Metro Packet-Optical Transport 2.0: a Heavy Reading Survey Analysis

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VOL. 11, NO. 3, MARCH 2013 KEY FINDINGS Pricing is paramount Metro Packet-Optical Transport 2.0: in metro packet-optical A Heavy Reading Survey Analysis transport Other important The metro packet-optical transport systems (P-OTS) product differentiators include segment has grown from nothing in 2007 to more than $1.2 integration with Layer billion in equipment sales in 2012. However, because these 2/3 packet networks systems were not truly best-of-breed in both packet and TDM and superior OAM/ functionality, and because packet technology itself was not ready management abilities as a true replacement for TDM transport, the P-OTS market has failed to live up to expectations thus far. The Sonet/SDH MSPP era has clearly We are now entering a new "P-OTS 2.0" era that seeks to build and abruptly ended on the packet shortcomings of the first generation. As we enter The primary drivers this new phase, P-OTS is finally poised to make the crossover for metro P-OTS are and unseat Sonet/SDH as the dominant form of optical transport converged services and metro and aggregation networks. In this new era, we expect transport, P2P Ether- to see: 1) the focus of packet-optical shifts from TDM functions to net services delivery packet functions; 2) pure-packet implementations of P-OTS and mobile backhaul begin to ramp and, ultimately, dominate; 3) switched OTN enters the metro, removing the need for Sonet/SDH fabrics in new IP/MPLS is a serious elements; and 4) 100G takes hold in the metro. contender for metro network architectures As we enter this new metro P-OTS 2.0 phase, Heavy Reading of the future issued a global operator survey to get a better understanding of Operators worldwide operator plans, strategies, and perceptions regarding the present most associate Ciena state and future of packet-optical transport. This survey forms with metro P-OTS the basis of this report. leadership, followed AUTHOR: STERLING PERRIN, SENIOR ANALYST, HEAVY READING by Cisco, Alcatel- Lucent and Huawei Operator interest in OTN in the metro is real, but uptake will likely be less than some suppliers predict

© HEAVY READING | VOL. 11, NO. 3, MARCH 2013 | METRO PACKET-OPTICAL TRANSPORT 2.0: A HEAVY READING SURVEY ANALYSIS Introduction & Key Findings Heavy Reading has been tracking metro packet-optical transport systems (P-OTS) since 2007. Since that time, the product segment (as defined by Heavy Reading) has grown from nothing to more than $1.2 billion in equipment sales in 2012.

Heavy Reading believes that we are entering a new era of P-OTS, which we'll call P-OTS 2.0, which seeks to build on the packet shortcomings of the first generation. Figure 1 shows that, as we enter this new phase, P-OTS is finally poised to make the crossover and unseat Sonet/SDH as the dominant form optical transport and metro and aggregation networks.

Figure 1: Metro Optical Revenue by Segment, 2010-2016 $5.0

$4.5

$4.0 $3.5

$3.0

$2.5

Billions $2.0

$1.5 $1.0

$0.5 $0.0 2010 2011 2012 2013 2014 2015 2016

MS Sonet/SDH P-OTS Metro WDM

Source: Heavy Reading

In this new era, we expect to see the following:

 The focus of packet-optical shifts from TDM functions to packet functions  Pure packet implementations of P-OTS begin to ramp and, ultimately, dominate  Switched OTN enters the metro, removing the need for Sonet/SDH fabrics in new elements  100Gbit/s (100G) takes hold in the metro

Heavy Reading conducted a global operator survey to get a better understanding of operator plans, strategies and perceptions regarding the present state and future of packet-optical transport. The survey was conducted in November 2012. Respondents were drawn from the network operator list of the Light Reading readership database. A total of 114 service provider respondents participated in the survey.

Figure 2 shows the breakdown of the 114 qualified respondents by the geographic location of the company's headquarters.

