June 5, 2000
New Versions of Ethernet Promise Swift Improvements in Communications
By JOHN MARKOFF
ALO ALTO, Calif. -- Several years ago, with tongue only
partially planted in cheek, Intel's chairman, Andrew Grove, made an
observation: Unlike the chip industry, where processing speeds
double every 18 months or so, the moribund telecommunications world
seemed to double its speed only about once a century.
But here on a test bench at Agilent Technologies is clear
evidence that may give lie to Grove's Law -- evidence that the
nation's communications networks could be poised for sweeping
improvements in speed and efficiency that could rival the breakneck
pace of breakthroughs in the chip industry.
Thor Swift for The New York Times
Brian Lemoff, left, and Lisa Buckman are part of a team at Agilent Technologies that has produced a device -- based on a technology developed 27 years ago -- that is capable of shuttling data at a rate of 10 billion bits a second.
Using inexpensive high-speed semiconductor components, lasers
and mirrors, a small group of Agilent researchers have fashioned a
palm-size device capable of shuttling data at 10 billion bits -- or
10 gigabits -- a second.
And the Agilent device, known as a transceiver, does not rely on
the costly, complex optical-network formats that telephone
companies and Internet backbone carriers typically require to
achieve such transmission speeds. Instead, the device uses a new
souped-up version of the homely Ethernet format that has been the
simple, reliable mainstay of office computer networks for nearly
But this is not your father's Ethernet; it is Ethernet 3,000
thousand times as fast as the original versions. At the rate the
technology is evolving, some analysts expect office desktop
computers to soon have access to data networks with speed and power
formerly available only in the nation's best research laboratories
-- but at prices no higher than today's standard business-office
"This has caught the world by surprise," said Waguih Ishak,
director of Agilent's communications and optical research
laboratory. "Three years ago, very few people were talking about
one-gigabit Ethernet. And people were laughing at us when we talked
about 10-gigabit optical networking."
No one is laughing at Agilent now, or at the other companies
developing new Ethernet technologies. A mad dash is under way as
dozens of start-ups and established giants race to put the
27-year-old Ethernet networking standard on an ever faster
price-performance improvement curve.
While 10-gigabit Ethernet transceivers remain mainly at the
testing stage, one-gigabit transceivers are already becoming the
preferred way to link the new optical switches that are becoming
the standard way to route information over the Internet. (Optical
components use flashes of laser light, rather than electronic
pulses, to convey the on-off semaphore of digital information.)
"The cost of our one-gigabit transceivers will fall below $5 by
2004," said Brian E. Lemoff, an Agilent designer. That number is
significant because $5 is roughly the current price of a
100-megabit Ethernet transceiver -- one capable of moving data at
only 100 million bits a second.
Industry analysts and executives say the rapid improvements in
Ethernet -- and the resulting increase in bandwidth, or transmission
speeds, of fiber optic networks -- could bring a frenzied pace of
change to the telecommunications world similar to the
microprocessor chip's revolutionary impact on the computer industry
in the 1980s.
"The beauty of all of this is the cost of optical components is
now following the same declining cost curve that drove the
semiconductor industry," said Geoff Baehr, chief network officer
of Sun Microsystems.
As prices plunge for the new high-speed Ethernet, it could
become what economists call a disruptive technology -- one that
forces established data communications companies to alter their
business models, while creating lucrative new opportunities for
fast-moving start-up companies. And the victims of the disruptive
technology, according to the data-networking upstarts, will be the
nation's giant telephone companies, which have large investments to
protect in more costly and complex telecommunications and voice
Ethernet engineers now routinely cite Clayton M. Christensen's
thesis about the power of so-called disruptive technologies in his
book "The Innovator's Dilemma" (Harvard Business School Press,
"Gigabit Ethernet is a totally disruptive technology that until
recently looked like a toy" to the telephone companies, said David
Isenberg, an industry consultant and a former AT&T engineer. "Now
it's going to eat their lunch before they have time to turn
That role reversal has not escaped Robert Metcalfe, a
co-inventor of the original three-megabit Ethernet standard at
Xerox's Palo Alto Research Center in 1973.
"The guys at the telephone companies have all read
Christensen's book by now," Metcalfe said, "but they're like deer
caught in the headlights."
Peter DaSilva for the New York Times
Jerry Parrick is chief executive of Yipes Communications, which is building a nationwide data-networking service based on an updated version of the familiar Ethernet technology.
Telecommunications executives, of course, take a dim view of
such hyperbole. They note that established network companies have
ready access to Ethernet technology, and will not hesitate to use
it. They also contend that many of the keys to better networks have
less to do with pushing technical boundaries in the laboratory than
with mundane issues like obtaining rights of way for fiber optic
cables and cellular towers.
And the big companies may not be as beholden to their installed
network equipment as the upstarts may assume, according to David C.
Nagle, AT&T's chief technology officer and president of AT&T Labs.
"New players do have an advantage," Nagle said. "But
increasingly, we and everyone else are learning how to respond
quickly to these disruptive technologies."
