Ciena
Ciena CEO sees huge increase in AI generated network traffic growth while others expect a slowdown
Today, Ciena reported better than expected revenue of $1.12 billion in its 4th quarter, which was above analyst expectations of around $1.103 billion. Orders were once again ahead of revenue, even though the company had expected orders to be below revenue just a few months ago. A closer look at key metrics reveals mixed results, with some segments like Software and Services showing strong growth (+20.6% year-over-year) and others like Routing and Switching experiencing significant declines (-38.4% year-over-year).
Increased demand for the company’s Reconfigurable Line Systems (RLS), primarily from large cloud providers. And he said the company was also doing well selling its WaveLogic coherent optical pluggables, which optimize performance in data centers as they support traffic from AI and machine learning.
Ciena’s Managed Optical Fiber Networks (MOFN) technology is designed for global service providers that are building dedicated private optical networks for cloud providers. MOFN came about a few years ago when cloud providers wanted to enter countries where they weren’t allowed to build their own fiber networks. “They had to go with the incumbent carrier, but they wanted to have control of their network within country. It was sort of a niche-type play. But we’ve seen more recently, over the last 6-9 months, that model being more widely adopted,” Smith said. MOFN is becoming more widely utilized, and the good news for Ciena is that cloud providers often request that Ciena equipment be used so that it matches with the rest of their network, according to Smith.
Image Credit: Midjourney for Fierce Network
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The company also said it now expects average annual revenue growth of approximately 8% to 11% over the next three years. “Our business is linked heavily into the growth of bandwidth around the world,” CEO Gary Smith said after Ciena’s earnings call. “Traffic growth has been between 20% and 40% per year very consistently for the last two decades,” Smith told Light Reading.
Ciena believes huge investments in data centers with AI compute servers will ultimately result in more traffic traveling over U.S. and international broadband networks. “It has to come out of the data center and onto the network,” Smith said of AI data. “Now, quite where it ends up being, who can know. As an exact percentage, a lot of people are working through that, including the cloud guys,” he said about the data traffic growth rate over the next few years. “But one would expect [AI data] to layer on top of that 30% growth, is the point I’m making,” he added.
AI comes at a fortuitous time for Ciena. “You’re having to connect these GPU clusters over greater distances. We’re beginning to see general, broader traffic growth in things like inference and training. And that’s going to obviously drive our business, which is why we’re forecasting greater than normal growth,” Smith said.
Smith’s positive comments on AI traffic are noteworthy in light of some data points showing a slowdown in the rate of growth in data traffic on global networks. For example:
- OpenVault recently reported that monthly average broadband data consumption in the third quarter inched up 7.2%, the lowest rate of growth seen since the company began reporting these trends in 2012.
- In Ericsson’s newest report, Fredrik Jejdling, EVP and head of business area networks, said: “We see continued mobile network traffic growth but at a slower rate.”
- Some of the nation’s biggest Content Data Network (CDN) providers – including Akamai, Fastly and Edgio – are struggling to come to terms with a historic slowdown in Internet traffic growth. Such companies operate the content delivery networks that convey video and other digital content online.
- “In terms of traffic growth, it is growing very slowly – at rates that we haven’t seen in the 25-plus years we’ve been in this business. So it’s growing very, very slow,” Akamai CFO Ed McGowan said recently. “It’s just been a weak traffic environment.”
“The cloud providers themselves are building bigger infrastructure and networks, and laying track for even greater growth in the future as more and more of that AI traffic comes out of the data center,” Smithsaid. “So that’s why we’re predicting greater growth than normal over the next three years. It’s early days for that traffic coming out of the data center, but I think we’re seeing clear evidence around it. So you’re looking at an enormous step function in traffic flows over the next few years,” he concluded.
