Ethernet - WOCC

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Ethernet - WOCC

Technical Evolution of Optical Networks TowardsNew Revenue-Generating ApplicationsWireless & Optical CommunicationConference in Taipei on March 9th 2004Gerard.Galbe@alcatel.fr


Asian Operators – Healthy and Growingin 2003Increased revenue and profitability …RevenueProfit MarginGrowth02/012002Growth03/02 E20022003EFixed-5.1%113 BE1.4%4.5%6.0%Mobile4.9%111 BE4.4%8.3%11.5%Fixed &Mobile7.6%30 BE2.2%17.3%16.0%Total0.5%254 BE2.8%7.7%9.6%Estimated CY2003Source: MSDW, Company dataX_ppt—2All rights reserved © 2003, Alcatel


Operators expect Revenues up, Costsdown, Profits upIndicator20022003EFixed LineOverall PenetrationARPU29.7%$26.229.8%$26.1Stable Top lineLines/employeeCapex/sales38524.0%41820.3%Productivity upMobileOverall PenetrationARPU45.5%$21.348.8%$20.8Subscriber growthoffsets ARPU declineData Rev/Total Rev4.8%7.8%Data ARPU importantSubs/employeeCapex/sales2,11166.3%2,27334.4%Cost ReductionsSource: Goldman Sachs. Figures are arithmetic averages, not weighted averages.X_ppt—3All rights reserved © 2003, Alcatel


Strategic aspects in APAC: revenuesand users growthNumber of Suscribers8000006000004000002000000[000] [000] [000]Narrowband SubscriberLine sBroadband SubscriberLine sTot a l P riva t e Circ uitConnectionsType of users1998A1999A2000A2001A2002E2003E2004E2005E2006E2007E#Narrow bandCAGR: 15%#BroadbandCAGR: 167%#Leased LinesCAGR: 12%Source: Pyramid Research200000150000100000500000Revenues[US$m] [US$m] [US$m]Voice Broadband Private CircuitRevenues per type$TotalCAGR: 3%$BroadbandCAGR: 115%$Leased LinesCAGR: 9.7%X_ppt—4All rights reserved © 2002, 2003, Alcatel


Do the ABC: Opex improvements becomingas important as Capex improvementsSG&A32%2002 Opex: $161 billion forNA ILECs and IXCsAccesscharges17%Source: RHK Inc. 2003Depreciationand amort.23%Networkcosts28%> Network costs• Operations• Maintenance• Provisioning> Access charges• Fees paid to use anothernetwork> SG&A• Sales & Marketing• Finance• Corporate Overhead> Depreciation and amortization• Allocation of tangible andintangible fixed assetsX_ppt—5All rights reserved © 2003, Alcatel


Revenues Opportunities: Growing demandfor metro servicesService2007 Revenues($Millions USD)5-year CAGR1.Ethernet access5,657+59%2.IP-VPN3,239+27%3.VoIP (wholesale)1,721+28%4.Native ATM1,126+20%5.Web-hosting (carrier)875+40%6.Web-hosting (ISP)673+41%7.IP multi-cast (retail)450+115%8.Content distribution/Caching (wholesale)407+35%9.IP multi-cast (wholesale)267+72%10.Unified Messaging246+63%Source: Gartner Dataquest Apr03X_ppt—6All rights reserved © 2003, Alcatel


Worldwide RevenuesService/Year 2003 2007Frame Relay $16.7B $16.7BLeased Lines $23.2B $24.2BEthernet$1.2B $8.3BSource: Infonetics ResearchX_ppt—7All rights reserved © 2003, Alcatel


Services Price andQuality PositioningLeased Lines 100 No OverbookingFrame Relay 70 CIR + BE nx64Kb/sEthernet (Objective) 70 CIR + BENetwork based IP VPN 45 No QoSCPE IP VPN 15 No guaranteesSource: Internal studiesX_ppt—8All rights reserved © 2003, Alcatel


The strategic aspectsof the Metro networkThe metro network has been up to recently built inoverlaying networks, one per type of service.The current pressure for financial performance andcost efficiency, is leading operators to built metronetworks with the following characteristics:Migrating services and protecting revenuesSimplifying and collapsing the network reducing thenumber of overlaying networks.OPEX reduction through centralized OAMPX_ppt—9All rights reserved © 2003, Alcatel


Yield management:One metro network or many?How to achieve economies of scale?Corporate services:Existing leased lines services and frame relayNew emerging Ethernet servicesFuture GPRS/EDGE/3G cellular servicesResidential services:Existing ADSL servicesFuture VDSL servicesFuture GPRS/EDGE/3G cellular servicesEmerging Ethernet servicesX_ppt—10All rights reserved © 2003, Alcatel


Yield Management:One metro network or many? QoS allows one network to better use complementarytraffic matrixes on the same infrastructure.Source: AT&TX_ppt—12All rights reserved © 2003, Alcatel


