Core Networks Will Soon Go to Packet-Optical Transport, New Report Finds

Deployment of P-OTS in carrier core networks to trigger a big step in the transformation of telecom networks to a pure packet-based architecture, according to Heavy Reading

Dec 15, 2009

Packet-optical transport system (P-OTS) technology, which is now being deployed in metro networks, will start to be deployed in carrier core networks in 2010, triggering a big step in the transformation of telecom networks to a pure packet-based architecture, according to a major new report from Heavy Reading (, the research division of Light Reading (

The Core Packet-Optical Transport Evolution offers a detailed early look into this emerging segment that is poised to have a tremendous impact on core optical networking over the next five years. The report analyzes the market drivers and primary applications for core P-OTS, explores enabling technologies and standards, and offers in-depth five-year forecasts covering worldwide optical core networking revenues, broken out by region. Together, the forecasts provide a clear view of how and when network operators will make the transition to core P-OTS, and which markets are expected to have the most activity in this emerging technology sector.

The 46-page report profiles two network operators -- BT and Verizon -- with very different strategies for packet networking in the core, as well as 11 leading and innovative suppliers in core packet-optical transport and switching, based on exclusive, in-depth interviews.

  For a list of technology suppliers analyzed in this report, please see:

"To date, the P-OTS evolution has been all about the metro network, but we're now seeing P-OTS move into the core of the network," says Sterling Perrin, Senior Analyst with Heavy Reading and author of the report. "Part of the reason core P-OTS is emerging now is that the core transport network has largely been ignored for a couple of years, while the industry has focused on rebuilding access, metro, and aggregation networks for packets and IP. In reality, growth in Ethernet and IP, Internet data and video, and mobile data and video affect core as well as metro access networks."

Operators increasingly see core packet-optical transport as the solution to the challenges facing the core evolution, Perrin notes. "This new class of network element uses many of the functions being put into metro/regional P-OTS, such as WDM, Ethernet, and Sonet/SDH integration, but with greater capacity and scale -- and with some key differences, such as high-capacity OTN switching and ASON/GMPLS control plane," he explains. "Operator requirements for core P-OTS are just emerging, and vendors are just starting to announce products now. We expect several more product announcements to come in 2010 and 2011, and we expect revenues to begin ramping in 2010."

Key findings of The Core Packet-Optical Transport Evolution include the following:

The core P-OTS segment is still nascent, and products will be just coming to market throughout 2010. Most vendors need to commercialize their large-scale (terabit and multi-terabit) OTN optical switch fabrics to deliver core P-OTS solutions. Huawei is now shipping a large-scale OTN/DWDM product called the OSN 8800, but has yet to introduce a packet switching fabric on this platform. Optical startup Cyan Optics is very close, with its commercially shipping Z77 product. Product activity from the major DWDM and switching systems suppliers will intensify throughout 2010.

The core P-OTS revenue opportunity is in displacing operator spending on long-haul DWDM systems and standalone optical crossconnects. We expect 2010 to be the first year of core P-OTS revenue, with significant ramp-up starting in 2011. By 2014, Heavy Reading expects that core P-OTS will reach $1.66 billion worldwide, generating significant revenue from North America, Europe, and Asia/Pacific.

Modularity will be a key requirement for core P-OTS products. High modularity is a recurring theme in core P-OTS in our discussions with vendors and network operators. High modularity is the best way to integrate multiple functions into a system without making the integrated system too costly and/or too restrictive to be broadly adopted by the industry.

Established optical switching vendors are at risk of losing customers and share. Optical switching has been a closed club throughout this decade, dominated by just three suppliers -- Alcatel-Lucent, Ciena, and Huawei. But the converged nature of core packet-optical transport is creating opportunities for insurgent vendors. Many vendors view the new requirements as an opportunity to get into the core and take share from the optical switching incumbents. Incumbents do have some advantage in terms of installed base, but they must produce next-generation products that are best in class.

The Core Packet-Optical Transport Evolution is essential reading for a wide range of industry participants, including the following:

The report is essential reading for a wide range of industry participants, including the following:

  --  Telecom service providers: How will new developments in core
      packet-optical transport technologies affect your deployment decisions
      and your ability to compete? How do anticipated migration plans match
      up with your company's plan? What kinds of factors are most likely to
      drive -- or stall -- implementation of P-OTS in carrier core networks?
      Which suppliers are in the best position to meet your needs for
      next-generation optical core products?
  --  Telecom equipment manufacturers: How do your product development plans
      map to those of your competitors in the core packet-optical transport
      sector? Is your current and anticipated product portfolio in line with
      projected technology deployments? What impact will various standards
      have on development and demand for P-OTS technologies?
  --  Component and subsystem suppliers: What is the most likely demand
      curve scenario for components and subsystems that enable core
      packet-optical transport? Which equipment suppliers and products are
      emerging as the early leaders in this sector? Where are the market
      opportunities for your components and subsystems?
  --  Investors: How will the migration to P-OTS affect the optical
      networking sector? Which technology providers are likely to emerge as
      the main suppliers of next-gen core optical products, and when are
      they most likely to reap those benefits?

The Core Packet-Optical Transport Evolution costs $3,995 and is published in PDF format. The price includes an enterprise license covering all of the employees at the purchaser's company.

  For more information, or to request a free executive summary, contact:

  Dave Williams
  Sales Director, Heavy Reading

  Press/analyst contact:
  Dennis Mendyk
  Managing Director, Heavy Reading

  About Heavy Reading

Heavy Reading is an independent market research organization offering quantitative analysis of telecom technology to service providers, vendors, and investors. Its mandate is to provide the comprehensive competitive analysis needed today for the deployment of profitable networks based on next-generation hardware and software.

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SOURCE: Heavy Reading

CONTACT: Dave Williams, Sales Director, Heavy Reading, +1-858-485-8870,; Press/analyst contact: Dennis Mendyk, Managing
Director, Heavy Reading, +1-201-587-2154,

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