References:
https://www.lightreading.com/data-centers/ciena-ceo-prepare-for-the-ai-traffic-wave
https://www.fierce-network.com/broadband/cienas-ceo-says-companys-growth-linked-ai
Summit Broadband deploys 400G using Ciena’s WaveLogic 5 Extreme
DriveNets and Ciena Complete Joint Testing of 400G ZR/ZR+ optics for Network Cloud Platform
Telco spending on RAN infrastructure continues to decline as does mobile traffic growth
Analysys Mason & Light Reading: cellular data traffic growth rates are decreasing
TechCrunch: Meta to build $10 billion Subsea Cable to manage its global data traffic
Initiatives and Analysis: Nokia focuses on data centers as its top growth market
Summit Broadband deploys 400G using Ciena’s WaveLogic 5 Extreme
Florida-based fiber optic telecommunications provider Summit Broadband has launched 400G services following a network upgrade with Ciena. Summit Broadband is leveraging Ciena’s WaveLogic 5 Extreme (WL5e) [1.] to offer 400 Gbps wavelength services to enterprise customers in Central and Southwest Florida, Ciena said last week.
Summit Broadband owns and operates over 4,300 fiber-route miles of infrastructure and serves industries and communities throughout the state with voice, video, data, internet, and Ethernet services, as well as dark fiber transport.
Note 1. Summit Broadband is deploying Ciena’s WaveLogic Ai coherent optics across a flexible 6500 ROADM network, delivering 400GbE wave services to increase capacity and reach more users. Summit Broadband is also utilizing Ciena’s 3926 and 5164 Routing and Switching platforms for cost effective service delivery, as well as Adaptive IP Apps and Manage, Control and Plan (MCP) domain controller for real-time visibility and analysis of routing behaviors to optimize network performance and identify issues with greater ease for faster resolution.
Ciena noted that Summit Broadband has rolled out 400 Gbps wavelength to support the rise in data consumption of high-bandwidth applications such as cloud computing, IoT devices, video streaming, and enterprise services. This upgrade builds on the longstanding relationship between both companies, with Ciena powering Summit’s optical network.
In his first year as CEO, Kevin Coyne has transformed Summit Broadband’s network to create data superhighways encircling the Florida peninsula, serving customers in Central, West, and Southwest Florida. This recent network expansion gives Summit Broadband even greater flexibility and adaptability to respond to the increasing needs of its customers, including school districts and municipalities.
“The past year has shown us how having access to high-quality connectivity is a necessity for everyday life,” said Coyne. “We chose to invest in deploying Ciena’s cutting edge solutions to bring an enhanced digital experience across Florida, connecting more people and businesses using higher speeds and lower latency services.”
“The demand for bandwidth shows no signs of slowing down, and our new 400 Gbps service ensures that our business customers have the high performance and scalability essential for applications like data center interconnect, which require fast speeds and low latency.”
Additionally, the upgrade will allow Summit to deliver more data per unit of energy over our existing infrastructure, maximizing network utilisation and providing capex and opex savings, Summit Broadband added.
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In January, BW Digital, the owner of the Hawaiki Submarine Cable, confirmed the availability of commercial 400 GbE services on the Hawaiki trans-Pacific cable, powered by Ciena’s GeoMesh Extreme subsea network solution.
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Ciena acquires 2 privately held companies: Tibit Communications and Benu Networks
Ciena® Corporation, a networking systems, services and software company, today announced that it has entered into a definitive agreement to acquire Tibit Communications, Inc., a privately-held company headquartered in Petaluma, California, and that it has acquired Benu Networks, Inc., a privately-held company headquartered in Burlington, Massachusetts. Tibit and Benu are focused on simplifying broadband access networks through next-generation PON technologies and advanced subscriber management, respectively.
Individually and together, Tibit and Benu will complement Ciena’s existing portfolio of solutions for broadband access use cases, including residential broadband, enterprise business services, and fixed-wireless access, which represent a significant addressable market for Ciena. In addition, the acquisitions will strengthen Ciena’s expertise in these areas, with the addition of a combined 60+ talented engineers with significant experience in access technologies.
“The acquisitions of Tibit Communications and Benu Networks will extend our ability to support customers’ next-generation metro and edge strategies as service providers globally accelerate investments to modernize their networks and improve connectivity at the network edge,” said Scott McFeely, Senior Vice President, Global Products and Services, Ciena. “Tibit’s high-speed PON technologies and Benu’s subscriber management products, combined with Ciena’s current access and edge portfolio, will enable us to offer broader, more complete, and fully integrated broadband access solutions that combine routing, subscriber management, and PON features and functionality.”
