1 Lightwaves at the end of the telecom tunnel? Yves Poppe Dir. IP Strategy Nordunet Annual Conference Reykjavik, August 24 th 2003

2 Agenda Evolution of Transoceanic Internet Capacity Demand and Supply Aftermath of the Great Telecom Storm The R&E World Sees More and More Light Next (Light)wave of Opportunities

3 The pitfalls of predictions and forecasts

4 In October 1994 Teleglobe and its partners inaugurated Cantat-3 with two fiber pairs, capacity of 5 gigabit (2x2.5Gb) linking Canada to the UK, Germany, Denmark, Iceland and the Faroe Islands. Doubled the capacity under the Atlantic 155mb was earmarked for data Engineering estimated 17years to fill the cable

5 Cantat-3 and R&E

6 How Reality Turned Out to Look Like The internet tsunami took everybody by surprise. Cantat-3 was full in less than 3 years. The magic potion of DWDM : five years later cables of 1000 times the capacity of Cantat-3 were being installed. Deregulation, easy access to capital, advances in laser and fiber technology and spectacular internet growth created a new generation of global cable builders: Global Crossing, Level3, FLAG, 360networks and resulted in a cornucopia of transmission capacity. R&E transatlantic connectivity : from kb/sec to meg/s to gig/sec in less than 10 years After 3-4 years of spectacular growth, a peak in early 2000 and a long steep downhill in the telecom industry.

7 The Battle of the Atlantic The Battle of the Atlantic Design capacity and RFSGbps* RFS –Level 3/GC (Project Yellow) 1,280Sep00 –TAT-14 (Club) 640 Apr01 –Hibernia (360networks, Inc.)1,920Jun01 –FLAG Atlantic-1 (FLAG/GTS) 2,560Sep01 –Atlantic Crossing -2 (Global Crossing)2,560**1Q01 –TyCo Global Network2,560Jun02 –Apollo (C&W) 3,200 Feb03 – Total 12,160Gbps! * = Design capacity ** = Cancelled, AC-2 joining Level 3 Lit capacity early 2003: 2,338Gb (source: Telegeography)

8 The Battle of the Pacific The Battle of the Pacific Design capacity and RFS Gbps* RFS –TPC-5 (club) 20 Dec98 –Southern Cross 480 Nov00 –China-US (club) 80 Jan 01 –PC-1 (Global Crossing & Marubeni) 640 Apr01 –Japan-US (club) 640 Oct01 –Tyco Pacific 5,120 ** Jan03 –FP-1 FLAG Pacific 5,120*** 2Q02 –360 Pacific 4,800*** 3Q02 – Total 6,980Gbps * = Design capacity ** = april 01: Tycom joins FLAG aug 01: FLAG withdraws, Tycom continues alone; RFS postponed ***= project dropped Lit capacity early 2003: 1,043 (Telegeography)

9 Transoceanic buildout frenzy completed Transoceanic buildout frenzy completed With the activation of the C&W Apollo transatlantic and Tyco’s transpacific cable the current phase of intense build-out is coming to an end With current fill rates low and about 3 years between start and completion of a project, this means new cables unlikely before Weak point remains Europe-Asia capacity. Should improve with SEAMEWE4 scheduled RFS date Q with 1.28Tb/s design capacity.

10 Could there be some oversupply? Atlantic: 19% of total capacity lit (2,338Gb). Of lit capacity about 1,300Gb is sold. Pacific: 16% lit (1,043Gb) Intra-Asia : 3.5% lit (15,810 Gb design capacity) US-Latin America: 6% lit ( 5,166 GB design) Europe-Asia: 30 gig lit ; 120 gig design capacity Europe-Africa-Asia: 10 gig lit ; 130 gig design Numbers; Telegeography 2003 Int’l bandwidth report

11 Congratulations Iceland ! FARICE : 40 gig at RFS 640 gig design RFS jan 1st 2004 Ready to participate in lambdaswitching!

12 Predictions and forecasts revisited What will fill the capacity and how fast? Current (2003) transatlantic: voice: 9.3gig internet: 258.3gig other (IPL etc): 48.7gig TeleGeography predicts a slow growth scenario of 763.6gig and a fast growth of 1.48Tb for 2007 Who would dare to predict it will take 17 years to fill the capacity? Could lambda switching have the same disruptive effect on predictions and forecasts as internet was about to have when planning capacity a decade ago?

13 Who still remembers Icecan and Scotice? Laid in , capacity: 24 telephone channels Also in 1961, COTC as Teleglobe was known in those days together with BPO and C&W activated the first Cantat between New Foundland and Scotland with a capacity of 80 telephone channels. Cantat1 was retired in 1986 From the Bill Glover cable stamp collection See: cable.com/

14 Disruptive capacity growth? It happened before In the 1950s new technology put cables ahead of radio. Small vacuum tubes that could operate under water for 20 years or more meant that amplifiers could be buried at sea with the cable. This boosted the cable's information capacity to the point that it could even carry telephone signals. Small vacuum tubes like this could be buried at sea with the cable for years. They helped to increase a cable's information-carrying capacity by more than a thousandfold. Borrowed from : The Underwater web, Smithsonian Institute

15 Agenda Evolution of Transoceanic Internet Capacity Demand and Supply Aftermath of the Great Telecom Storm The R&E World Sees More and More Light Next (Light)wave of Opportunities

16 Aftermath of the perfect storm Aftermath of the perfect storm More than 100 billion in default Huge write-offs Market valuation telecom sector down 1 trillion $ 500,000+ jobs lost at service providers and manufacturers Carrier capex still very conservative First wave emerges from bankruptcy protection Bottom reached but slow recovery

17 How did we get into this predicament? Deregulation + internet and wireless boom + abundance of equity capital --» wild spending by established telecom carriers and start-ups US Telecom Act and European deregulation promised access to a US$300 billion market growing at 10% p.a. Emulation of get rich quick model by 1996 purchase of MFS by Worldcom for US$14billion or 6 times the value of assets put in the ground Spectacular advances in DWDM technology expected to accomodate an insatiable bandwidth demand.

