Laurel Networks - overcoming B-RAS limits with video-enabled ST200
May 2, 2005		Email this page

Interview with Mr Stephen Vogelsang, Co-Founder and Vice President of Marketing.

Introduction

Laurel Networks, founded in 1999, is headquartered in Pittsburgh, Pennsylvania, with international offices in London, UK, Hong Kong and Seoul, South Korea. The company has raised $102 million in financing from investors including Ciena, New Enterprise Associates (NEA), Trinity Ventures, Worldview Technology Partners, WorldCom Ventures, Rein Capital and CommVest.

Laurel Networks develops and markets service edge router systems and service management solutions, having launched commercial products in 2002. Its core products are the ST-series routers, comprising the ST50 and ST200 platforms.

Laurel Networks markets products to service provider customers worldwide, both directly and via partners that include Ciena and Marconi.

Background - delivering video to the home

Stephen Vogelsang explained that Laurel Networks has been addressing the broadband access market for the past year. Through working with PTTs, RBOCs and service providers worldwide it has become clear that all are facing the same challenge - voice revenues are coming under extreme pressure due to competition, compounded by evolving technologies. He commented,

"In the U.S., cable operators are increasingly encroaching on the telecom operators territory by offering voice services; internationally, more and more voice traffic is carried over wireless networks. At the same time IP-based voice services are now extending into the local market."

In response to this changing market landscape, telecommunications carriers are recognising the need to tap into new revenue streams by offering new services - the obvious candidate being video. Stephen Vogelsang noted that to deliver video traffic the carriers must invest in new equipment, using the revenues they are still able to earn from provision of local voice services.

Laurel Networks sees video as the growth engine for broadband IP networks, with the delivery of video services presenting both a challenge and an opportunity for equipment vendors and service providers alike - a challenge in that reliable delivery of high-quality video requires substantial network capacity; an opportunity as, once in place, the infrastructure supporting video services greatly expands the range of services that carriers can offer.

Outlining how the transition to video-enabled networks can be achieved, Stephen Vogelsang said that a key element of the broadband IP network capable of supporting video services is the router. He noted that cable operators are beginning to shift to IP-based networks for delivery of video services for a number of reasons, primarily relating to benefits in terms of cost, reliability, flexibility and ease of scaling in comparison with their installed video switches.

An additional advantage deriving from the shift to IP-based networks for video delivery is the opportunity to develop interactive services, made possible by the merging of video and Internet traffic onto the same network. This shift also creates opportunities for content providers, facilitating an expansion into new markets through the use of alternative distribution channels.

Commenting on the slow progress towards delivery of video services over telecommunication networks, which has been promised for the past twenty years, Mr Vogelsang said,

"Until now the technology enabling cost-effective transport of video over telecom networks has simply not been available. As recently as five years ago, if a telco wanted to offer video services it would have been forced to either duplicate the cable operators' infrastructure, or deploy fibre in the access network."

He continued,

"It is only recently that packet-based delivery of video has become feasible. The advent of ADSL2+ and VDSL technology makes the delivery of video service over copper infrastructure a practical proposition."

A second factor driving this shift is seen to be the competitive situation in the market, which, as noted previously, is obliging telecom carriers to expand service portfolios. Illustrating this change in the market environment, Stephen Vogelsang observed that ten years ago a carrier could make more money - and for a substantially lower investment - from adding a feature to its voice services than it would by rolling out video service. He added,

"With the continuing decline in revenues generated from provision of local voice service it is difficult to imagine that telcos will be able to make any significant profit from voice services alone in the future."

Product overview

Laurel Networks is currently focused on the entertainment experience in the home, via the television. The ability to deliver a full range of entertainment services to every home over the existing telecommunication network requires the application of new technology, which Laurel Networks believes it can now offer.

Stephen Vogelsang stated that to enable delivery of triple-play - voice, data and video - services over existing networks Laurel Networks has enhanced its existing products, adding the necessary functionality and features to make this viable. Laurel Networks has transformed its ST200 service edge router platform, which, Mr Vogelsang noted, is deployed with cable operators worldwide including ntl in the UK, into a specialised IP video router by enhancing functionality and adding newly developed line-cards.

Laurel Networks' new platform is described as being designed to operate in multi-purpose broadband networks, where it integrates with ADSL and FTTP infrastructure. As such the system can be dropped into an existing network to immediately enable IP video delivery. The platform also provides for the transition to Ethernet-based DSL networks.

