At the SuperComm 2001 telecommunications trade show in Atlanta, Cisco Systems, Lucent Technologies and others will show off their latest optical networking equipment-- technology that can transport Internet traffic at high-speeds.
Spending by telecommunications carriers has dropped this year because of the economic slowdown and because many start-up carriers have gone out of business. Nevertheless, a recent study by Wall Street analyst firm SG Cowen found that the 31 service providers it tracks plan to still spend $107 billion this year, down 9 percent from last year's $118 billion.
With billions of dollars in sales still at stake, networking companies are courting carriers with new technology aimed at helping the carriers generate more revenue from their customers, with new features such as voice and video over the Internet, and improved security, analysts and executives say.
"The phenomenon you're seeing is that service providers' investments are no longer about pure bandwidth," said Jayshree Ullal, a vice president of Cisco's service provider line of business. "It's about survival and profitability. It's about getting the most out of their networks and expanding their capabilities."
For example, Lucent on Monday is announcing new optical equipment to enter the fast-growing market to build networks in metropolitan areas. The technology is targeted at service providers that want to deliver high-speed Net access at cheaper prices. But it also offers new services to businesses, such as storage of corporate data and the ability to increase bandwidth at a moment's notice.
Executives from Cisco, Foundry Networks and Riverstone Networks say they will also announce this week new optical hardware to improve their families of products for metropolitan networks. The networking companies, including Nortel Networks, are all fighting for a piece of a market that is expected to grow from $6.3 billion in revenue in 2000 to $17.2 billion by 2003 in North America, according to analyst firm Infonetics Research.
Cisco's Ullal said the company on Tuesday plans to give further details of its next-generation Internet routers, a market the networking giant has historically dominated, but has been losing market share to hard-charging Juniper Networks in the past two years. In the market for Internet routers that ship Net traffic from point to point at high speeds, Juniper has swiped 38 percent of the market, compared with Cisco's 59 percent.
HyperChip, a networking start-up that has raised more than $100 million in venture capital, will unveil its Internet router that can carry traffic at "petabit" speeds, far greater than current systems that can process data. A petabit router can handle 1,000 terabits of information, or 1 million gigabits of information, per second.
In contrast, Cisco and Juniper's current hardware can carry traffic at gigabit speeds, which represents 1,000 megabits per second.
Analysts also expect Ciena, Tellabs, Sycamore Networks and others to show off new optical switches, technology that not only transmits data over networks that run between cities, but also allows carriers to better manage the traffic.
Networking companies are continuing to offer Internet-based products that allow carriers to marry phone and Internet data traffic into a single network. Lucent is announcing new equipment that will allow carriers not only to offer phone service, but also video and data services to customers.
Likewise, Siemens subsidiary Unisphere Networks is announcing an update to its equipment that allows Internet service providers to offer new services, such as video content over the Web, to customers.
Internet telephony equipment maker Clarent is releasing new technology Monday that allows traditional phone companies to offer phone calls over the Net.
Lucent executives also said the company will release new equipment aimed at helping local phone companies deliver high-speed Net access to suburban and rural areas.