18 How did we get into this predicament? (2) Unrealistic expectations of traffic growth Does internet traffic double every 90 days or every year? depends on what scale you look at it. Rising multipolarity of the internet was largely ignored in early models : end of the US centricity of information –Japan : 80% of accessed internet info is local. –Chile: 70% is local –USA: 10 to 30% of accessed information resides in the region!

19 During the storm : progress continued 20+ million Broadband internet accesses (DSL and cable) in NA by end of million personal Wi-Fi routers (Linksys, D-link etc) The Wi-Fi hotspot phenomenon Cellphones become multifunctional and start to replace fixed line Stage set for the next wave : global reachability and mobility

20 Agenda Evolution of Transoceanic Internet Capacity Demand and Supply Aftermath of the Great Telecom Storm The R&E World Sees More and More Light Next (Light)wave of Opportunities

21 The R&E world savours the bandwidth glut Happy days for the R&E world: –Europe: Geant goes 10 gig, some NREN’s also –North-America: lambda’s and dark fibre –Transatlantic: Finally enough to satisfy the bandwidth gluttony of the high energy physics people. 10gig transatlantic links on the verge of becoming common place. –Transpacific and intra-Asia: slower price decline, lambda’s still have to wait a while. –Europe-Asia : remains a bottle-neck however.

22 North-American R&E lambda initiatives Canada –Ca*net4 : Canarie federal R&E network –RISQ : Quebec –ORANO : Ontario –BCnet ORAN: British Columbia USA –NLR (National Lightrail): CENIC, Cisco, Level3 –Fiberco : Internet2 with Level3 –USAwave : SURA with AT&T –Teragrid –DoE ultrascale : initially ORNL – Sunnyvale - Chicago –Abilene 2 nd gen

23 USA regional R&E initiatives California (CENIC Optical Networking Initiative) Connecticut (Connecticut Education Network) Florida (Florida LambdaRail) Indiana (I-LIGHT) Illinois (I-WIRE) Maryland, D.C. & northern Virginia (MAX) Michigan New York + New England states (NEREN) North Carolina (NCNI) Ohio (Third Frontier Network) Oregon SURA Crossroads (southeastern region) Texas (Star of Texas) Source: Paul Love internet2 Jtech Lawrence,Ka august 4th

24 Transatlantic R&E lambda initiatives Translight –Starlight : Eurolink -UIC –Netherlight : SURFnet –DataTAG/CERN –Canarie 10 gig triangle Chicago-Amsterdam-Geneva and Ca*net4 10 gig to NY and Seattle

25 The capacity divide Uneven geographic distribution of capacity gluts contributes to a capacity divide, sometimes further exacerbated by monopolies or oligopolies in certain regions Clearly illustrated by the SLAC PingER project measuring regional disparities of internet packet loss. Abrupt halt of the global build affected Mediterranean and Europe-Asia Uneven capacity distribution is also visible on national and regional level: Everyone builds on same major routes and same major population centers.

26 Agenda Evolution of Transoceanic Internet Capacity Demand and Supply Aftermath of the Great Telecom Storm The R&E World Sees More and More Light Next (Light)wave of Opportunities

27 The optical future has already started Will it lead to an all-optical future? Will Moore’s law and related laws for growth of fiber transmission capacity and internet growth continue to apply? Probably The laws of gravity still apply, even in the New Economy. Progress alternates between periods of exponential growth and plateaus were the progress is absorbed. Technology ahead of demand? –160 wavelengths at 40Gb ? –Soliton technology? –Optical crystals and hollow-core fibers with another 100fold increase of capacity per fiberstrand capacity?

28 The Verizon optical bet Verizon plans fiber to every home and business in its 29 state territory : 10-15years and US$20 to 40 billion. US$12.5 capex in2003. Why? Cable Companies are eating into phone lines (2.2 million end 2002, forecast 3.7 million in 2005 ) and are ahead in broadband internet (66% of the 18 million US BB internet users). Is this model applicable outside the US in coming years? –Not sure; phone companies DSL dominate in many countries. Competitive pressure from cablecos mostly not so severe. As reported in Business Week, August 4th

29 What are the next telecom growth engines? The telecom ecosystem is famished. Hopes for reviving corporate and end-user demand are largely pinned on –Integrated mobile internet access ( ,web, data), 3G –SMS, Voice over IP, location based services –Home/SME area networks –Local wireless: Bluetooth, Wi-Fi, Ultra large Bandwidth –Further penetration of DSL and cable access, FTTH? –P2P applications : videoconferencing, gaming etc. –Secure VPN’s and end to end security and encryption. –Remote monitoring, tracking, sensing (healthcare, transportation etc.) –Audio/videostreaming –sensor networks, RFID Widespread penetration of this end to end mobility and reachability on the internet implies the deployment of IPv6, prerequisite for permanent addresses, scaleability and sufficient address space.

30 Next: the era of ubiquitous everything Ubiquitous computing Ubiquitous communication Ubiquitous information access Ubiquitous monitoring Ubiquitous localisation and tracking Ubiquitous neighbour discovery and sentient networks

31 Thank you for your attention