PairGain and the New Access Network

PairGain and the New Access Network The underlying technology used to provide person-to-person communications has changed little over the past few decades. While the basic copper infrastructure cannot be replaced anytime soon, the methods used to transfer information between people and computer equipment will evolve rapidly over the next five years. Large telecommunication service providers face the greatest challenge in their history. New competitive providers will need to build infrastructure and reliable service quickly in order to compete. Both will need a platform that anticipates these changes and can evolve quickly to support nextgeneration services. The PairGain Technologies Avidia System is designed to provide telecommunications service providers with the ability to deliver next-generation data, voice, and video applications over their existing copper infrastructure. This paper describes the trends that are driving the new access network and how the Avidia System meets those needs. Network Evolution To appreciate the trends that generate the need for a new access network, consider the evolution of telecommunication networks worldwide. Today telecommunication networks are forced to consider the relationship between voice, data, and how to provide new services. Phase I - Separate Voice and Data Networks When public data communications services were initially offered, they were built on a separate network that used different transmission and packet processing equipment. While the transmission paths may have crossed from time to time, there was no concept of, or any perceived benefit to integrating voice and data. Data was simply a new service. A customer that would buy a data service would have to lease a dedicated line specifically for that service. These leased data lines could be quite costly. PairGain Technologies, Inc. Page 1

Phase II - Voice and Data Combined in Backbones As data services became more popular, in tandem with the advances being made in computing technology, a two-tiered network concept was extended to accommodate data services. The data service access and backbone became analogous to local and long-distance services in the voice world. Microwave radio and fiber optic technologies such as SONET allowed cost-effective deployment of long-distance or backbone transmission services. The benefits and cost savings of this approach were real; but the initial cost of deploying a backbone network is very high, it therefore made sense to combine both voice and data on a single backbone. Indeed, SONET and related equipment were designed to combine both voice and data. SONET led to the inevitable combination of voice, data, and other new services. Phase III - SONET / ATM Services Move to the Edge PairGain Technologies, Inc. Page 2

As a result of great increases in both voice and data traffic and changes in the regulatory environment, telecom providers and new competitors began to deploy high-speed fiber network services in major metropolitan areas. This expanded the range of long-distance choices for businesses. As a result of consumer demands, the availability of local data transport access was also greatly expanded. The combination of voice and data services came closer to the user. This phase also saw the introduction of new technologies, such as efficient Asynchronous Transfer Mode (ATM) cell-switching, as a way to increase the capacity of fiber backbones as well as a wealth of new devices to move traffic on and off of the backbone, such as SONET muxes, ATM edge adapters, Frame-Relay Switches and Next-Generation Digital Loop Carrier Systems (NGDLCs). New voice over data services such as voice over IP, or voice over frame-relay, were also introduced late in this time period. Phase IV - Data, Voice and Video Services Share a Single Network Once a technology that allows data, voice, and video to be combined over a single cell-switching or frame-switching network becomes fine tuned, the need to support two separate networks will disappear completely. A new generation of access platforms that have copper interfaces to the subscriber on one side and high-speed interfaces to the SONET or ATM fiber backbone on the other side will slowly replace the need to support dozens of different platforms to manipulate traffic. Switching will be performed in these devices at the edge of the network by intelligent devices that establish data calls over the backbone, suitable for the traffic or service type requested. This new technology will dramatically decrease the cost to support a multi-services communication network and will provide a wider range of high-quality services to customers. Network Equipment - The Evolution Depicted The new access network will cost significantly less to deploy than the overlay networks of the past. Further improvements in the scalability of the new access network may compel even legacy telecom service providers such as the ILECs to shift network design quickly toward the new access network model. The cost savings in equipment needs are compelling enough for the shift. Consider the following example of a network built using the old overlay model and a network built using the new model. PairGain Technologies, Inc. Page 3

Old Network Model New Network Model PairGain Technologies, Inc. Page 4

Note that the new model provides the same services as the old model, but with the following benefits: Dramatically lowered equipment costs. Less equipment to manage with significantly reduced complexity. Fewer equipment vendors. Lower incremental costs for new services. Ability to easily bundle services. Increased scalability. Increased network reliability with fewer points of failure. Trends Driving the New Access Network Network service trends also point to this type of unified network architecture. Convergence In the future, data, voice and video services will all be connected over the data network. This trend creates a number of advantages, such as the development of a common networking infrastructure for all services. In addition, data-networking equipment leverages modern digital technology and can be made very inexpensively. And, while the regulatory environment around data is somewhat uncertain, data will never be regulated to the same extent of government control to which voice services were subjected. Data, Voice, and Video Convergence PairGain Technologies, Inc. Page 5

