Carriers decry 40 Gb/s prices

Capacity constraints might be pushing some carriers to upgrade their 10 Gb/s networks, but some of them are also warning equipment vendors that if 40 Gb/s gear is too expensive, it will be eclipsed by 100 Gb/s gear before long.

Late last month, Verizon Business announced it would turn up its first commercial 40 Gb/s link in the second quarter in the crowded corridor between New York and Washington. Some unknown number of additional 40 Gb/s upgrades will follow, but Verizon will also begin trialing 100 Gb/s links in 12 to 18 months, it said — a signal to vendors that 100 Gb/s is close on the heels of 40 Gb/s gear.

“Most routes have at least 40 Gb/s on them, but it isn't necessarily cost-effective to use 40 Gb/s everywhere yet,” said Glenn Wellbrock, director of network technology development for Verizon Business. When the carrier began trialing 40 Gb/s gear three years ago (as MCI), its goal was for 40 Gb/s gear to be no more than two and a half times the price of 10 Gb/s gear. “We're not there yet,” he said.

Carriers suspect 100 Gb/s might offer better economies of scale because, unlike 40 Gb/s technology, it moves at the same speed as a lot of embedded Ethernet gear. It might, therefore, be able to use some of the mass-produced chipsets whose cost has already been driven down. Moreover, carriers might be able to apply to 100 Gb/s some of the same work already done to make 40 Gb/s links work in long-haul networks (e.g., new modulation formats).

Still, Verizon will continue upgrading its heaviest routes to 40 Gb/s this year. AT&T began a 31-city upgrade of its IP core network to 40 Gb/s last summer. Level 3 Communications hasn't gone to 40 Gb/s yet and is moving straight to 100 Gb/s, according to Robert Feuerstein, a senior architect for that carrier. “I suspect that one hundred Gig is going to be the more economical next step,” he said.

But the carrier believes it has some time to decide. “We haven't seen a lot of demand for 40 Gb/s,” Feuerstein said. “There's an extremely small number of customers asking about it.”

“This represents a nascent market,” wrote Simon Leopold, an analyst for Morgan Keegan, in a recent note. In the race between 40 Gb/s and 100 Gb/s, he said, “It's too early to handicap a winner.”