Tibit Communications:
Tibit combines PON-specific hardware and OS into a micro pluggable transceiver that can be easily integrated into a carrier-grade Ethernet switch. Unlike the closed and proprietary approaches of traditional Optical Line Terminal (OLT) vendors, Tibit’s open, microplug OLT technology enables rapid PON deployment in any environment.
The acquisition will enable Ciena to build on its market traction and accelerate its time to market, specifically with more vertically integrated, next-generation PON solutions that support residential, enterprise, and mobility use cases, including 10G XGS-PON with development paths to deliver 25G and higher PON in the future.
“The global PON market is growing at a rapid pace and this acquisition will provide the opportunity to take Tibit’s differentiated products to market at scale through Ciena’s extensive service provider customer base. And, as a combined team, we will continue to support and leverage Tibit’s existing network of relationships with system integrators and other equipment vendors,” said Edward Boyd, Vice President of Engineering and Chief Technology Officer of Tibit Communications.
Ciena and Tibit have a strong existing relationship. Ciena has been an investor in Tibit since its initial funding round in 2016 and is currently Tibit’s largest shareholder. Ciena is also Tibit’s largest customer, successfully leveraging Tibit’s products and technology within its portfolio of broadband access solutions.
Under the terms of the agreement, Ciena will acquire the remaining shares of Tibit that it does not already own in a cash-free, debt-free transaction currently valued at approximately $210 million, with the merger consideration to be paid in cash. In addition, Ciena will enter into certain employee retention arrangements in connection with the transaction. The Tibit transaction has been approved by the boards of directors of both companies as well as Tibit’s shareholders. The transaction is expected to close during Ciena’s fiscal first quarter 2023, subject to customary closing conditions.
Benu Networks:
Benu has developed a portfolio of field-proven, cloud-native software solutions, including a virtual Broadband Network Gateway ((v)BNG), which are highly complementary to Ciena’s existing portfolio of broadband access solutions. Benu will provide Ciena with the ability to deliver a single solution that integrates routing, OLT, subscriber management and network services, thereby reducing both capital and operating expenses and improving sustainability for our customers.
“Ciena and Benu have already successfully partnered in the market, including as part of an award-winning joint Proof of Concept (POC) with other residential broadband ecosystem vendors, as well as on active work on customer trials and POCs globally. As part of Ciena, we will be in a stronger position to further extend the market reach and continued development of our software solutions,” said Ajay Manuja, CEO of Benu Networks. The Benu transaction closed during Ciena’s fiscal first quarter 2023.
Ciena:
Ciena (NYSE: CIEN) is a networking systems, services and software company. We provide solutions that help our customers create the Adaptive NetworkTM in response to the constantly changing demands of their end-users. By delivering best-in-class networking technology through high-touch consultative relationships, we build the world’s most agile networks with automation, openness and scale. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, the Ciena Insights blog, or visit www.ciena.com.
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From Light Reading: These are positive moves for Ciena, according to Rosenblatt Securities Analyst Mike Genovese, who wrote about the deal in a note to clients on Tuesday. Ciena is looking to use its switching and routing platforms to win more business in the edge networking and fiber broadband markets, “which are in a strong and long multi-year growth cycle,” he wrote.
Genovese noted that one of Ciena’s primary customers, AT&T, intends to continue growing fiber access, even as it fights through mounting debt and economic headwinds. The carrier aims to pass 3 million to 4 million more homes with fiber between 2023 and 2025.
“We believe AT&T is the largest customer for Ciena’s PON [passive optical networking] solutions and there are good opportunities to win share at other Tier 1 telcos and cable MSOs [multiple system operators] where Ciena has switches and routers deployed,” Genovese wrote.
“Ciena has already announced a number of product enhancements and customer wins specifically using 10G PON transceivers housed within their access and aggregation switches,” wrote Kyle Hollasch, Cignal AI’s lead analyst for optical and routing hardware, in an email to Light Reading. “The Tibit acquisition brings a degree of vertical integration into an application that Ciena considers an important differentiator.”