This lack of regulation will provide consumers with a wider choice of data services than was ever available with voice. Lack of regulation will also lower entry barriers for new competitors offering new types of services. While this may present a challenge for incumbent carriers that built their networks in a regulated environment, it will also afford them the opportunity to expand out of region and offer new competitive services that take advantage of their vast experience as a reliable service provider. New Services Introduced More Often In the past, telecommunication service providers would offer new services only from time to time, sometimes with as much as a two to three year gap. With rapid changes in network services, deregulation, and new competition, the frequency with which providers will offer new services and the incremental complexity and cost of deploying each new service will increase exponentially. The New Service Complexity and Cost Formula shows how the cost and complexity of deploying new services is increased through a number of different factors. This results in an exponential new services curve. New Service Complexity and Cost Curve (Old Network) PairGain Technologies, Inc. Page 6

Clearly the old model will break if providers do not make drastic changes in their ability to deploy new services. New Service Complexity and Cost Curve (New Network) A fundamental change toward a new unified network model will allow new services to be deployed with lower incremental complexity and costs. Here are some simple reasons: fewer equipment vendors involved fewer new platforms to evaluate or approve no need to build an overlay network for each new service multiple services provisioned and managed from the same platform PairGain Technologies, Inc. Page 7

Service Bundling Market research indicates a strong affinity on the part of consumers for service bundling. The chart below illustrates one example of consumer preference for bundled services. Local Phone + Long Distance 32% Local Phone + Cable 29% Cable + Long Distance 27% Local Phone + Cable + Long Distance 23% Long Distance Phone + Cellular 21% Local Phone + Cellular 20% Local Phone + Long Distance + Cellular 19% Local Phone + Internet 18% Long Distancer + Internet 17% Cable + Interenet 16% Local Phone + Long Distance + Internet 16% Long Distance + Paging 15% Local Phone + Paging 15% Cellular + Paging 15% All Six Services 14% 0% 10% 20% 30% 40% 50% Consumer Purchase Likelihood Source: The Strategis Group Consumer Affinity for Service Bundling The reason for this preference is simple. Consumers want to deal with fewer service providers; and in most cases, consumers perceive that they will pay less by buying all services from a single provider than by buying each service separately from individual providers. Indeed, providers will offer incentives for consumers to buy all of their services from them in a single package. PairGain Technologies, Inc. Page 8

Providers also see great value and competitive advantage in offering bundled services. The following chart from a recent market survey of competitive CLECs show bundled services as a key marketing strategy. CLECs Plan to Offer Bundled Services Another reason CLECs plan to offer bundled services is that the ILECs cannot easily do so. This allows them significant competitive differentiation. These trends toward convergence, new services, and service bundling all point to a new network design that unifies services in fewer platforms. Service providers will find it much easier to offer bundled data, voice, and video services more quickly if they can deploy an access system that can provision multiple services simultaneously, than if they have to deploy a separate platform or network for each type of service. PairGain Technologies, Inc. Page 9

Characteristics of the New Access Network Edge Switching One of the most important characteristics of the new access network will be switching at the edge or edge switching. In the past, point-to-point communications paths were set up by huge centralized switches. Traffic was transported by dumb muxes of various sorts to large switching centers where all the intelligence resided. Centralized Switches with Dumb Muxes With traffic loads growing exponentially, it no longer makes sense to centralize switching functions. Switching elements in the network must be distributed so that switching and traffic processing functions can be expanded smoothly and incrementally as traffic loads increase. PairGain Technologies, Inc. Page 10

Distributed Switching This distributed or edge switching model has a number of advantages: Local traffic is switched locally. The burden is reduced on expensive backbone resources by statistically concentrating traffic. Switches can be added where they are needed most. Over-all network reliability is improved by reducing central points of failure. Network intelligence is pushed closer to the users. Some may feel that the transition away from legacy switches to the new access network and edge switching will not occur in our lifetime. The transition to the new access network architecture will take several years to evolve, but we should not forget the lessons learned in computer technology. An analogy to the birth and evolution of the new access network occurred in computer history that reverberated throughout computing technology, all the way down to its foundation. In the 1960s and 1970s, businesses that used computing technology typically deployed large central computers called mainframes. Some deployed a smaller version of the mainframe called the mini. These large computers aggregated a number of dumb serial terminals. PairGain Technologies, Inc. Page 11