The new players include aggressive start-ups like Yipes Communications of San Francisco, which is building a nationwide
data-networking service based on a gigabit Ethernet optical
network. Users, primarily business customers, could use it for any
number of current and future high-speed applications, possibly
including combined voice and data communications and TV-quality
Yipes has raised almost $91 million from venture capitalists and
partners and plans to sell Internet connection services in more
than 20 metropolitan regions in the United States by the end of the
year. The company has moved quickly by leasing unused fibers from
other companies and assembling networks in the nation's largest
metropolitan areas. Early customers include the Silicon Valley law
firm of Fenwick & West, the Palo Alto Medical Foundation and Front
Range Internet, a Colorado Internet service provider.
The company says it can give customers connections over optical
fiber networks at data speeds from one megabit to one gigabit using
Ethernet -- and can do so while significantly underpricing its
traditional telecommunications industry competitors.
"To compete, they are going to have to cannibalize their
existing customer base," said Jerry Parrick, chief executive of
Yipes and a former telecommunications industry executive who has
run data networking businesses at the regional telephone companies
Pacific Bell and U S West.
According to an estimate by the Del'Orro Group, a
telecommunications market research firm in Portola Valley, Calif.,
the hardware cost for conventional networking equipment at the
OC-192 standard -- the optical network format used by phone
companies -- was $6,783 for each gigabit. That compares with $350
for a 10-gigabit optical Ethernet connection.
"This makes so much sense because we are able to avoid the
multiple layers of what is in effect scar tissue" in telephone
companies' networks, said Eric Benamou, chairman and chief
executive of the 3Com Corp. 3Com was the company Metcalfe founded
to commercialize the Ethernet standard in in the 1970s; he left in
In the beginning, Ethernet was a simple data standard for
letting groups of computers communicate within a single office
building, or at most an office-park campus, at a top speed of 10
million bits a second. But improvements in the technology now allow
for Ethernet networks of speeds of 10 billion bits a second,
reaching some 30 miles. As a result, Ethernet has become
competitive with the main network techniques now used by the big
Those techniques include asynchronous transfer mode, which
supports speeds from 1.5 megabits to the gigabit range. Another is
a format known as synchronous optical network, or Sonet (pronounced
like the short-verse form), which supports data rates ranging from
51 megabits up to nearly 2.5 gigabits.
The main advantage that asynchronous transfer and Sonet hold
over Ethernet is that they offer rich network management -- software
that enables engineers to carefully control and monitor
communications traffic, be it voice or data. Ethernet provides for
only skimpy network management, although many companies are working
on more robust management software packages for use with Ethernet.
But in other ways, Ethernet is much more flexible than
asynchronous transfer or Sonet. Executives at Yipes, for example,
say they will have a significant advantage over the data services
offered by traditional telecommunications companies because the
Yipes network administrators will be able to dial the amount of
bandwidth a customer receives, up or down, quickly on demand.
This flexibility might permit a small Web site, for example, to
add capacity quickly and temporarily for a special event, or make
it possible for an individual in an office to set up a high-quality
teleconferencing connection for a short period.
But in terms of flexibility, the biggest advantage of the new
gigabit Ethernet services like Yipes could be the ability to add
each new customer to the network with an industry-standard Ethernet
connector -- similar to the small circuit boards or plug-in devices
that already enable a new PC to be quickly added to an office
network or allow a consumer's home computer to be attached to the
local cable television system. Telephone companies typically have a
much more complicated task in determining how best to connect each
new data customer to the local network.
"This makes it a seamless interconnection," said Michael
Kleeman, chief technology officer of Aerie Networks, a broadband
network start-up in Denver, which plans to use Ethernet technology.
"There are no additional boxes."
The most bitter struggle between the new Ethernet data
networking upstarts and the traditional data networks may involve
voice traffic, currently the revenue backbone of the telephone
Telephone industry technologies have been designed to ensure
that data packets carrying voice telephone calls have priority
passage through the network, even during peak traffic periods. That
capability adds to the complexity and cost of conventional
telecommunications data networks, but it also gives voice
conversations a reliable sound quality that Ethernet or standard
Internet formats cannot yet match.
But service providers like Yipes intend to plunge in to the
lucrative voice market by guaranteeing customers a minimum quality
of service -- whether for voice or data -- that the companies say
they will be able to meet by designing their networks to handle
bursts of high-data traffic.
For Metcalfe, the Ethernet inventor, the venerable technology's
new ascent offers a lesson that transcends cost savings. In the
current era, where approaches to technical standards in computing
range from Microsoft's proprietary control to the free-software
approach represented by the Linux operating system, Metcalfe says
that Ethernet illustrates a third way.
Ethernet became a universal standard, he said, because of the
licensing practices Xerox adopted in the 1970s. Xerox licensed its
Ethernet patents at modest terms, ensuring that it won the
standards battle with competing technologies at the time, promoted
by companies like IBM.
With licenses easily obtained, companies were free to devise the
best ways to develop commercial Ethernet-based products.
"What Ethernet is today is a business model based on open
standards and individually owned implementations," he said. "It
has created a world where there is rapid innovation and fierce
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