IP without ATM: How preying on service provider niches may prove effective

While networks seem to be built from a standard set of equipment components, vendors and technologies, sometimes straying from that norm may prove more cost-effective and even more functional. For customer-hungry competitive local exchange carriers and other service providers that have bottom lines hinged upon keeping expenditures low, niche solutions may be the most attractive.

For packet LEC Vitts Networks, working with an equipment vendor to solve specific needs was enticing. Vitts wanted to simplify the access component as its network speed increased, said Chris Oliver, CEO of Vitts. The provider targets Tier 2 cities on the upper East Coast with DSL broadband data services, Internet services and e-business outsourcing, but simplifying the way it delivers those services is a critical ingredient to reducing costs to support continued growth, Oliver said.

"Our business is very competitive, and we are doing everything we can to drive our costs down so we can make offerings even more affordable and grow our customer base," he said.

To accomplish the simplification goals, Vitts turned to Net to Net Technologies. Vitts already was using DSL network extenders from Net to Net, and as the service provider was sketching out growth plans, the sensibility of having DS-3 network extenders that circumvented the need for ATM in its network materialized. Other vendors are focusing on equipment that adapts Ethernet or IP into ATM first, which is more expensive on a capital acquisition basis and a daily basis, Oliver said. "We said to them, `If you build this, we will buy it,'" Oliver said. And build they did.

Now a year later, Vitts is nearing deployment of the DNE4500 DS-3 network extenders from Net to Net (see figure). Before using the Net to Net extenders, Vitts used ATM at the backbone of its network.

"While ATM is extremely capable in that service, our services on the front end are IP-derived and our customers' interconnect is usually some flavor of Ethernet," Oliver said. As part of its growth plans, Vitts wanted to evolve more of the front end of its network so that it would be more like Ethernet but adapted to the medium it was carried over.

"Providers traditionally extend the ATM cloud to all central offices in an area, but that can be cost-prohibitive," said Eric Knapp, director of marketing for Net to Net. In contrast, Net to Net is shrinking the ATM cloud while it tries to give the equipment more plug-and-play qualities. The DS-3 network extender lets service providers backhaul access services by connecting to a fast Ethernet port at the end of each DS-3 circuit.

"At the end of the day, the network extender is effective and has inexpensive capital costs," Oliver said. "That's what we need to allow us to deploy more aggressively without service-related issues that hold back installation time."

Despite the fact that Oliver sees ATM playing an important role in the future, he believes it ultimately will give way to IP-based infrastructure. "Yesterday's caliber of network services and network infrastructure just isn't going to cut it anymore," he said. Although ATM can help, it is not IP. "You may layer IP over [ATM], but you give up certain things in doing that, and you add complexity." The IP-centric network also will enable Vitts to offer more service level agreements.

Net to Net appears to be the only company without ATM functions, but it is tapping into a niche market, said Kate von Goeler, industry analyst with Cahners In-Stat Group. "It is similar to a growing trend in the ISP market where equipment is being tailored to meet the specific needs of a customer." But she cautioned that the network extender would save money onlyin the short term. "Once providers expand, it may not be so cost-effective.">