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Interview with Mr. Bill Kautz, Strategy & Planning GroupIntroductionTellabs, based in Naperville, Illinois, develops and markets voice and data transport and access systems, as well as providing professional services, for customers worldwide. The company offers a range of products that support both legacy and packet-based traffic for applications such as delivery of business services, mobile backhaul and optical transport, and counts among its worldwide customers AT&T, BT, Bharti Airtel, China Unicom, NTT Communications, Swisscom, Telstra, tw telecom, Verizon and Vodafone. The primary focus of Bill Kautz's role is planning product development across Tellabs' portfolio with a specific focus on optical and access systems and, more recently, MPLS-TP solutions. Bill Kautz began by outlining Tellabs' product portfolio, which comprises three broad product groups - business, mobile and optical - plus a services offering. Business solutionsProducts for business services applications centre on Carrier Ethernet and multi-service platforms for delivery of leased-line and carrier data services. Almost all sales for this market are to service providers, to enable them to serve their business customers. Specifically, Tellabs' portfolio for business products includes the Tellabs 8800 Series router system, which supports both IP/Ethernet and legacy ATM services to allow a gradual transition to all-Ethernet networks. Another product often deployed to support business services is the Tellabs 7100 Series DWDM optical transport switch with ROADM capability. Using this platform, a service provider can supply a business customer with a purpose built optical network or shared service network. Typical end-customers include major financial, healthcare and insurance firms, often addressing network resiliency/disaster recovery requirements or choosing to install a private network at large facilities. For projects involving the installation of a private network, Mr. Kautz said Tellabs would generally partner with the service provider customer to deliver the solution. Tellabs also offers access products for business applications via its Tellabs 1100 multi-service access solution and the Tellabs 1600 ONT products for delivery of fibre to buildings and to the desktop. The Tellabs 1100 Series products offer support for both DSL and GPON technology. Targeting optical LAN projects, Bill Kautz said Tellabs intends to push the 1600 ONT solution to enterprise and federal customers in the U.S., with a key selling point being the ability for customers to significantly reduce power and space requirements using optical cabling as opposed to copper. Mobile solutionsWhile not going into detail for competitive reasons, Bill Kautz said much of Tellabs' revenue comes from mobile backhaul, which depending on the generation of mobile network covers applications ranging from connecting cell towers back to the network to linking core networks with GGSN and SGSN elements in 3G networks. Key products for this market are the Tellabs 6300 SDH transport system, the Tellabs 7100 Optical Transport System and the Tellabs 8600 and Tellabs 8800 IP/MPLS multi-service routers. It was noted that there are now more than 140 mobile backhaul networks utilising the Tellabs 8600 platform. Tellabs has been in the mobile market for 20 years and addresses this sector via partnerships with some of the major mobile infrastructure suppliers, as well as selling direct to mobile carriers and wholesale backhaul providers. As networks transition to 4G technology, Tellabs is aiming to offer solutions for the mobile core and as part of this strategy, in December 2009, Tellabs acquired WiChorus, a supplier of evolved packet core solutions. To date, Tellabs has launched a WiMAX ASN gateway and GGSN within its Tellabs SmartCore™ 9000 Series offering. Optical solutionsTellabs' core product portfolio targets metro and regional transport applications for which a range of platforms is offered, including the Tellabs 6300 managed transport system, the Tellabs 7100 optical transport Series and Tellabs 7300 metro Ethernet switch Series, plus the Tellabs 8000 intelligent network manager solution. The Tellabs 6300 Series supports SDH, Ethernet-over-SDH and DWDM technologies. The Tellabs 7300 platform is described as a hardened Layer 2 Carrier Ethernet edge switch suitable for deployment out in the network at remote sites. The Tellabs 7300 devices support Ethernet aggregation across modules to offer hardware redundancy between two switch modules, in line with the carrier-class focus of the product. Mr. Kautz described the Tellabs 7100 Series platform as an 8-degree ROADM-based system for metro/regional applications that also offers support for local add-drop, sometimes referred to as providing 9 degrees. The Tellabs 7100 is offered in two configurations: the compact Tellabs 7100 Nano 5RU system for edge/small-scale applications and the scalable Tellabs 7100 system, both of which support up to 88 channels. It was noted that Tellabs has deployed what is believed to be the world's largest metro ROADM network in the U.S. and that 6-9s system reliability has been proven in the field based on many years of customer use. Mr. Kautz emphasised that the Tellabs 7100 does not have to be deployed as a full 8-degree system, being scalable from 2 up to 8 degrees through incrementally adding 1 degree or more as required. The Tellabs 7100 is offered in 44- and 88-channel configurations and integrates TDM, SONET/SDH, OTN and packet switching capabilities that can be added by installing modules, for example a SONET/SDH MSPP or an OTN or Ethernet switch on a blade. This system currently supports client-side interfaces from 100 Mbit/s to 40 Gbit/s capacity, with a 100 Gbit/s transponder in development. The system's ROADM optics and amplifiers are already 100 Gbit/s-capable. Tellabs' approach to 40 Gbit/s and 100 Gbit/s systems is based on requiring multiple suppliers