Copyright 2000 Globe Newspaper Company
The Boston
Globe
January 19, 2000, Wednesday ,THIRD EDITION
SECTION: BUSINESS; Pg. C1
LENGTH: 1120 words
HEADLINE:
NEW ENGLAND FIRMS BUILDING A BETTER NET 'OPTICAL NETWORKING' START-UPS WORK TO
BOOST TRAFFIC FLOW, SERVICES
BYLINE: By Ronald
Rosenberg, Globe Staff
BODY:
It's no secret the
explosive growth of the Internet has helped create an information highway that
carries ever-increasing amounts of traffic.
Now come the cloverleafs,
ramps, and automated toll booths that link and modernize the
system. A new generation of technology, based on
fiber-optic communications, is being developed to speed and increase the flow of
traffic on the Net and to soup up services to users of the information highway.
Known as "optical networking," the hardware and software are being
developed by dozens of upstart telecommunications companies. Many of them are in
Massachusetts, which has become the epicenter for optical networking. "These
young companies are saying, 'How do we not stall the growth of the Internet?' So
they are on the bleeding edge of the technology, thinking several years ahead to
get a leg up over competitors," said Andrew Cray, senior analyst at Aberdeen
Group in Boston.
Fiber-optic technology isn't entirely new: Cables
containing hair-thin glass strands that use pulses of light, instead of
electrical pulses, have increasingly replaced copper wires to form the backbone
of the nation's communications network.
But there's a new wave of
fiber-optic equipment that transmits huge amounts of data at phenomenal speeds -
comparable to sophisticated toll booths and on-off ramps - along with new
software services. This new infrastructure promises to make Internet
communications faster, cheaper, and better.
Lately, optical networking
has taken on a buzz. Take the example of Sycamore Networks Inc. of Chelmsford,
best known for its dizzying stock market valuation - $20.5
billion as of yesterday. Sycamore developed a powerful optical switch that
allows phone carriers to offer the latest fiber-optic technology to corporate
customers quickly and less expensively. The company went public in October at
$38 a share and saw its stock surge to 328 in late December. It
closed yesterday at 259 15/16, down 8 11/16.
With Sycamore serving as a
model, a bevy of other start-ups has sprung up locally. Topping Silicon Valley,
home to some of the telecommunications giants, Greater Boston and parts of
southern New Hampshire are considered the leading centers for optical
networking, followed by Northern California and Texas.
Huddled along
Interstate 495 are nearly a dozen optical networking start-ups backed by venture
capital, mostly formed in the last 22 months. Many of the leaders of these
companies and their employees have come from Bell Laboratories, Lincoln
Laboratories, and Cascade Communications Inc. of
Westford, the
high-speed switching company that enjoyed a meteoric rise in the 1990s.
Most of the optical start-ups, which have yet to sell products and
services commercially, are targeting phone carriers and service providers that
in turn sell to businesses.
"When you look at the management and talent
running these optical start-ups in Massachusetts, you see their infrastructure
expertise in building systems and reliable networks for telephone carriers,"
said David E. Schantz, general partner at Matrix Partners, a local venture firm
that has funded several optical companies.
"You don't have this level of
experience in Silicon Valley, which is why the pendulum in the next generation
of optical networking has swung eastward to New England."
The new
companies are developing products and services that complement Sycamore's.
"Today's infrastructure is built on voice telephone calls, and while it
has changed to handle data, optical networking is starting differently - with no
choke points. You can have a mind-boggling 10,000 lanes with automated tolls,"
said Desh Deshpande, Sycamore chairman and founder.
To speed adoption of
the new technology, Sycamore announced last week that 50 optical networking
equipment makers and long-distance carriers will promote universal technical
standards, creating a sort of "optical dial tone."
Plugging into
Sycamore switches are a host of complementary companies including Coriolis
Networks, Appian Communications, and Quantum Bridge Communications.
"There is a little bit of the land-rush scramble going on, where
entrepreneurs see opportunities [in selling to] long-distance carriers who want
to offer corporate customers more capacity for their Internet traffic and new
telephone services - all at a lower cost," said Robert Castle, founder and
president of Coriolis, a 35-person Boxborough company developing optical access
equipment.
The thirst for more Net capacity, or "bandwidth," is expected
to fuel sales of optical net working equipment and services, from
$8.9 billion last year to more than $41
billion by 2003, according to RHK, a market research firm in San Francisco. At
the same time, phone carriers that buy the optical equipment and install it in
corporations will also provide related services - such as Web hosting, desktop
videoconferencing, customized private networks, and a panoply of e-mail
possibilities.
"The challenge is to develop the services side that the
carriers will depend on for their future, while also keeping up with the speed
requirements that optical networking requires," said David Tolwinski, president
of Tenor Networks Inc. of Acton.
Tenor Networks was formed to provide
hardware and customized services. Robert P. Ryan, now vice president of research
and development, and Leon K. Woo, the company's chief technology officer, formed
the company in October 1998. Tolwinski joined them in January 1999. All three
worked at 3Com Corp.'s switching division in Boxborough.
"After the kids
went to school, Leon and I put our ideas together on the dining room table of my
home," recalled Ryan. "We are technologists and saw a fundamental change in the
way networks will be built in the future."
It wasn't just technology
that gave rise to optical networking. The Telecommunications Act of
1996, which effectively ended the Baby Bells' phone monopolies, sparked
a flurry of telecommunications start-ups.
"We would not be in business
today were it not for the Telecom Act," said Mick Scully, founder and president
of Appian Communications of Boxborough, which has quickly grown to 43 employees
since March.
As with anything that involves Internet communications, the
optical networking upstarts say that speed is essential.
"You have to
run like hell, set expectations, meet them, and know that you really have less
than a year's lead time over your rivals," said Anthony Zona, president and
chief executive of Quantum Bridge of North Andover. SIDEBAR: Communications
center A sampling of Massachusetts companies involved in developing fiber-optic
technology for the Internet. PLEASE REFER TO MICROFILM FOR CHART DATA
GRAPHIC: PHOTO CHART, Appian
Communications of Boxborough, one of the state's "optical networking" firms, has
grown to 43 employees, from six, since March. / GLOBE STAFF PHOTO/FRANK O'BRIEN
LOAD-DATE: January 19, 2000 