Europe 33% Asia/Pacific 25%

North America Rest of World 22% 20%

Key findings of this report include the following:

Pricing is paramount in metro packet-optical transport. Few equipment suppliers lead with this differentiating feature, but overall system pricing topped the list of differentiating features in our survey – by a significant margin. Heavy Reading has been saying for years that the funda- mental mission of transport innovation is to reduce the cost per bit, and this survey finding underscores that message.

In addition to overall pricing/cost, two other differentiating features rose to the top: integration with Layer 2/3 packet networks and superior OAM/management abilities. The emphasis on Layer 2/3 integration is consistent with the overall trend seen throughout this survey that the future of P-OTS is in packets, not TDM. We note that the three lowest-scoring differentiators were all about Sonet/SDH and TDM. Interestingly, OAM/management features scored signifi- cantly higher than the "speeds and feeds" features by which optical suppliers typically describe and market their products.

Converged services transport, point-to-point Ethernet services delivery (or E-LINE) and mobile backhaul are the three primary drivers for metro packet-optical transport. In our survey, switched Ethernet services, or E-LAN services, also scored high (3.84) and should also be included as a significant driver, based on survey results.

IP/MPLS is a serious contender for metro network architectures of the future. Based on the results, we cannot deny that IP/MPLS is set to play a major role in metro transport architectures in the future. The definition of transport has broadened beyond OSI Layers 0 (WDM) and 1 (Sonet/SDH and OTN). As a result, carrier "transport" capex will increasingly be spent throughout Layers 0-3. Equipment suppliers with little expertise in IP/MPLS must adjust to this reality – either by building IP/MPLS products of their own or by conceding a sizeable portion of the metro packet- optical market to IP/MPLS competitors.

Operators globally most associate Ciena with metro packet-optical innovation and leadership, followed by Cisco, Alcatel-Lucent and Huawei. Among North American operators in particular, Ciena's leadership perception is extremely strong. In Europe, Cisco led the voting, followed by a three-way tie for second among Alcatel-Lucent, Ciena and Huawei. Asia/Pacific voting was led by Cisco and Huawei, followed by Alcatel-Lucent. In the rest of the world, Ciena and Huawei tied for first, followed by a two-way tie between Cisco and Alcatel-Lucent. Notably absent from the top rankings (even in North America) was Fujitsu, whose Flashwave 9500 system is the worldwide (and North American) metro P-OTS leader based on revenue.

© HEAVY READING | VOL. 11, NO. 3, MARCH 2013 | METRO PACKET-OPTICAL TRANSPORT 2.0 3 Survey Analysis Heavy Reading's Fall 2012 Metro Packet-Optical Transport Survey is organized in five subsections: Drivers and Applications; Features and Functions; Adoption Timelines; Packet- Optical Control Plane; and Vendor Leadership. This special report focuses on survey results related to vendor leadership.

We make one important note on scope and definitions before delving into the results and findings. While Heavy Reading has a specific definition for metro packet-optical transport systems (P- OTS), we did not provide a packet-optical transport definition to operator respondents or restrict them to any specific definition in responding to their questions. As a result, the survey reflects a broader scope than metro P-OTS as covered in Heavy Reading's Packet-Enabled Optical Networking Quarterly Market Tracker. Specifically, some operators view carrier Ethernet switch/routers (CESRs) and multiservice edge/Ethernet Service Edge (MSE/ESE) platforms as packet-optical transport, and some responses reflect these views.

As optical transport-centric products add more packet functionality and as packet-centric products add more optical transport functionality (such as integrated DWDM optics) the lines between previously distinct categories of products blur. This blurring is beginning to happen in packet- optical transport and is reflected, to a degree, in our survey results.

Heavy Reading's metro P-OTS and CESR definitions are as follows:

P-OTS These products converge DWDM transport, Sonet/SDH, large-scale packet switching and connection-oriented Ethernet in a single chassis/device. Heavy Reading has created detailed definitions for metro core/regional, edge/aggregation, access and core/backbone P-OTS. P-OTS is alternatively referred to as packet-optical networking platform (P-ONP) or packet-optical transport platform (P-OTP).