for the components used in its transponders. Mr. Kautz noted that the company worked on the 300-pin MSA architecture to enable it to seek bids from multiple suppliers, both to gain the best price and to provide supplier diversity. He remarked that XFP modules would be 40 Gbit/s capable in future. The use of the 300-pin MSA also allows Tellabs to change the modulation type used in its products relatively easily - as it has done with 40 Gbit/s systems - to improve performance and range. Further, the system supports a shelf switch that can switch data between modules, acting as a cross-connect, and also offers software controlled, rate agile client interfaces that support any client service - SONET, SDH, Ethernet and Storage Area Network (SAN). Client side SDH rings are also supported, with the Tellabs 7100 at the head of the ring processing multiple wavelengths if required. Mr. Kautz explained that it may be unnecessary to take DWDM to the customer endpoint since there is continuing demand for SONET/SDH equipment, which the Tellabs 7100 products support. For lower Ethernet capacity requirements, Tellabs 7300 Ethernet switches can be used. Tellabs' focus is on building flexible transport infrastructure that can be deployed quickly and eliminates overlay technologies as far as possible. Mr. Kautz commented, "In the past a network might have SDH rings overlayed with Ethernet switches and then IP routers below the application layer. Tellabs aims to collapse the layers - Layers 1 and 2 and the transport layer - below the IP routers. In addition, the company integrates support for multiple services - SDH, Ethernet and OTN - into a single transport system". Finally, Mr. Kautz added that the Tellabs 8000 Series Intelligent Management solution supports all of Tellabs' products, can be deployed as either an EMS or an NMS system, and provides service management functionality, which may be valuable for smaller Tier 2 service provider customers. Technology innovationsOutlining the basis for Tellabs' product strategy, Mr. Kautz said the company could be regarded as both a technology innovation-led operation and a fixer of problems faced by its customers. Offerings such as ROADM and router bypass could be seen as technological innovations, while mobile backhaul products mainly address a cost challenge for service providers. Another area of interest is the control plane, which Mr. Kautz remarked is seen as becoming more important with adoption of OTN and MPLS-TP technology in transport networks. ROADM functionalityDescribing Tellabs' ROADM-based products, Mr. Kautz explained that the way networks have been built with SONET/SDH access makes it costly to incrementally add bandwidth and customers. This architecture involves back-to-back multiplexers, generally linked via cross-connects at ring interconnects that are then overlayed with Ethernet switches, resulting in the need for numerous optical-electrical-optical (OEO) conversions and presenting problems as regards the flexibility to add bandwidth. Using ROADM-based networks, where traffic is multiplexed at the network edge, it is possible to keep the signal optical across the network, aiding flexibility. Once ROADMs are in place it is straightforward to add a wavelength across, for example, a metro network, reducing the cost of adding a 10 Gbit/s service for a customer. Traditionally it would be necessary to add MSPPs into the network, involving multiple additional OEO conversions. For service provider customers with large networks, particularly in the U.S., Mr. Kautz remarked that this strategy can help them to be more competitive by reducing turn-up times for new services and lowering opex, which can then enable them to cut the prices they charge for services. At the same time, by deploying smaller versions of the Tellabs 7100 system a customer can both provide existing services at lower cost and offer new services. Enabling router bypassAnother area of focus for Tellabs is router bypass, which, Mr. Kautz stated enables service providers to reduce the number of router ports needed. This offering was developed in collaboration with customers and is currently in trials. Router bypass integrates certain Layer 2 features with DWDM transport. The idea is not new but is becoming more important and is based on the fact that not all traffic on a network needs to be routed. A service provider's data traffic will be a mix of that going to the Internet, which does not need routing, plus business services and IP traffic that does. Tellabs found that most service providers presently design optical transport networks as point-to-point, router-to-router systems, irrespective of whether it is an SDH or a DWDM transport network. Such a design leads to numerous transit hops where each router processes all traffic to send on to the next one, whereas Internet traffic could bypass the routers and travel direct to an Internet access point. While existing networks can be designed to perform this bypass procedure, Mr. Kautz said that most carriers do not do so, and therefore Tellabs has been working with customers to enable them to use the transport network to bypass routers utilising the Layer 2 integration capability of the Tellabs 7100 system. The company expects to see deployments of this solution shortly. It was observed that aside from the technology issues relating to this concept, large carrier customers tend to maintain separate transport and data traffic services teams that must work together to implement the solution, thus adding to the time required to position the idea. Mr. Kautz emphasised that Tellabs focuses on selling the value proposition to customers rather than highlighting the technology underpinning the solution. The competitive environmentMr. Kautz commented that over the past ten-or-so years the competitive landscape has changed significantly. During the 'bubble' era much of Tellabs' competition was small start-ups offering advanced technology; subsequently it has tended