It was fitting that Carl Russo gave his final perspective on the telecom industry as he contemplated leaving Cisco. He had already “checked out” after the acquisition of Cerent in 1999 and extracted concessions from John Chambers on the status of each and every employee of his upstart startup.
Referred to as an industry heavyweight in a Fiber Optics News (FON) interview [1] published on Christmas Eve 2001, Carl Russo, then Cisco’s vice-president of optical strategy, said that there would be a “bumpy” return to capital spending in 2002. His comments, in retrospect, reflected an unrealistic optimism.
Referred to as an industry heavyweight in a Fiber Optics News (FON) interview [1] published on Christmas Eve 2001, Carl Russo, then Cisco’s vice-president of optical strategy, said that there would be a “bumpy” return to capital spending in 2002. His comments, in retrospect, reflected an unrealistic optimism.
“I hear varying things about when the turnaround may come, anywhere between Q1 and Q3, but I don’t think there will be an identifiable ‘as-it’s-happening’ turnaround next year,” said Russo to FON.
Industry analyst David Gross, of Communications Industry Researchers, provided a much less sunny outlook than Russo’s assessment. He told FON that the market will stop getting worse in 2002, but spending probably won’t actually increase until early 2003 [2].
Industry analyst David Gross, of Communications Industry Researchers, provided a much less sunny outlook than Russo’s assessment. He told FON that the market will stop getting worse in 2002, but spending probably won’t actually increase until early 2003 [2].
New Services with Less Capital Expenditure (CAPEX)
That being understood, a more cost-effective way of introducing efficient and data-optimized services was made possible with the introduction of the Cerent 454 (now Cisco ONS 15454). This product innovation allowed Ethernet over an optical transport infrastructure (SONET or SDH) to be introduced on a local, regional, or national basis.
Russo acknowledged that Ethernet was top of mind with all of Cisco’s customers, not frame relay and no longer ATM to a large degree. He told FON, “Ethernet as a deployed service to a customer is going to grow, and grow rapidly.”
On this point, Russo was spot on. He added, “How the backhaul network of that Ethernet is instantiated, really depends on who is building the network. If you have an ILEC that’s deploying Ethernet, they’re going to deploy it over their SONET infrastructure. You might even find customers deploying Ethernet services to their end customers, and encapsulating it in ATM and putting it over SONET. It really depends on who you’re talking about.”
Russo cautioned that the industry wouldn’t see Ethernet replacing SONET at the transport framing mechanism. Again, he was correct, and Cisco acknowledged this with its IP + Optical Mega Launch held earlier that year on January 31st. Telcos would have to deploy Ethernet as a service over the top of the existing optical transport infrastructures in order to remain competitive.
“The only folks that are ripe to try something different are going to be the greenfield CLECs, and that’s not a particularly wonderful segment of the market right now,” Russo said, adding, “I think some people will try to use Ethernet as their transport mechanism, and try to press Ethernet onto a lambda. That way a fiber cut or circuit failure would be done at a lambda level, not at the Ethernet level. But we’re a ways away from the ‘transport Ethernet replacing SONET’ discussion really having much meaning.”
Time-to-Revenue Emerged as a Driver in 2002
Service providers were searching for telecom products that enabled faster time-to-revenue. The Cerent 454 enabled this by reducing the turn-up time from weeks to a day and in some cases, cutting service activation times down to hours or even minutes [3].
Cerent recognized early on, as others later came to realize, that the secret sauce for managing an optical network (that has the agility to reconfigure services in real time anywhere) is the software to take all of the standalone network nodes and have them interconnect and talk to each other. This allowed for rapid introduction of new services and significant improvements over the rollout of existing services.
Russo gets the last word. With one eye on potential developments on Capitol Hill in 2002 and another eye on the broadband access market, Carl summarized for FON the situation as he saw it, “The issue is how do we encourage the ILECs – without giving up the farm – to get into the broadband access business and accelerate their rollouts. You need big pipes at the end of your network.”
He added, “The challenge with it is two-fold. One is the whole broadband access litigation legislation issue. And the other thing to watch is the ‘who pays?’ model. That is equally as important as the regulation.”
Russo chose to tackle part of this challenge directly. He left Cisco’s optical transport team shortly thereafter to lead Calix, a broadband access manufacturer, where, in 2017, he still works.
This industry heavyweight sought to try his influence in another part of the telecom network.