Yield management:One metro aggregation system or many?CONSOLIDATEDBACKBONEIP/MPLSSDHWDM1640FOX1642EM1650SMC1660SM1662SMC1670SM1692MSE1696MS1641SXOMSNCWDMWDMMultiserviceAggregationDeviceATMEthernetATMEthernetATMATMPDH/SDHEthernetMediaGatewaysDSLAMsFR NodesBSTsNodes BFTTBFTTBVoice ServicesBB ServicesNB ServicesMobileServicesLL ServicesETH ServicesSAN servicesX_ppt—13All rights reserved © 2003, Alcatel


Connectivity requiredin the WANConnectivity between large hubsConsolidated trafficQoS managed in the enterprisePoint to point leased lines type of servicessufficeVCX, LCA, GFP are the solutions adoptedConnectivity between small branches and large hubsand LAN to LAN connectivityVolatile trafficQoS managed by the service providerPoint to multipoint services welcomeMPLS switching is the solution adoptedX_ppt—14All rights reserved © 2003, Alcatel


Initiating Ethernet Point to Pointwith ISA Ethernet boards63 x 2M3 x 45 M1 x FE (100 M)OMSNGbE#1 (200 M)Node # 1OMSN4 x STM-1oOMSNSTM-16GbE#1 (200 M)Node # 2OMSN4 x STM-1oOMSNNode # 3GFPLCAS ( V.Cat )Build # 1Note:- Node #1 is equipped with 1 x FE port (100 M), where its traffic is multicasted into towards twodirections (two head ends) with STP protocol activated at the client side- FE mapped in N x VC3/VC12ISA-ETH V2ISA-GBEX_ppt—15All rights reserved © 2003, Alcatel


Continuing Ethernet Point to Pointwith ISA Ethernet63 x 2M3 x 45 M1 x FE (100 M)RemoteEthernetExtension1 x FE (100 M)4 x STM-1o4 x STM-1oOMSNNode # 1OMSNNode # 2OMSNNode # 3GFPLCAS ( V.Cat )STM-16OMSNOMSNGbE#1GbE#2GbE#1GbE#2ISA-ETH V2 ISA-GBE FE ExtenderNote:Build # 2- Node #1 is equipped with 1 x FE port (100 M), where its traffic is multicasted towards twodirections (two head ends) with STP protocol activated at the client side.-Node #3 is equipped with 1 x FE port (100 M) with 100 BaseFL interface to reach theremote node which is equipped with FE extender. The FE traffic is also multicastedtowards two direction (two head ends) with STP protocol activated at the client side.X_ppt—16All rights reserved © 2003, Alcatel


Extending Ethernet Point to Multi-Pointwith ISA Ethernet63 x 2M3 x 45 M1 x FE (100 M)4 x STM-1o1 x FE (100 M)OMSNNode # 1OMSNNode # 2STM-16OMSNL2GbE#1GbE#2GbE#11 x FE (100 M)RemoteEthernetExtension4 x STM-1oOMSNNode # 3L2GFPLCAS ( V.Cat )= Layer 2 AggregationOMSNL2GbE#2Build # 3Note:ISA-ETH V2ISA-GBEFE Extender- Node #1 is equipped with 1 x FE port (100 M), where its traffic is multicasted towards twodirections (two head ends) with STP protocol activated at the client side.-Node #3 is equipped with 1 x FE port (100 M) with 100 BaseFL interface to reach theremote node which is equipped with FE extender. The FE traffic is also multicastedtowards two direction (two head ends) with STP protocol activated at the client side.X_ppt—17ISA-PR-EAAll rights reserved © 2003, Alcatel


RemoteEthernetExtension63 x 2M3 x 45 M1 x FE (100 M)4 x STM-1oGbE#34 x STM-1oExtending Ethernet Multi –Pointto Multi-Pointwith ISA EthernetOMSNNode # 1OMSNL2Node # 2L2OMSNNode # 3GFPLCAS ( V.Cat )STM-16OMSNL2OMSNL2GbE#1GbE#2GbE#1GbE#2GbE#3L2= Layer 2 AggregationBuild # 4Note:GBE Extender- Node #1 is equipped with 1 x FE port (100 M), where its traffic is multicasted towards twodirections (two head ends) with STP protocol activated at the client side.ISA-ETH V2ISA-GBE-Node #3 is equipped with 1 x FE port (100 M) with 100 BaseFL interface to reach theremote node which is equipped with FE extender. The FE traffic is also multicastedtowards two direction (two head ends) with STP protocol activated at the client side.ISA-PR-EAX_ppt—18All rights reserved © 2003, Alcatel


ConclusionsThe metro network holds the key to revenues generationand operator’s profitability.It is also the most capital intensive piece of infrastructure.Tight financial controls will be applied to metroinvestments strongly focusing on risk management andROI.The only way to achieve these objectives is to have asingle convergent multi-service transmission metronetwork.X_ppt—19All rights reserved © 2003, Alcatel


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