to be the large, established vendors. He noted that in a difficult economic environment carriers tend to become more conservative in changing technology, making it even more difficult for new players to succeed. Although Tellabs has completed only one acquisition in the past five years, Bill Kautz said the company is constantly on the lookout for new technology that could enhance its product offering. Specifically, the Tellabs 8800 platform was cited as an example of successful products based on acquired assets derived from the acquisition of Vivace Networks in 2003: "With acquisitions it is partly simply a matter of finding the right company at the right time. As I said, Tellabs is always seeking interesting new technology and has no inherent aversion to buying companies or assets. However, acquisitions are not always beneficial and the integration of two businesses is usually difficult and very time consuming". Working with larger customersConsidering the challenges of addressing large carrier customers as a mid-sized vendor, Mr. Kautz acknowledged that there is a danger that individual customers will begin to have too much influence on the product roadmap. Achieving a reasonable balance is not easy, he said, especially as at times it can be valuable to follow a large customer's requests for a particular solution in order to ensure a place in its network or because the company is a leader in a particular field. Overall, Tellabs aims to select areas of focus that it can apply more widely than a single customer. As an example, Mr. Kautz cited the Tellabs 7100 system as not generally having been tailored for specific customers, with enhancements such as packet transport that are widely applicable in the market developed by working with a number of customers. At the same time it was noted that working closely with individual customers could be useful as it is a way for Tellabs to learn what works and to adjust its product roadmap to include emerging technology that service providers are demanding. The difficult part is picking out the right areas to focus on. In this context Mr. Kautz noted that Tellabs is currently working with customers and potential customers to develop high-capacity OTN switching capability. This is one area where working with large carriers is seen as essential as they will be the early adopters, while small carriers may adopt the technology eventually, but not initially. End-to-end solutionsExpanding on Tellabs' focus on specific parts of the network, Mr. Kautz noted that the company seeks to be the best in its areas of focus and to maintain this leading position as it extends its offering. For example, the Tellabs 7100 was originally a DWDM-based transport system that did not reach the network edge for smaller applications; when this capability was identified as of value to customers the company quickly developed a 5RU product to address the need. Where customers demand an end-to-end network solution, Tellabs can partner with larger vendors - mobile backhaul being a good example. In this case mobile infrastructure vendors utilise Tellabs systems as part of a complete solution, generally deploying Tellabs' branded systems rather than re-badging the products. Tellabs itself does occasionally use other suppliers products as part of a solution and a couple of third party products have been re-badged under the Tellabs name. Demand for end-to-end solutions does vary from customer to customer though, Bill Kautz said, with Tellabs' sometimes forming part of a complete network and at other times providing the optical systems independent of other suppliers. The road aheadMobile packet core solutions is the key area where Tellabs is now aiming to develop its offering, building on the acquisition of WiChorus. Further to this, Bill Kautz said Tellabs sees the growth of over-the-top data traffic in fixed as well as mobile networks becoming a challenge for carriers, "I see the carriers having to get more involved in the delivery of OTT services, for example by helping increase video service quality to enable providers to charge more or working with companies to help them target their advertising". Tellabs can now help carriers gather and analyse data to reveal what is happening on their networks and then enable them to act on it, which is the rationale behind the WiChorus purchase and the Tellabs SmartCore™ 9000 Series products. Tellabs claims to serve 43 of the top 50 service providers worldwide, which could be seen as limiting its prospects for growth. Mr. Kautz responded that the company often sells only one class of product to a customer for a specific application, which leaves plenty of room for expanding sales to such customers, both through expanding applications for a product and by selling additional types of product. Tier 2 service providers worldwide are a further area where the company is seeking to expand its sales, both directly and via partners. From a technology perspective, Tellabs also sees a general shift to packet integration in DWDM systems presenting opportunities. Mr. Kautz noted that five years ago DWDM transport deployments were typically point-to-point systems with fixed filters; the focus then moved to the current ROADM-based solutions. Finally, it was noted that Tellabs is financially stable, with approximately $1 billion in the bank, although sales have not yet recovered to reach the $2 billion sales level achieved in 2006. The primary aim going forward, Mr. Kautz said, is to grow sales profitably by pushing development and sales of mobile solutions and systems delivering integrated packet transport, "No one in the industry realistically expects to see growth like that of the dot com bubble again any time soon, if ever. The aim is to achieve stable, sustainable growth and Tellabs intends to be very careful how it runs the business. Ultimately the financial stability of equipment vendors is crucial to customers".  |
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