And interestingly enough it is not a tenfold from very low levels, which tends to be the case when we see booming markets numbers being touted. No, the 10G and above market in the enterprise and service provider segments was already in 2009 north of $10 billion ($11.1 to be exact according to the report).

So what drives this insatiable demand for bandwidth?

For the Service Provider segment it is clear that the growth stems from the build-outs of new Fiber Access networks. They are architected for service delivery over Ethernet, and generate traffic in high volumes that is aggregated by switches and routers. In turn, they need interface speeds that are several magnitudes higher than the access side of the network. Already in this early phase of the market, the interest for Gigabit access is real, and growing through for instance the Googles initiative “Fiber for Communities”. Also new products are arriving to meet the new demands. The recently announced high-density gigabit access switch developed jointly by Accton and Xelerated, is perfectly aimed to this market.

The 10G growth is not limited to the service provider segment. Also enterprises are inevitably migrating to 10G interface connectivity. End-users consume more bandwidth, and require that data centers scale in parity with that growth.

Some philosopher said “the best way to predict the future is to create it”.  At Xelerated we make the fastest and most flexible chips for this new market. We are part of the creation. But does this mean we know where future networking will be in 20 years? Sure – let me just take out my crystal ball from the drawer…

According to Point Topic, Asia now accounts for nearly 40% of all broadband subscribers.  Not to mention, the region outperformed the sum of all other regions in terms of net subscriber additions last year. With China, Japan and South Korea leading the way, other Asian countries are growing fast, but from a smaller base. The Philippines grew 60% last year, and India 40%(!).

China passed the 100 million subscriber milestone in the fourth quarter last year, and the pace of growth is not slowing down. There is no doubt these numbers have a profound impact on how the industry is being shaped in support for the emerging fiber-based broadband market.

The Network Processor (NPU) industry is no different. A new generation comes with significant more processing power, and still our customers ask for more. There are more standards coming down the road, and there are more features requested by service providers around the world. Demand is always more, never less.

At the recent Linley tech seminar Xelerated’s Vice President of Business Development, Thomas Eklund, delivered a presentation – available for download on Slideshare – on the importance of service density in the NPU business. If your processing device can’t manage all the network services expected, then you will find your Research & Development department under hard stress to balance features and performance against available resources.  The need for greater service density is an important aspect for the whole service provider industry. If next generation routers and switching platforms can be built with greater headroom for new services, we can extend the lifetime of the equipment, and thereby strengthen the business case for the broadband services.

Service density can be a bit hard to measure, but doing some very basic calculations on the raw service processing capabilities of a particular chip is fairly straightforward and this will give you a rough idea on the capabilities of the chip. Failing to do this in an evaluation process for a new line card design often leads to unhappy surprises at a very late stage in the project. In turn this results in risk of missing an important market window, as well as signficantly increased engineering and product costs.  So take a look and find out – how much service density is your chip providing?

Update: this post was re-published at Advanced TCA Systems Web Site.

This year, the energy and activity level at Mobile World Congress has been far better compared to the two previous years’ events. A lot of ideas about sharing networks were shown both by service providers and vendors.  Huawei showcased the largest and widest portfolio and made a big impact with their lifetime cost approach. And NEC’s focus on cloud computing was impressive, expanding its concept to all types of customers/users and putting the operators in the central role.

Another thing that struck me about this year’s show is that there are not many Asian people in attendance. In particular, I did not find many of my Chinese industry colleagues.  This week was the Chinese New Year with the spring festival, which is comparable to having an event during the United States’ Thanks giving holiday.  Even still, there were several Asian companies participating and showing their goods, however few visitors from the region.

While previous Mobile World Congress events have been clogged with small startups trying to attract larger companies for M&A activities, this time it was far more companies aiming at building and growing on their own. Another very healthy sign.

Of course, a more dominant subject here at the show is LTE, however it is being talked about in a very broad context. And few are discussing how to become the most efficient bit-pipe provider (which must be the basis for all MNOs).

Another trend is that OPEX seems to be coming back after years of short-term focus on CAPEX.  And lastly, it is interesting to note that the representatives from the Asian markets air a much more positive vision of the future compared with the “old” world.

Stay tuned for more thoughts from the show floor…

While there are technical constraints associated with not having full control of network resources, there is an obvious gain in cutting the investment costs in half. Most of the technical limitations are addressed as the technology matures. But the commercial aspect is harder to tackle. Sharing the complete radio network makes differentiation very hard.

This is a multi-billion dollar question, and the jury doesn’t seem to have reached their verdict. Yet.

As technology ages, it eventually needs to be upgraded or replaced. Management and control plane software can often be upgraded without any hardware impact. But for the network processing line cards, the operator is required to send someone out to the site and swap the card, or in some cases, the complete box.