The ST200 platform has been enhanced through the development of new hardware capabilities, leveraging the Ethernet-optimised network processing blade, and additional software features. The enhanced ST200 platform is scheduled for launch on the market in the third quarter of 2005.

Mr Vogelsang explained that the network processing blade is a card that performs packet processing tasks, including packet forwarding, buffering and queuing, plus quality of service (QoS) functions. This module integrates with a physical I/O card housing the system ports. He noted that a 10-port Gigabit Ethernet card has also been developed for the platform.

Highlighting the advantages of the new platform, Mr Vogelsang cited low-cost, with a price-point claimed to be approximately one-third that for a typical IP edge router system and around one-third that of Laurel Networks' previous generation system; delivery of wire-speed, 1 Gbit/s, bandwidth across all ports with no packet loss or over-subscription issues; and QoS features essential for delivery of video traffic.

In terms of QoS capabilities, individual video streams may be isolated and expedited to reduce signal latency and jitter, a feature claimed to allow the use of lower cost set-top boxes (STBs) in the home as there is consequently a reduced need for signal buffering.

The new platform also offers improved security features to prevent unauthorised network access and to protect from malicious attacks.

New software features are scheduled to be launched in tandem with the enhanced product hardware in release 3.2 in the third quarter of 2005. The key component of this upgrade, as relating to video delivery, Stephen Vogelsang said, is the capability to automatically and dynamically discover, authenticate and provision home media devices,

"This feature means that when a user plugs in a network device at home, whether an STB or a PC, Laurel Networks' system will detect this, determine what type of device has been connected and what service is required, assign an address, and connect it to the appropriate network."

The Laurel Networks platform also provides a facility to control bandwidth and other network resources to each individual device connected to the network, as appropriate. This feature translates as an ability to allocate the bandwidth required for video service delivery to the consumer,

"At present, if you view a streamed video on a PC you will not be surprised if the video stops occasionally; contrast that with your expectations when watching television at home - you do not expect any loss of service or variation in quality."

Enabling the network

Describing the present state of telecommunication access networks, Stephen Vogelsang noted that there are a number of limitations that inhibit delivery of video. He cited lack of multi-cast capabilities, the need to upgrade from ADSL to higher bandwidth ADSL2+, VDSL or fibre technology, plus the requirement to shorten loop lengths to enable use of ADSL2+ and VDSL technologies, as barriers to the rollout of video services.

With its new product, Laurel Networks has focused on addressing shortcomings with the B-RAS (Broadband Remote Access Server) platform affecting video delivery. The new video-enabled ST200 platform drops into an existing network and ties in with the headend equipment, consisting of VoD (Video on Demand) servers and codecs, the IP backbone and the access network. The product also works alongside installed B-RAS equipment.

For delivering video, B-RAS platforms suffer a number of limitations. They were originally designed to provide Internet connectivity and as such they offer relatively low reliability, and, as the product is optimised to deliver low bandwidth connections to a large number of subscribers, low overall throughput. Further, B-RAS systems are expensive on a per-subscriber basis, and this cost escalates as bandwidth per-user is increased.

As takeup of video services increases, other elements of the access network will need to be upgraded in order to deliver more channels, support more STBs and offer services such as high-definition television. Mr. Vogelsang remarked that ultimately, the DSLAMs (DSL Access Multiplexer) would be replaced, typically with remote terminals placed further out in the network and thus closer to the subscriber. This would shorten the local loop connections and enable the rollout of ADSL2+ and VDSL technologies.

Such a scenario results in a large number of lines coming into the central office location, which, using the ST200 platform equipped with 10 port Gigabit Ethernet cards, could be terminated directly. The platform would also perform aggregation, IP video routing and subscriber management functions. As subscriber numbers and network traffic grow, it becomes logical to move the IP edge - the ST200 platform - further out into the network to increase capacity.

At some point, Mr Vogelsang noted, the level of video traffic dictates the removal of the B-RAS systems and ATM-based access equipment, at which time Internet traffic must be transferred onto the video routing infrastructure. He emphasised that this does not present a problem as the Laurel Networks platform is capable of performing the functions of the B-RAS system.

Addressing the market opportunity

The enhanced ST200 platform will be marketed as a new product, targeted specifically at the IP video sector. However, it will be made clear to customers that the new product is an extension of the existing platform, utilising the same proven core technology that has been available on the market for some time. Emphasis will also be placed on the fact that the system enables delivery of video services over existing network infrastructure.