Old Host - Terminal Computing Model In the 1980s, the computing model changed very rapidly. In just a few short years, desktop PCs and client-server computing exploded onto the scene. The new model distributed computing power to the users on the edge of the network and connected them with a high-bandwidth local area network (LAN). PCs LAN Server New Client / Server, LAN Computing Model Vendors - Compaq - Oracle - Cisco PairGain Technologies, Inc. Page 12

The benefits of this approach were clear: Applications were processed locally, reducing the burden on expensive mainframe resources. Computers were added incrementally and added where they were needed the most. Overall reliability increased by reducing central points of failure. Network intelligence was pushed closer to the users. There was a period of pain involved in this transition, but the result was an ubiquitous use of the computer as a tool for a wide variety of applications. This allowed computers to become cost-effective for home use. Large multi-billion dollar mainframe manufacturers resisted this change, as did many corporate IS departments. But, in the end, the survivors were the ones who took advantage of change instead of fighting it. This same evolution will occur in the new telecommunications network. Large, expensive centralized switches will go the way of the mainframe computer, and will be replaced by a myriad of low-cost distributed edge switches that take better advantage of new computer processing and backbone technologies such as ATM and DWDM. These edge switches will provide a variety of copper interfaces and services while adapting traffic and establishing calls for data transmission over the backbone. The New Access Network Provides Edge Switching. Includes many copper interfaces and services. Concentrates traffic. Leverages new backbone technologies such as SONET, ATM, DWDM. Establishes Calls. PairGain Technologies, Inc. Page 13

ATM Switching ATM will be the basis upon which traffic will be switched in the new access network. Both edge switches and backbone switches will participate in ATM switching. ATM will easily mesh with a variety of related technologies such as IP, SONET, and Wave Division Multiplexing. This fusion will provide larger, more reliable pipes between ATM switches. The Road Leads to ATM ATM will predominate as a result of the following compelling ATM benefits: scaleable, secure, standards-based, multi-vendor support provision for bundled multiple services (data, voice, and video) on a common pipe allows the service provider to offer tiered services and quality of service. provision for a self-healing load balancing meshed architecture simplicity that allows for low-cost hardware provision of a connection-oriented ( call-oriented ) architecture that is more suitable for telco-like services. Indeed, ATM was standardized by the ITU and endorsed by Bellcore as the next-generation transport for broadband ISDN services. Telecommunications service providers are therefore familiar with ATM and are deploying ATM backbone technologies at an increasing rate. PairGain Technologies, Inc. Page 14

Increasing ATM Deployment Rate While ATM has not predominated LANs, it will become the primary transport mechanism within wide area networks (WANs), for which it was originally intended. Q Q Q Q Q Q Q June 25 - MetroNet Extends ATM Net Across Canada June 24 - AllTel in Major ATM Switch Deployment June 15 - British Telecom Announced PAN-European SDH / ATM Network June 10 - Sprint Places Multi-Million Dollar Order for MGX 8800 ATM Switches June 9 - Bell Atlantic Announces Major ATM Network Plans June 5 - Level 3 Announces Nation-Wide ATM Backbone June 3 - Sprint Unveils ION ATM Network June 1998 Carrier ATM Deployment Announcements PairGain Technologies, Inc. Page 15

ATM and SONET ATM and SONET are complimentary technologies: SONET has been widely deployed as a highly reliable fiber-optic transport network. ATM has been designed from the beginning to use the SONET physical layer. Many SONET muxes include OC-3 or other interfaces that can connect directly to ATM switches. While some providers will build fiber mesh topologies using native ATM switching, many will opt to use reliable, proven SONET rings to connect ATM switches. Some note that ATM adds a cell-tax. This small 5-byte tax per cell slightly reduces network efficiency for a specific data stream, but dramatically increases overall network efficiency by establishing a protocol for statistical multiplexing that opens up unused bandwidth to other applications. SONET does not inherently possess this capability. SONET and ATM together are a powerful combination. ATM Switch Connected to a SONET ATM. DWDM and ATM Dense Wave Division Multiplexing (DWDM) and ATM are complimentary technologies. DWDM does for fiber, what DSL has done for copper it increases the bandwidth potential of a single strand of fiber to an almost immeasurable level. However, DWDM does not provide quality of service, service tiering, or bandwidth on demand. Data traffic loading on the backbone is doubling at least twice a year, with this trend expected to continue for several more years. DWDM will dramatically increase the available bandwidth of network backbones. This may delay the need to immediately adopt a switched backbone infrastructure, but not for long. DWDM optical transceivers will probably be used to connect multiplexers or switches. PairGain Technologies, Inc. Page 16

