, Gazettabyte asked several market research analysts - Heavy Reading's Sterling Perrin, Ovum's Daryl Inniss and Dell'Oro's Jimmy Yu - for their views.
Part II: The analysts' view
"It is just a very slow, grinding process of adjustment; I am not sure that the next five years will be any different to what we've seen"
Sterling Perrin, Heavy Reading
Larry Schwerin, CEO of ROADM subsystem player Capella Intelligent Subsystems, believes optical industry restructuring is inevitable. Optical networking analysts largely agree with Schwerin's analysis. Where they differ is that the analysts say change is already evident and that restructuring will be gradual.
"The industry has not been in good shape for many years," says Sterling Perrin, senior analyst at Heavy Reading. "The operators are the ones with the power [in the supply chain] and they seem to be doing decently but it is not a good situation for the systems players and especially for the component vendors."
Daryl Inniss, practice leader for components at Ovum, highlights the changes taking place at the optical component layer. "There is no one dominate [optical component] supplier driving the industry that you would say: This is undeniably the industry leader," says Inniss.
A typical rule of thumb for an industry in that you need the top three [firms] to own between two thirds and 80 percent of the market, says Inniss: "These are real market leaders that drive the industry; everyone else is a specialist with a niche focus."
But the absence of such dominant players should not be equated with a lack of change or that component companies don't recognise the need to adapt.
"Finisar looks more like an industry leader than we have had before, and its behaviour is that of market leader," says Inniss. Finisar is building an integrated company to become a one-stop-shop supplier, he says, as is the newly merged Oclaro-Opnext which is taking similar steps to be a vertically integrated company. Finisar acquired Israeli optical amplifier specialist RED-C Optical Networks in July 2012.
Capella's Schwerin also wonders about the long term prospects of some of the smaller system vendors. Chinese vendors Huawei and ZTE now account for 30 percent of the market, while Alcatel-Lucent is the only other major vendor with double-digit share.
The rest of the market is split among numerous optical vendors. "If you think about that, if you have 5 percent or less [optical networking] market share, that really is not a sustainable business given the [companies'] overhead expenses," says Schwerin.
However Jimmy Yu, vice president of optical transport research at Dell’Oro Group, believes there is a role for generalist and specialist systems suppliers, and that market share is not the only indicator of a company's economic health. “You have a few vendors that are healthy and have a good share of the market,” he says. “That said, when I look at some of these [smaller] vendors, I say they are better off.”
Yu cites the likes of ADVA Optical Networking and Transmode, both small players with less than 3 percent market share but they are some of the most profitable system companies with gross margins typically above 40 percent. “Do I think they are going to be around? Yes. They are both healthy and investing as needed.”
Innovation
Equipment makers are also acquiring specialist component players. Cisco Systems acquired coherent receiver specialist CoreOptics in 2010 and more recently silicon photonics player, Lightwire. Meanwhile Huawei acquired photonic integration specialist, CIP Technologies in January 2012. "This is to acquire strategic technologies, not for revenues but to differentiate and reduce the cost of their products," says Perrin.
"There is a problem with the rate of innovation coming from the component vendors," adds Inniss. This is not a failing of the component vendors as innovation has to come from the system vendors: a device will only be embraced by equipment vendors if it is needed and available in time.
Inniss also highlights the changing nature of the market where optical networking and the carriers are just one part. This includes enterprises, cloud computing and the growing importance of content service providers such as Google, Facebook and Amazon who buy components and gear. "It is a much bigger picture than just looking at optical networking," says Inniss.
"There is no one dominate [optical component] supplier driving the industry that you would say: This is undeniably the industry leader"
Daryl Inniss, Ovum
Huawei is one system vendor targeting these broader markets, from components to switches, from consumer to the data centre core. Huawei has transformed itself from a follower to a leader in certain areas, while fellow Chinese vendor ZTE is also getting stronger and gaining market share.
Moreover, a consequence of these leading system vendors is that it will fuel the emergence of Chinese optical component players. At present the Chinese optical component players are followers but Inniss expects this to change over the next 3-5 years, as it has at the system level.
Perrin also notes Huawei's huge emphasis on the enterprise and IT markets but highlights several challenges.
The content service providers may be a market but it is not as big an opportunity as traditional telecom. "It is also tricky for the systems providers to navigate as you really can't build all your product line to fit Google's specs and still expect to sell to a BT or an AT&T," says Perrin. That said, systems companies have to go after every opportunity they can because telecom has slowed globally so significantly, he says.