Discussing Laurel Networks' approach to the market, Mr Vogelsang said the company is positioning itself with a number of partners to ensure that it is able to effectively address the perceived market opportunity. He stressed that Laurel Networks has developed relationships with suppliers in different regions to address potential customers in markets worldwide. These activities include teaming with Ciena in the U.S. and Marconi, which OEMs Laurel Networks' products, in Europe.

The company's initial focus has been the U.S. federal government, and this strategy has assisted Laurel Networks' entry to the European market. Mr Vogelsang stated that Laurel Networks recently established a value-added reseller agreement with systems integrator Telindus of Belgium,

"The ntl contract in the UK was won through Telindus, which acquired UK systems integrator K-NET several years ago. The fact that Laurel Networks had an existing relationship with K-NET dating back many years was useful in this case."

In general, Laurel Networks is confident that by developing the right partnerships and distribution channels it will be able to compete on equal terms with the larger vendors in the sector.

Market development

The present competitive situation for service providers in the market varies from region to region. Stephen Vogelsang observed that, for example, in Europe the need for telcos to move to delivery of video services is less clear-cut than in the U.S., where competition from cable operators is far more intense. He noted,

"In the U.S. the cable and telecommunications operators are now battling for the broadband market. For the telcos provision of video service is essential just to maintain parity with cable operators in terms of service portfolio. The telcos see the deployment of broadband networks capable of delivering VoD services as a way to leapfrog the cable companies and so gain a competitive advantage."

Commenting further, Mr Vogelsang expressed the view that the trend with video services will be towards more customised content, both in Europe and North America. He noted that this is likely to apply particularly to sports coverage,

"Viewers of sporting events might, for example, want to check statistics on particular teams or players whilst watching a televised event. Currently this could be done via the Internet, in the future live coverage of the event and background information will be available via the same channel."

Describing the take-up of new technologies, Stephen Vogelsang said that although in the past the U.S. market would generally be the first to adopt new technologies, followed by Europe then Asia, today the situation is reversed. It was emphasised that Laurel Networks is targeting the Asian market and ramping up its operations in the region, recently appointing a VP for Asia based in Beijing. Laurel Networks has several customers in the region and will be leveraging these to increase a presence in Asia.

Mr Vogelsang regards Asia as the early adopter of technology across the board in the telecommunications sector, followed by either Europe or the U.S. depending upon the specific technology or application considered.

Europe is viewed as a key market by Laurel Networks. Recent investments include the appointment of Thomas Schmitt, based in Frankfurt, Germany, as VP of sales for the EMEA region, and the expansion of operations in the UK. A number of near-term opportunities have been identified with Tier 2 carriers; longer term the PTTs are regarded as potential customers.

In the U.S. Mr Vogelsang said Laurel Networks focuses on the IOCs (Independent Operating Companies) and ILECs (Independent Local Exchange Carrier); the RBOCs (Regional Bell Operating Companies) are not considered to represent a near-term opportunity. The RBOCs have, to date, stuck with incumbent vendors while they assess their future direction. It is anticipated that the RBOCs will open up to new vendors in early to mid-2006 as they move to equip their networks for delivery of video services.

Video as revenue opportunity

From the carriers' perspective, Stephen Vogelsang does not believe there is any 'killer application', whether video or any other offering, although he believes that video offers telcos a genuine revenue opportunity. It was noted that the very high demand for bandwidth that video delivery imposes on the network gives telcos an advantage over cable and wireless operators,

"The telcos have the core infrastructure in place, with their copper access networks, to enable provision of high bandwidth to every subscriber. Video is the catalyst to this coming about. However, I do not regard video as the end game; in the future there are likely to be services and ways of utilising those services that have not yet been conceived."

Mr Vogelsang acknowledged that it could be argued telcos do not need video - generally it could be said that they are doing reasonably well as things stand. However, at some point in the not too distant future carriers will be forced to seek additional revenue streams.

Taking BT as an example, he observed that the company's core voice business is suffering under increasing pressure from wireless carriers; to address this issue in the short-term BT is seeking to converge wireline and wireless services to regain control of the customer base. But despite this, he believes that BT, and all major operators, will soon need to find alternative sources of income.

Winning new customers

Laurel Networks has already won an order for the new ST200 solution from a small IOC in the U.S. This contract has not yet been announced. Stephen Vogelsang said that reaction to the new product so far, from Laurel Networks' sales force and from customers, has been very positive.

He commented that whether or not the new product leads to a tranche of large-scale video installations, the company is confident that there exists a major opportunity in upgrading broadband infrastructure - driven by a requirement to deliver video services. He reiterated the belief that once the bandwidth is available in the access network it will lead to development of a wide range of new services, which will in turn drive demand for yet more capacity.

