If open networking is a challenge to vendors, what’s the solution? One possible pathway is to try to guide your buyers to better benefits, thus justifying higher costs. That’s not an easy sell, and particularly problematic for Cisco, whose sales-driven approach to networking is legendary. That leaves the other pathway; steal someone else’s money. By that, I mean build products that consolidate layers of functionality into a single box. That, I think, is where the whole Cisco Silicon One and Optics thing just announced is heading.
When Cisco bought Acacia, I did a blog suggesting that Cisco aimed at expanding its optical capability in large part to subsume the optical layer into routers. That would put the optical budget on the table in router sales, reducing the price pressure on Cisco in itself. It would also raise the technical stakes for open-network routers by adding in stuff that white boxes aren’t likely to provide. The idea has a lot of merit for Cisco, and for others in the router space. The reverse, subducting routing into the optical layer, has corresponding value for vendors like Ciena.
We used to offer all services based on time-division multiplexing (TDM), and so we really had single-layer networks using things like SONET. When IP came along, it became an overlay, using optical transport. As IP came to dominate, the obvious question was whether you built “transport” based on packet-enhancing the optical layer, or by optical-izing the router layer.
To support the former, optical vendors like Ciena have pushed packet optics and reconfigurable optical add-drop multiplexers (ROADMs) as the foundation of modern IP networks. At one time, in the world of TDM and SONET, the notion of a separate optical layer was a given, since there were multiple service technologies (TDM and IP, ATM, whatever) that shared optical transport. Now, that’s less true, and so optical players have worked to carve out an IP mission. Ciena today is touting its support for 5G, for example.
An IP mission for Ciena means less money for Cisco, or put more opportunistically, less Ciena mission can equal more Cisco mission. My speculation with respect to the Acacia buy was that Cisco was planning to make a direct assault on the optical layer, and such a move would necessarily enrich Acacia as a separate company. It would also put Cisco’s plans at risk should Acacia be bought by a competitor.
As logical as it would be for Cisco to do an Acacia deal to keep the riches in-house, there’s still the matter of generating the riches in the first place, which is where I think Silicon One and the announcement come in. What Cisco is working on is a model of more affordable or practical IP/optical transport that can be more IP than optics. The Cisco model is described by Cisco here and (in particular, in more detail, here). The early target, I think, is the convergence of multiple IP services for business, telephony and video, residential and Internet, all onto a common infrastructure. The later target is to ensure that infrastructure is mostly routers, mostly Cisco.
One of the most serious threats to a goal of converging transport multiplexing and routing in a single layer is the problem of different services’ needs and value to the operators. The Internet generates most of the bits and yet its margins stink. Services with better margins don’t generate the same level of traffic, and unruly Internet traffic could compromise QoS on those better-paying services. In the future, if we do indeed end up with 5G slicing or IoT or something else that has a different profit-per-bit potential, this challenge gets harder to address, which is where I think Cisco’s “early target” comes in.
If you listen to Cisco’s short video, the most visible theme is what I’ve (in what I’m sure Cisco sees as an irreverent lapse) call the “devices suck” paradigm. Devices suck bits automatically, so the fact that more of them are getting connected means more bits will be sucked through the network. It doesn’t matter whether operators make money on it or not (well, OK, they can try to minimize their losses as long as it doesn’t hurt Cisco sales), operators have to pay for those sucking devices’ appetites. We get a lot of the what’s sucking detail in the video, but it leads up to the point that we have today the ability to supply enough bits so all the device sucking can’t stagger the Internet. That’s what the announcement is all about. We can converge all different kinds of IP traffic because we now have a combination of silicon and optics that let us do it at the IP level.
I characterize this cynically because I think it is cynical, but that doesn’t mean there’s no thread of value in the theme. So, let me rephrase to say the same (sort of) thing without the usual Cisco oversell.
Operators are forced, today, to create parallel service/transport infrastructure because they lack a truly efficient way of partitioning and sharing IP capacity within a single infrastructure. That raises their costs, not only for capital equipment but for operations as well. Cisco’s union of silicon and optics supports orderly, efficient, partitioning and sharing, and so can credibly be expected to lower that cost. Same conclusion, but without Cisco’s usual excitement-building story.
There’s more to the story than photons and electrons, though. As my sanitized recap says, you need to enhance operations too. Here I find a bit of a glitch in Cisco’s numbers. The material says “According to IDC, global telecom operating expenses were 78.7 percent of 2018 revenue.” They make this statement in the context of “operations include prioritizing traffic and engineering traffic routes to ensure quality of service for distinct customer experiences.” The problem is that the percentage they give is the portion of each revenue dollar that’s associated with all OAM&P, which is everything except capex and return to the investors. The description they give is for what I’ve called “process opex”, which currently amounts to (liberally interpreted) about 30 cents of every revenue dollar. Still, we do need to improve process opex, and in particular we need to ensure that adding new services or changing technology doesn’t drive up opex faster than it reduces capex.
Cisco’s view is that it’s not efficient to try to provide operations assurance by pushing the SLA spaghetti up two hills, the IP layer and the packet-optics-and-ROADM layer. Better to unify the technologies so you can harmonize and improve the efficiency of the operations. True, but the portion of operations costs that could (again, liberally) be considered to be directly related to network operations and SLA assurance is only about 5 cents per revenue dollar.
The basic problem with process opex is the operators’ inability to properly integrate the software elements associated with both service and infrastructure lifecycle management. This is something that both the ETSI’s zero-touch automation activity and the Linux Foundation (and AT&T’s) ECOMP were aimed at providing, and have failed to provide. Cisco’s not providing it either, not even in the new stuff they’re talking about.
It may sound at this point like I’m debunking Cisco’s whole story and I’m not. I’m always critical of Cisco’s way of announcing things because I think it’s short on substance and long on razzle-dazzle, but fundamentally, the network needs to be simplified, and Cisco’s approach may not (won’t, in my view) “revolutionize” the Internet, but it will improve IP-network economics when operators need improvement desperately. Reducing the layer count is a logical approach, and to do that you can either subsume more optical-layer tradition into the router layer, or the other way around. Cisco, obviously, prefers the former option, and their preference is important not only because this razzle-dazzle stuff does work, but also because the optical vendors like Ciena don’t do either razzle-dazzle or substance in their counterpoints.
The future is not determined by the best path forward, but the best path taken. Operators are, and have been, almost slavishly devoted to vendor positioning to set their planning priorities. Cisco is positioning. Ciena is not positioning, nor are any other vendors in either of the two spaces. Judged by that standard, Cisco has a winner here.