Inniss expects the big optical component players to start to distance themselves, although this does not mean their figures will improve significantly.
"This market is what it is - they [component players] will continue to have 35 percent gross margins and that is the ceiling," says Inniss. But if players want to improve their margins, they will have to invest and grow their presence in markets outside of telecom.
"I like the idea of a Cisco or a Huawei acquiring technology to use internally as a way to differentiate and innovate, and we are going to see more of that," says Perrin.
Thus the supply chain is changing, say the analysts, albeit in a gradual way; not the radical change that Capella's Schwerin suggests is coming.
"It is just a very slow, grinding process of adjustment; I am not sure that the next five years will be any different to what we've seen," says Perrin. "I just don't see why there is some catalyst that suggests it is going to be different to the past two years."
This is based on an article that appears in the Optical Connections magazine for ECOC 2012
ROADMs: core role, modest return for component players
Next-generation reconfigurable optical add/ drop multiplexers (ROADMs) will perform an important role in simplifying network operation but optical component vendors making the core component - the wavelength-selective switch (WSS) - on which such ROADMs will be based should expect a limited return for their efforts.
"[Component suppliers] are going to be under extreme constraints on pricing and cost"
Sterling Perrin, Heavy Reading
That is one finding from an upcoming report by market research firm, Heavy Reading, entitled: "The Next-Gen ROADM Opportunity: Forecast & Analysis".
"We do see a growth opportunity [for optical component vendors]," says Sterling Perrin, senior analyst and author of the report. “But in terms of massive pools of money becoming available, it's not going to happen; it is a modest growth in spend that will go to next-generation ROADMs."
That is because operators’ capex spending on optical will grow only in single digits annually while system vendors that supply the next-generation ROADMs will compete fiercely, including using discounting, to win this business. "All of this comes crashing down on the component suppliers, such that they are going to be under extreme constraints on pricing and cost," says Perrin. The report will quantify the market opportunity but Heavy Reading will not discuss numbers until the report is published.
Next-generation ROADMs incorporate such features as colourless (wavelength-independence on an input port), directionless (wavelength routing to any port), contentionless (more than one same-wavelength light path accommodated at a port) and flexible spectrum (variable channel width for signal rates above 100 Gigabit-per-second (Gbps)).
Networks using such ROADMs promise to reduce service providers' operational costs. And coupled with the wide deployment of coherent optical transmission technology, next-generation ROADMs are set to finally deliver agile optical networks.
Other of the report’s findings include the fact that operators have been deploying colourless and directionless ROADMs since 2010, even though implementing such features using current 1x9 WSSs are cumbersome and expensive. However, operators wanting these features in their networks have built such systems with existing components. "Probably about 10% of the market was using colourless and directionless functions in 2010," says Perrin.
Service providers are requiring ROADMs to support flexible spectrum even though networks will likely adopt light paths faster than 100Gbps (400Gbps and beyond) in several years' time.
The need to implement a flexible spectrum scheme will force optical component vendors with microelectromechanical system (MEMS) technology to adopt liquid crystal technology – and liquid-crystal-on-silicon (LCoS) in particular - for their WSSs (see Comments). "MEMS WSS technology is great for all the stuff we do today - colourless, directionless and contentionless - but when you move to flexible spectrum it is not capable of doing that function," says Perrin. "The technology they (vendors with MEMS technology) have set their sights on - and which there is pretty much agreement as the right technology for flexible spectrum - is the liquid crystal on silicon." A shift from MEMS to LCoS for next-generation ROADM technology is thus to be expected, he says.
Perrin also highlights how coherent detection technology, now being installed for 100 Gbps optical transmission, can also implement a colourless ROADM by making use of the tunable nature of the coherent receiver. "It knocks out a bunch of WSSs added to the add/ drop," says Perrin. "It is giving a colourless function for free, which is a huge advantage."
Perrin views next-gen ROADMs as a money-saving exercise for the operators, not a money-making one. "This is hitting on the capex as well as the opex piece which is absolutely critical," he says. "You see the charts of the hockey stick of bandwidth growth and flat venue growth; that is what ROADMS hit at."
The Heavy Reading report will be published later this month.
Further reading:
OTN hardware gets the 100 Gigabit treatment
“The real market demand is for simple systems - the transponder and interfaces to the routers"
Lars Pedersen, AppliedMicro
Why is this significant?