Discussing the company's sales cycle, Mr. Vogelsang said that, up until around one year ago, Laurel Networks was seeing typical sales cycles of between six and nine months. However, he observed that over the past year cycles have begun to shorten, particularly with smaller operators. This change is put down to Laurel Networks' expanding customer base and growing reputation in the market.

With the recent sale of the new product to a U.S. IOC, Stephen Vogelsang pointed out that the sales process took six weeks, from launching the product to the sales team to installation of the product at the customer site.

On the subject of the need for a major reference customer, Mr. Vogelsang acknowledged that such would certainly be helpful to Laurel Networks, adding,

"While there are no opportunities that will translate into a flagship, reference customer within the next few months there are a number of candidates on the horizon. As I mentioned earlier, the new solution will be launched in the third quarter of 2005, Laurel Networks is currently seeking to establish trials with key operators. I have every confidence that one of these companies will be converted into a reference customer."

Stephen Vogelsang remarked that service providers generally expect equipment suppliers to present a concept of how networks could evolve. He cited the atypical example of SBC, which tendered for a company to devise a network architecture capable of delivering video services, eventually selecting Alcatel, however,

"More usually a vendor will offer a carrier its concept for the future of the network, and the carrier will accept part or parts of that view. Laurel Networks, for example, is a developer of IP networking and subscriber management technology, a carrier customer expects us to have some idea of how their networks might be architected and operated in the future."

This does not mean that Laurel Networks dictates to a carrier how its network must be designed. Mr. Vogelsang emphasised that Laurel Networks' products are flexible and allow a customer to follow a different path to that envisioned by the company if they wish to do so. The facility to deploy the product into existing networks is seen as a demonstration of this flexibility.

Sizing up the competition

With regard to the competitive landscape, Mr Vogelsang stated that Laurel Networks' closest rival is Redback Networks, with its SMS and SmartEdge platforms. He noted though that these platforms offer 30 Gbit/s capacity, and therefore lack the scalability of Laurel Networks' 80 Gbit/s ST200 system; also Redback does not currently provide 10 Gigabit Ethernet interfaces.

Of the other major vendors, Juniper Networks, with its ERX B-RAS platform, and Cisco Systems, do not offer next-generation solutions comparable to Laurel Networks' new product, while Alcatel markets its 7450 and 7750 products, gained through the acquisition of TiMetra.

Mr Vogelsang pointed out that all of the above-mentioned deliver products lacking the subscriber management capability of Laurel Networks' solution, which is considered to be a key feature of the product,

"The end point in the network is the device, or devices, in the home; it is the edge router platform that must communicate with these devices to enable provisioning of the requested services. Laurel Networks provides for this with its subscriber management functionality. Very few platform vendors offer this."

Laurel Networks regards this omission on the part of competing vendors as presenting a prime opportunity to expand its presence in the market. Juniper is understood to be developing a next-generation product but has so far not managed to launch it on the market; Cisco, due to its size and positioning, is expected to garner a portion of the market even though it lacks the best technology. Stephen Vogelsang concluded,

"I believe that Laurel Networks currently has an eighteen-month to two-year lead over the competition in the broadband services router market sector."

Addressable market

With regard to the size of the market that Laurel Networks is addressing, Mr. Vogelsang said the B-RAS product segment, which the new ST200 platform is designed to supersede, is expected to be worth approximately $1 billion by 2008. The new product is also expected to take a portion of the edge router market, which is forecast to be worth around $2 billion in 2008.

Taking these figures, Laurel Networks estimates its total addressable market at approximately $1.5 billion by 2008 - this figure representing a substantial growth rate from a market currently estimated at $200 million.

It is expected that the major part of the market will be shared between Laurel Networks, Redback Networks, Cisco Systems and Alcatel.

Preparing for the future

Considering the development of networks and services, Laurel Networks envisions a future where any content can be published electronically and distributed to any subscriber that wishes to view it. Stephen Vogelsang noted that one of the hurdles to this scenario is the difficulty in licensing content, the other being the ability of the networks to deliver the content,

"The access portion of the network is now being upgraded to enable distribution of video services. Laurel Networks believes that it has a part to play in this process, not only in the near-term, through offering solutions giving service providers a quick route to enabling existing infrastructure, but also in the future, as new network infrastructure is installed to meet demand from increasing subscriber numbers and expanding services and resultant growth in traffic volumes."