“Traditional edge routers include tightly integrated subscriber management, but virtual and/or cloud-based BNG [broadband network gateway] functionality is gaining traction, and this is where Ciena sees its opening,” wrote Cignal AI’s Hollasch. “The Benu acquisition bolsters Ciena’s expertise in this area as they increase scale and move up the stack to become a more full-featured router vendor.”
Since 2015, Ciena has bought seven companies, and a few of those have included virtual routing and switching, network performance management, and other tools to help communications service providers of all types better control, automate and manage their networks.
Routing and switching were 12% of Ciena’s revenues in its fiscal third quarter and grew 45% year over year, according to Catharine Trebnick, a managing director at MKM Partners (and a former Light Reading editor). According to Ciena and analysts, the addressable market of the entire metro networking and edge (excluding China) has grown to $22 billion. Fiber broadband access is seen as the biggest driver in that segment.
“We view these two acquisitions as broadening its market reach into rural broadband infrastructure opportunities that are funded through the Infrastructure bill,” Trebnick wrote in a note to clients on Tuesday.
Heavy Reading Analyst Sterling Perrin, in a note to Light Reading, said that the global pandemic hit the accelerator for fiber broadband and – even with all the expected delays and bureaucracy – the massive government funding bill lessens a lot of the risk companies like Ciena would face by investing and making more bets in this space.
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Samsung and Ciena partner to deliver pre-validated implementations of 5G networks
At 2021 MWC LA, Samsung Electronics and Ciena announced that they are collaborating to deliver 5G solutions (?) by coupling Samsung’s 5G RAN and core network with Ciena’s xHaul routing and switching portfolio. The collaboration will enable the companies to offer hardware and software solutions to telecom operators to support the increasing volume of 5G data traffic at the edge and within an increasingly distributed 5G architecture.
Rafael Francis, senior director of solutions architecture at Ciena, sited the blurring between the RAN, transport and core network as motivation for the partnership with Samsung.
Image Courtesy of ACG Research
“The domains of RAN, transport and core are becoming more tied in the sense as operators roll out 5G with new architectures and approaches, like virtualized RAN (vRAN) or cloud RAN (cRAN),” Francis told RCR Wireless News. “Effectively, the network becomes an integral part of that because you not only have backhaul networks, but you have fronthaul and mid-haul networks, and these things all need to interoperate.”
5G xHaul transport needs a solution-level approach that includes both a feature-rich box and a well-integrated automation and orchestration platform. Ciena provides a complete yet open solution with its innovative Adaptive IPTM portfolio, which is well integrated with its Blue Planet Automation software. The company has simplified the 5G xHaul transport with a lean and open set of IP protocols driven by analytics focused, multidomain and multivendor closed-loop orchestration layer.
Alok Shah, Samsung’s VP of strategy, business development and marketing for the company’s networks business, agreed with Francis, adding, “Networks used to be a lot easier to understand. The RAN and the core were well defined, and the transport was backhaul for the cell sites.”
Now, though, in the world of vRAN and cRAN, the backhaul is only one means of transport. There is also fronthaul and mid-haul and, according to Shah, each one has a different level of performance requirement; when it comes to the fronthaul, in particular, the link between fronthaul and the RAN equipment has to be “really tight.”
“Because, you want to make sure that if you’re running 25 Gbps from your radio back to baseband unit, you want to make sure you’re getting the full performance out of that link,” Shah added.
Further, the combined offering will help operators accelerate critical 5G capabilities such as network slicing (requires 5G SA Core network), which Francis singled out a perfect example of why coordination across network domains has become more critical in a 5G era.
“Concepts and capabilities brought by 5G such as network slicing that can be used to drive new revenues and services for MNOs (mobile network operators) must be well coordinated across RAN, transport and core to really have the correct impact like ensuring SLAs and partitioning resources,” Shah said.
Wonil Roh, SVP and head of product strategy for Samsung Electronics’ network business said, “In order to deliver more powerful 5G services, the current network architecture needs to evolve. Samsung’s ability to couple our best-in-class 5G solutions with a leader in transport technologies like Ciena will give customers a solution to address this need, and do so with the confidence to scale and evolve their networks to support the future of 5G.”
