Forward To The Past

It's hard to spot a trend at its outset. Most major shifts only become obvious on hindsight, when the momentum is in full swing.

It's hard to spot a trend at its outset. Most major shifts only become obvious on hindsight, when the momentum is in full swing. So it's a bit risky to make dire predictions too far in advance of actual events, but that's what I'm going to try to do.

In talking with most of the major makers of optical networking gear, I've observed what appears to be a strong - and surprising - trend. While optical networking was designed for the big network operator, such as long-distance and local phone companies, Internet backbone providers and regional carriers, the early form of equipment that targets local networks is actually being snapped up by private companies.

According to Alcatel, Lucent Technologies and Nortel Networks, among others, there is strong interest in metropolitan optical networking gear among financial institutions, retailers and others that maintain large central repositories of digital information and need to distribute that information to a relatively small number of sites. Rather than go to a phone company, the companies are buying raw bandwidth and then connecting their own optical networking boxes to their data networks. The data traffic, whether it's Gigabit Ethernet, System Network Architecture or Fibre Channel, is converted to an optical signal but carried in its native protocol in a point-to-point connection between two sites.

This has several advantages for customers. They don't have to buy services at the tariffed rates, especially if those tariffed services don't match their needs. Not every company's applications fit neatly into T1 or T3 sizes. Also, they don't have to mess with the data traffic. If a corporation is using Gigabit Ethernet internally, that's what traverses the network; there's no need to put things into a format for Asynchronous Transfer Mode or frame relay switching, since neither is involved.

Because raw bandwidth is increasingly available from multiple parties, these private companies can assure their network's viability by using diverse routing of signals - if a backhoe cuts one provider's fiber-optic cable, the data traffic can be carried over another provider's cable.

The simplicity of point-to-point networks makes them relatively easy for corporations to manage on their own. They rely on the phone company or other carriers only for the physical connection.

OK, so what's the dire prediction here? Can you say 'dumb pipe?' It wasn't that many years ago that an entire industry sprung up seemingly overnight when AT&T cut the rates of its long-distance T1 service. Enterprising companies such as TimePlex Group built sturdy, reliable T1 multiplexers that would take voice and data traffic from a business and put it only to a local T1 link leased from the phone company. That was fine for the phone companies, at first, since local T1 rates were high and the service was profitable. Then came companies such as Metropolitan Fiber Systems and Teleport Communications Group to build local fiber networks and offer cheaper T1 links between a business and its long-distance carrier, and a competitive industry was born.

It may seem early to predict similar things will happen now, but at least, the optical networking trend goes sharply against the notion that businesses are moving away from private networks to network hosting services from phone companies, Internet service providers and others. If those who ignore history are doomed to repeat it, there will likely be some local phone companies doomed to the dumb pipe business.

Carol Wilson is Executive Editor at Inter@ctive Week. She can be reached at on the Internet.