The OTN standard, defined by the telecom standards body of the International Telecommunication Union (ITU-T), has existed for a decade but has emerged recently as a key networking technology.
“SONET/SDH is now legacy while packet optical is next-generation work,” says Sterling Perrin, senior analyst at Heavy Reading. “OTN has emerged as an interim step away from SONET/SDH that is able to handle packets.”
With the advent of 100 Gigabit-per-second (Gbps) optical transmission, OTN has been upgraded to handle 100Gbps signals and multiplex existing 10Gbps and 40Gbps OTN within the 100 Gigabit framing format. AppliedMicro claims to be first-to-market with merchant 100Gbps OTN hardware.
AppliedMicro’s 100Gbps OTN designs are implemented using field-programmable gate arrays (FPGAs) and will become available to system vendors this quarter. Using FPGAs allows vendors to start their hardware designs early, adding AppliedMicro’s FPGA software as the OTN design is completed.
What has been done?
The TPOT414 and TPOT424 designs, implemented on a line card, perform mapping - taking a 100 Gigabit client-side signal and turning into a 100Gbps line-side signal for transmission - and regeneration of a 100Gbps signal.
The 100Gbps OTN muxponder uses framing and mapping but adds multiplexing between 10, 40 Gbps and 100Gbps streams. One application is a router taking IP traffic at different rates and framing them before transmission over a 100Gbps dense wavelength division multiplexing (DWDM) network.
The 100Gbps muxponder comprises AppliedMicro’s PQ60 framer/mapper chip and multiplexing FPGA products, referred to by AppliedMicro as soft silicon. “It [soft silicon] is a combination of an FPGA and the programming image delivered as one unified component,” says Lars Pedersen, TPACK’s CTO. “There is still some uncertainty as to the specification and what is needed.”
The benefits of a soft silicon approach compared to an application-specific standard product (ASSP) include the ability to reprogram the design to accommodate standards’ changes, and allowing system vendors to add new elements as they customise their designs.
AppliedMicro also provides an application programming interface (API) which simplifies control and maintenance when several of its designs are combined to implement a more complex function. “From a software perspective it looks like one combined function,” says Pedersen. The 100Gbps muxponder, for example, is controlled via the API. The API also allows software reuse were AppliedMicro to offer the functions as an ASSP chip.
The TPOT OTN architecture
The two functions – the TPOT414 and TPOT424 – are implemented on a common FPGA design.
The TPOT414: Source: AppliedMicro
The TPOT414 has a 100 Gigabit Ethernet (GbE) CAUI interface (10 x 11.2Gbps) and performs physical coding sub-layer (PCS) monitoring per lane before mapping the signal into OTU4, prior to long-haul transmission. The two signals - the 100GbE and the 100Gbps line side - have separate clocks and the role of the mapper is to place the 100GbE stream into the OTN format.
The TPOT414 could be used to interface two optical modules on a line card: a CFP module that takes in a 100GbE client signal and an MSA-168 long-haul transponder whose electrical input is the OTN OTU4 signal.
The TPOT424 Source: AppliedMicro
The second design, the TPOT424, takes in an OTU4 signal made up of a payload and overhead components. The overhead part that includes a forward error correction (FEC) is terminated - errors corrected and signal measurements made – before the payload is put into a new OTU4 frame and a fresh overhead including a new FEC scheme is applied.
Both the TPOT414 and TPOT424 use standard FEC from the ITU-T G.709 standard. Separate devices in the optical module are needed if more powerful FECs are used. AppliedMicro says it will support more powerful FECs in future 100Gbps OTN devices.
“These [the TPOT414 and TPOT424] are the bulk of the emerging market and are the most needed components to start with,” says Pedersen.
The 100G OTN muxponder also supports the multiplexing function, including support for 10GbE and 40GbE, OC-192 and OC-768 SONET/SDH, and 8Gbps and 10Gbps Fibre Channel signals
What next?
Pedersen says there is now significant demand for its 100Gbps OTN designs as vendors prepare to launch systems supporting 100Gbps interfaces in 2011 and 2012. These include packet optical transport platforms and 100Gbps IP router line cards.
“The real market demand is for simple systems - the transponder and interfaces to the routers,” says Pedersen. “But at the same time there are many vendors working on packet optical transport platforms.”
The company does not rule out developing ASSP designs that support100Gbps OTN.