Forklift upgrades are painful. To send someone out to the field and replace hardware is not only costly, but it also negatively impacts the focus on growth and customer retention.

This is why programmability of the data plane is important. Features and standards evolve, and service providers should not accept being limited by fixed-function ASICs that are several years old and obsolete. Upgrading switches and routers due to the lack of port densities or capacity is one thing. But the lack of the data plane’s ability to support evolving standards or useful vendor specific features is another.

The inherent capability of network processors to be programmed not only enables system vendors to customize the feature set. Its ability to extend the lifetime of the products has a significant impact on service provider business economics.  So let’s put the data plane technology designs which cause unnecessary and painful forklift upgrades to the waste bin for obsolete technology.

CAGR for Asia-Pacific Telecom Services, 2008-2014

Source: Pyramid Research, as reported by Light Reading

The recent IPTV Asia Forum gathered players from China, Japan and South Korea, and while some of the comments focus on the negatives, it is clear that the number of subscribers are growing and that there is significant interest in the technology. In Japan, Hikari TV, the IPTV offering from NTT, is reporting 750,000 subscribers, and China is reporting 3 million subscribers.

The IPTV hype a few years back is gone. This is a good thing. At the time, the average copper-based connection couldn’t fulfil the underlying promise. The level of user interaction was no better than what cable or digital terrestrial could offer. And the quality and availability of the service was not on par with the competitive distribution methods. In short the user experience was not compelling enough.

With the new generation IPTV infrastructure, with mobile broadband and unified fiber access, IPTV will get another chance. Consumers tend to get what they want at the end of the day. And great content at the finger tips will always be compelling.

When the user experience is greatly improved, we will see a quick shift to IPTV.

Today EU is endorsing an open-based access model in an attempt to get more “fair” access to the local loop and Central Office spaces typically owned by the incumbent local exchange carrier (ILEC).  The idea is to avoid the problem experienced in the copper-based world with a monopoly organization owning a key public infrastructure resource, and thereby defining the rules for competition with implications both on network services, prices and pace of service innovations. Without sound regulations, alternate multiplay service providers, CLECs, utilities companies, and municipalities would have been effectively locked out to offer broadband services on competitive grounds.

The U.S. is a country where free trade and strong competition are well recognized. The way the regulatory discussion in the U.S. is moving forward, it is limited to content and service transparency and equal treatment. The goal is to limit service providers’ freedom to filter and downgrade user experiences on applications like Peer-to-Peer download. This is an important dimension but I think ultimately customers will leave if the services beeing offered have too poor quality. That is, if there are competitive players around for the consumers to select from. In competitive markets, access service providers who have tried to downgrade user experiences on specific network services have faced strong churn and the brands have taken serious hits in the media as well.

To be effective, broadband stimulus should couple net neutrality with defined rules for open-based access. There are many real world cases where this model has successfully stimulated sound competition.  If done right, competition will be healthy both on services being offered and for the access to the local loop and Central Office space footprint. This drives down price and increases the pace of innovation, pushing vendors and service providers alike to bring better technologies and services to market, all to the benefit of the consumer.

While the debates and the strengths of the different players vary between the U.S. and the European Union, both continents face similar challenges, and can learn from each other. Now is a good time to push for open-based access models and net neutrality. Broadband stimulus may add the necessary extra incentive to increase competition and avoid the new fiber access infrastructures currently being deployed from being locked into monopolies.

There are limitations to today’s IP/MPLS peering, both commercial and technical, however when looking at the broader context, I believe the main driver for using Ethernet as a peering technology comes down to cost. Historically, the success of Ethernet has been dependent on its ability to scale and reduce cost. Ideally, the MEF 23 standard – which will make it easier to scale Carrier Ethernet services globally – will provide a common framework for operators to interconnect Ethernet services with other operators, helping to improve the reach of those services.

The ENNI global interconnect* looks promising and could offer more robust monitoring of the peering points with Service OAM, faster fail-over-times and high availability at a lower cost for the carriers.

In addition, the use of  multipoint configurations and multi-homing scenarios will drive new feature enhancements to the data plane. Carrier Ethernet systems based on programmable devices, such as Xelerated’s chipsets, can add features to the data plane as they mature. The evolving Ethernet peering technology is another proof point for the benefit of programmability.

Ethernet peering is likely to be one of the next hot areas for the networking industry. At Xelerated, we will not only be watching this closely, but actively contribute to its success. Stay tuned for more updates.

—-

*ENNI is short for Ethernet Network to Network Interface, and defines a common set of rules for interchanging Ethernet services between service provider domains.