CESR CESRs are platforms that meet two basic criteria: (1) they offer a comprehensive, or nearly comprehensive, set of carrier-grade features required to support high-performance enterprise Ethernet services, triple-play services and/or mobile-backhaul applications; and (2) their primary purpose is to aggregate and/or transport Ethernet traffic. This category includes all carrier-class Ethernet switches, some carrier Ethernet transport switches and some products described as carrier Ethernet routers. We include certain Ethernet transport switches in our CESR category if they have a packet-based fabric, provide multiple QoS options, offer full support of MEF-defined services, include Ethernet OAM features, aren't based on a DWDM/ROADM platform and lack full Sonet/SDH ADM features (e.g., UPSR/BLSR functionality).

Carrier Ethernet routers have the customer-facing characteristics of a carrier Ethernet switch and some of the network characteristics of a service router. They use a combination of IP and MPLS protocols (e.g., IS-IS, RSVP-TE and LDP) to create full mesh connectivity and then tunnel Ethernet traffic through the MPLS network. But, like the carrier Ethernet switch, the primary (if not sole) purpose of these platforms is to handle Ethernet traffic for enterprise, residential or mobile backhaul applications.

Vendor Leadership We asked operators about supplier leadership in metro packet-optical transport. To get a comprehensive and candid gauge of supplier leadership, we asked the following question in a free- response format – meaning that respondents could write in any company they wished, and as

© HEAVY READING | VOL. 11, NO. 3, MARCH 2013 | METRO PACKET-OPTICAL TRANSPORT 2.0 4 many companies as they wanted. The survey question was: "Which supplier(s) do you believe deliver the highest technological superiority and innovation in metro packet-optical transport products?" In total, 76 respondents answered the question, and 18 different suppliers were named. Figure 3 shows the results for the top scorers.

Figure 3: Worldwide Metro P-OTS Technology & Innovation Leaders (N=76)

Ciena Cisco Alcatel-Lucent Huawei Juniper Infinera Ericsson Tellabs

0 5 10 15 20 25 30 Number of Votes

Ciena led the voting with 28 votes, followed by Cisco at 22, Alcatel-Lucent at 19 and Huawei at 17. Infinera and Juniper tied for fifth, followed closely by Ericsson and Tellabs. Ten additional suppliers were named, typically with one or two votes each.

There were a few surprises in the ranking. Ciena's leadership here is one surprise, as the company is much smaller than Cisco, Alcatel-Lucent and Huawei. While Ciena is a market-share leader in core networks, including 100G, the company is not at the top of the pack when measur- ing metro market shares, including metro WDM. The supplier is focusing on metro packet-optical integration and its messaging and innovation are clearly resonating with operators, even if this is not yet reflected in market shares.

Looking at North America only, Ciena topped the list (by a large margin); 60 percent of all North American respondents who answered this question cited Ciena as a leader. The North American technology and innovation leadership ranking is shown in Figure 4.

Figure 4: North America – Metro P-OTS Technology & Innovation Leaders (N=20)

Ciena

Cisco

Alcatel-Lucent

Juniper

Tellabs

Infinera

0 2 4 6 8 10 12 14 Number of Votes

© HEAVY READING | VOL. 11, NO. 3, MARCH 2013 | METRO PACKET-OPTICAL TRANSPORT 2.0 5 Ciena also led leadership scores among "Rest of World" respondents, which includes responses from Latin America, the Middle East and Africa. Results are shown in Figure 5.