[1] Good Riddance 2001; Welcome 2002: A Look Ahead At Trends That Will Shape The Industry, Fiber Optics News, December 24, 2001, pp.1–3, 8.
[2] Gross added, “Typically, to sustain yourself and have a reasonable credit rating and not get overburdened with interest payments, you can’t really spend much more than 20-25 percent of revenue on [capital expenditures],” Gross [said of the service providers]. “A lot of these carriers in the U.S. have come back into line with that range. We talk about a comeback, but what we’re talking about is hitting that trough and then rising very slowly off that trough. But there’s a lot of spending that’s just not coming back – probably ever.”
[Note: David is no longer with CIR.]
[3] The Cerent 454 achieved this rapid time-to-revenue with its second major software release and its CTM-based management capabilities.
That being understood, a more cost-effective way of introducing efficient and data-optimized services was made possible with the introduction of the Cerent 454 (now Cisco ONS 15454). This product innovation allowed Ethernet over an optical transport infrastructure (SONET or SDH) to be introduced on a local, regional, or national basis.
Russo acknowledged that Ethernet was top of mind with all of Cisco’s customers, not frame relay and no longer ATM to a large degree. He told FON, “Ethernet as a deployed service to a customer is going to grow, and grow rapidly.”
On this point, Russo was spot on. He added, “How the backhaul network of that Ethernet is instantiated, really depends on who is building the network. If you have an ILEC that’s deploying Ethernet, they’re going to deploy it over their SONET infrastructure. You might even find customers deploying Ethernet services to their end customers, and encapsulating it in ATM and putting it over SONET. It really depends on who you’re talking about.”
Russo cautioned that the industry wouldn’t see Ethernet replacing SONET at the transport framing mechanism. Again, he was correct, and Cisco acknowledged this with its IP + Optical Mega Launch held earlier that year on January 31st. Telcos would have to deploy Ethernet as a service over the top of the existing optical transport infrastructures in order to remain competitive.
“The only folks that are ripe to try something different are going to be the greenfield CLECs, and that’s not a particularly wonderful segment of the market right now,” Russo said, adding, “I think some people will try to use Ethernet as their transport mechanism, and try to press Ethernet onto a lambda. That way a fiber cut or circuit failure would be done at a lambda level, not at the Ethernet level. But we’re a ways away from the ‘transport Ethernet replacing SONET’ discussion really having much meaning.”
Time-to-Revenue Emerged as a Driver in 2002
Service providers were searching for telecom products that enabled faster time-to-revenue. The Cerent 454 enabled this by reducing the turn-up time from weeks to a day and in some cases, cutting service activation times down to hours or even minutes [3].
Cerent recognized early on, as others later came to realize, that the secret sauce for managing an optical network (that has the agility to reconfigure services in real time anywhere) is the software to take all of the standalone network nodes and have them interconnect and talk to each other. This allowed for rapid introduction of new services and significant improvements over the rollout of existing services.
Russo gets the last word. With one eye on potential developments on Capitol Hill in 2002 and another eye on the broadband access market, Carl summarized for FON the situation as he saw it, “The issue is how do we encourage the ILECs – without giving up the farm – to get into the broadband access business and accelerate their rollouts. You need big pipes at the end of your network.”
He added, “The challenge with it is two-fold. One is the whole broadband access litigation legislation issue. And the other thing to watch is the ‘who pays?’ model. That is equally as important as the regulation.”
Russo chose to tackle part of this challenge directly. He left Cisco’s optical transport team shortly thereafter to lead Calix, a broadband access manufacturer, where, in 2017, he still works.
This industry heavyweight sought to try his influence in another part of the telecom network.
[1] Good Riddance 2001; Welcome 2002: A Look Ahead At Trends That Will Shape The Industry, Fiber Optics News, December 24, 2001, pp.1–3, 8.
[2] Gross added, “Typically, to sustain yourself and have a reasonable credit rating and not get overburdened with interest payments, you can’t really spend much more than 20-25 percent of revenue on [capital expenditures],” Gross [said of the service providers]. “A lot of these carriers in the U.S. have come back into line with that range. We talk about a comeback, but what we’re talking about is hitting that trough and then rising very slowly off that trough. But there’s a lot of spending that’s just not coming back – probably ever.”
[Note: David is no longer with CIR.]
[3] The Cerent 454 achieved this rapid time-to-revenue with its second major software release and its CTM-based management capabilities.