ATM Switch Connected to a SONET Mux with DWDM Interface. ATM and IP ATM versus IP is a more complicated issue. IP has predominated as a transport for LANs and the Internet where ATM has often failed to gain acceptance. Over the last few years, IP has been adding quality of service and other protocols to give it some of the features that were built into ATM. IP was originally developed for use in packet-switched networks while ATM was developed for use in wide-area telecommunications networks. Now that telecom networks are adopting data packet switching, the relationship between these two technologies is unclear. The answer is probably that they will co-exist. IP will probably predominate LANs for the foreseeable future, and will run over Ethernet and other popular protocols that are well established for LANs. On the other hand, ATM appears as if it will predominate telecommunications networks for which it was designed. ATM will run over SONET, T1, T3, and other popular protocols that are well established for WANs. IP does not have the addressing capacity or circuit-switching technology in its current form to provide these basic features of ATM. While the IETF and other organizations are working to add these features to IP, it will be many years before they are standardized and deployable. We are most likely facing a world where IP and ATM will coexist, with ATM serving as a transport for IP and other protocols. The good news is that there are well-standardized protocols, such as RFC 1577, that are designed to bridge IP over the ATM network. ATM and IP Will Coexist PairGain Technologies, Inc. Page 17

Access devices or edge switches will need to be intelligent enough to support both IP and ATM interfaces, and traffic will need to be capable of adapting IP traffic to the ATM backbone. Supporting both protocols will be necessary. Direct Copper Interfaces The world is connected by copper. Telecommunications service providers have installed over 500 million copper pairs worldwide. Tens of millions more are being installed every year. New digital transmission technologies, especially Digital Subscriber Line (DSL), are capable of transmitting data at rates in the hundreds of kilobits per second over loops that extend well over 20,000 feet long. Shorter high-quality loops can provide data rates in the megabits per second. These data rates are suitable for supporting new data voice and video applications, not to mention high-speed Internet access. PairGain has been a pioneer in the development of DSL technology with over one million systems deployed worldwide. Many of these transceivers provide T1 transmission service for telephone companies and PTTs. Mux / Switch and Repeater Bay Separate PairGain Technologies, Inc. Page 18

In the past, it was necessary to transmit high-speed data signals through a separate repeater bay or digital transceiver. This is no longer the case as advancement in DSL technology now allows the transceiver to be incorporated directly into the switching or muxing equipment. Transceiver and Switch / Mux Together PairGain, as well as a number of its technology partners such as Nortel, Lucent, NEC, and Telco Systems, have incorporated copper interfaces directly into their muxes. PairGain will use the same approach with its new DSL access system the PairGain Avidia System. This has been made possible by dramatic advances in digital transceiver technology and microelectronics. PairGain Technologies, Inc. Page 19

Advances In PairGain s SPAROW Chip Just as new edge switches will incorporate switching and muxing features that used to be the exclusive domain of inside networks, the new-edge switches will incorporate direct copper-connected digital transceivers that used to be the exclusive domain of the outside plant network. The result is a multi-function platform, The Avidia System, that dramatically reduces the cost and complexity of deploying new high-speed digital services. Summary The new access network will require multiple functions, traditionally deployed in separate systems, to be combined into a single edge switch. Trends toward convergence, new services, and service bundling all point to a new network design that unifies services in fewer platforms. One of the most important characteristics of the new access network will be switching at the edge or edge switching. Asynchronous Transfer Mode (ATM) will be the basis upon which traffic will be switched in the new access network. ATM will coexist with SONET, DWDM, and IP. Copper transmission technology, particularly DSL, will be a key component of next generation access systems. Simple economics will drive the development of the new access network. PairGain Technologies, Inc. Page 20

1998 PairGain Technologies, Inc. All rights reserved. PairGain is a registered trademark, and Avidia is trademark of PairGain Technologies, Inc. All other products and brand names are trademarks or registered trademarks of their respective companies. PairGain Technologies, Inc. 14402 Franklin Avenue Tustin, California 92780-7013 Tel: 714.832.9922 or 800.370.9670 Fax: 714.832.9924 http://www.pairgain.com PairGain Technologies, Inc. Page 21