Figure 5: Rest of World – Metro P-OTS Technology & Innovation Leaders (N=16)

Ciena

Huawei

Cisco

Alcatel-Lucent

Ericsson

0 2 4 6 8 Number of Votes

© HEAVY READING | VOL. 11, NO. 3, MARCH 2013 | METRO PACKET-OPTICAL TRANSPORT 2.0 6 Vendor Profile: Ciena Ciena is one of several vendors targeting packet-optical transport with multiple product lines. Ciena's packet portfolio includes pure packet devices and P-OTS systems, scalable from 30G transponder-based switching to terabit-scale centralized switching, managed via the single cross- layer OneControl Unified Management system.

The 6500 comes to Ciena from the Nortel assets acquisition. Announced in late 2004, the 6500 made Nortel the first vendor to introduce a product into what became the P-OTS segment. (Alcatel-Lucent's 1850 TSS line debuted in late 2005.) The product differs from Nortel's older MSPP lines in many ways, including VT switching fabric size (80G on the 6500 vs. 10G on the 3500), the combination of Sonet and SDH in a single box and integration of DWDM transport. In addition, the 6500 has added significant packet innovation over time since its initial offering of MSPP-based packet aggregation.

Key to the 6500 P-OTS configuration is the Layer 2 Muxponder (L2 MOTR) card, scalable from 30G-60G, which was introduced in 2009. This module integrates packet switching and transport functions in one blade. MEF-9 and -14 compliant, the L2 MOTR supports E-LINE, E-LAN and EPL with failure state propagation. It also features G.8032 Ethernet Ring Protection, which offers 50ms resiliency in a packet-switched transport network. Traffic management capabilities include policing, traffic shaping and class-of-service-based queuing and scheduling. Another aspect is the ability to mate cards to offer higher capacity as well as protection options. Integrated capabilities include transport-compatible OTN protection schemes, as well as OTN mapping onto integrated photonics for extended reach applications. For 2013, the company is planning a next-gen version of the card that will boost capacity 10x (120G-300G).

OTN was introduced across the 6500 line in 2011 (announced in June). Fabric-based OTN addresses regional and metro core network applications in the 14-slot and 32-slot 6500 chassis. Card-based OTN extends OTN to metro edge applications, in the seven-slot and two-slot chassis version of the 6500. Included as part of the OTN introduction was the addition of Ciena's One- Connect Intelligent Control Plane on the 6500 line (based on the software developed for the 5400 and legacy CoreDirector lines).

The fabric that supports OTN switching is a single packet/OTN fabric, operating at 600G in the 14-slot 6500 chassis and at 1.6 Tbit/s in the 32-slot chassis. Centralized packet switching was introduced in early 2013. Looking further into 2013, Ciena plans to double the 6500 fabric capacities to 1.2 Tbit/s and 3.2 Tbit/s per system, complementing Ciena's core switching products that scale up to 15 Tbit/s.

Ciena's packet networking portfolio includes more than a dozen CESR and CEAP devices. Its CESR portfolio consists of multiple service aggregation switches in the 5000 family, including: the 5410, which supports 1 Tbit/s of full-duplex switching capacity with future plans to scale to 4Tbit/s – announced in September 2009; the 5305, which supports copper and fiber 1G/10G for metro- edge deployments – generally available since June 2007; the compact 5140, which fits in outdoor cabinets – available since April 2009; and the compact 5150, which supports PBB-TE, MPLS, 48 GE ports, up to four 10GE ports, and is optimized for mobile backhaul and business services – introduced in May 2010.

Ciena's CEAP portfolio consists of the widely deployed 3000 family of service delivery switches, with highlights including the 3930/3931, which is built for LTE backhaul, with two NNI SFP+ ports that support 1GE or 10GE, four 100M/1GE SFP UNI ports and four dual-mode UNI ports; the 3916, with two NNI SFP ports that support 1GE, two 100M/1GE SFP UNI ports and two dual- mode UNI ports; the 3940, with 24 1G user ports; the 3960, with four 10G and eight 1G ports; and the 3902 single-port 1GE demarcation platform targeted for small businesses.