Dell’Oro Group VP Stefan Pongratz noted that the two vendors have no material overlap. “Ciena’s telecom equipment revenues are primarily driven by its optical transport and SP switch portfolio while Samsung focuses on the RAN and mobile core markets,” he said. Stefan added that “as the backhaul becomes fronthaul, the transport requirements will change, which could impact the value of pre-integrated solutions.”
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References:
Samsung, Ciena partner to address ‘blurring between RAN, transport and core’
Telenor Deploys 5G xHaul Transport Network from Cisco and NEC; xHaul & ITU-T G.8300 Explained
Lightpath to deploy 800Gb/sec links using Ciena’s WaveLogic 5 Extreme technology
Fiber-optic network services provider Lightpath has rolled out 800-Gbps capabilities via implementation of Ciena’s WaveLogic 5 Extreme technology. The company also will deploy Ciena’s Waveserver Ai platform, which will pair with a flexible-grid optical transport network based on Ciena’s 6500 RLS platforms.
The Lightpath Network consists of over 18,000 route miles of fiber providing connectivity to over 12,000 service locations. Lightpath provides a variety of connectivity and business services to customers in the metro New York area, including financial services firms (e.g. “Lightpath intros 100-Gbps optical transport service” and “Lightpath raises New York metro fiber-optic network footprint”). Using Ciena’s coherent optical solution, Lightpath’s network becomes more adaptive, allowing it to respond quickly to ever-changing bandwidth demands while maximizing operational efficiencies, providing customers with more reliable, high-speed services.
The enhanced optical transport technology will increase fiber network flexibility and efficiency as well as support Physical Layer encryption for data security. Cable MSO Altice USA owns a controlling interest in the company (see “Altice USA to sell almost 50% of Lightpath fiber enterprise business to Morgan Stanley Infrastructure Partners”).
“In order for our customers to execute on their own digital innovations, we need to provide them with fast and reliable connectivity. With Ciena’s solutions, our customers in the New York and Boston metro areas will now experience next-level digital services with high bandwidth and minimal latency,” commented Phil Olivero, CTO at Lightpath.
“As users consume more digital content, it is crucial for service providers to ensure their network can adapt to these surging and often unpredictable demands. With Ciena’s technology, Lightpath is adding scalability to meet bandwidth demands and also gaining real-time visibility into the performance of its network,” added Kevin Sheehan, CTO, Americas, for Ciena.
WaveLogic 5 Extreme is now available in three different product implementations to meet network architecture preferences: 6500 Packet-Optical Platform, Waveserver 5 compact interconnect platform, and the WaveLogic 5 Extreme 800G transceiver module
The WaveLogic 5 Extreme chip is 12mm x 16mm CMOS device. Here are some of its remarkable features:
- It is the industry’s first commercial 7nm CMOS device for optical networks.
- Based on 7nm FinFET technology, it includes 3km of wiring and contains 800 Trillion operations per second, which is about as much horsepower as 400,000 laptops!
- Some of the capabilities that are packed into the ASIC include nonlinear probabilistic constellation shaping, throughput-optimized forward error correction, frequency division multiplexing, and encryption.
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About Ciena
Ciena is a networking systems, services and software company. We provide solutions that help our customers create the Adaptive Network™ n response to the constantly changing demands of their end-users. By delivering best-in-class networking technology through high-touch consultative relationships, we build the world’s most agile networks with automation, openness and scale. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, the Ciena Insights blog, or visit www.ciena.com.
About Lightpath
Lightpath is revolutionizing how customers connect to their digital destinations by combining our next-generation network with our next-generation customer service. Lightpath’s advanced fiber-optic network offers a comprehensive portfolio of custom-engineered connectivity solutions with unparalleled performance, reliability, and security. Our consultative customer service means we work with you to design, deliver, and support the solution for your unique needs, faster and more easily than ever before. For over 30 years, thousands of enterprises, governments, and educators have trusted Lightpath to power their organization’s innovation. Altice USA (NYSE: ATUS) owns a 50.01% controlling interest in Lightpath and Morgan Stanley Infrastructure Partners (MSIP) owns 49.99% of the Company.
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