Aurora Networks is betting that MSOs will look to enter the lucrative commercial Ethernet business.

Based in Santa Clara, Calif., Aurora expects to make its Ethernet product line available after the first of the year. The line includes power supplies, transmitters, optical amplifiers, digital transponders, return-path receivers, fiber-node platforms and Ethernet access devices. With Aurora products installed, operators could offer services such as telephony and video streaming to commercial ventures ? a customer segment the cable industry has been slow or unable to embrace in the past, says John Dahlquist, VP-marketing.

Ethernet, a standard developed by the Institute of Electrical and Electronic Engineers, was originally developed by Xerox to deliver large amounts of data over its local area networks. An Ethernet LAN typically uses coaxial cable or special grades of twisted-pair copper wires to deliver large amounts of data at very high speeds. Using Aurora's Ethernet equipment, cable operators can deliver more data faster and cheaper than telephone companies, which use T-1 lines, Dahlquist says.

Pioneer Consulting, an international market research and analysis firm specializing in global, high-speed telecommunications technologies, believes Ethernet offerings will be big business for service providers, such as cable operators.

Ethernet services are evolving beyond their local area network roots, writes Doug McEuen, a senior market analyst for Pioneer Consulting, in a recent report titled ?Gigabit Ethernet: Equipment and Service Provider Opportunities in Multiple Markets.? He predicts that total worldwide equipment sales for all types of Ethernet will grow from $17.3 billion in 2001 to $145.2 billion by 2005.

Gigabit technology, such as that being developed and sold by companies like Aurora Networks, will enhance and accelerate the development of Ethernet services, the study concludes.

?Ethernet is an extremely attractive technology,? McEuen writes in the study. ?It is simple to use, inexpensive and still evolving into an even better network solution.?

Aurora has two trials under way now, according to Dahlquist. He declined to identify the MSOs the company is working with but said that in one test the operator has wired several municipal buildings, replacing the T-1 lines the city had been leasing from the local phone company. Using Aurora Networks equipment, the buildings can communicate with one another as well as the outside world via Internet protocol technology.

?In this case,? Dahlquist says, ?the customer was buying their service from the local phone company. The operator came in and for a lower cost provided the customer with the same services at higher speeds and more capacity.?

The operator gained a significant customer, Dahlquist says, and a return on investment using this technology can come as quickly as three months. Excluding the cost and installation of the fiber, an MSO can install a system for commercial purposes for between $1,500 and $2,000 per port, he says. The cost of the installations depends on the number of ports (a port is where the high-speed data signals are dropped off, i.e., a municipal building, school, library or branch office).

Aurora Networks' equipment can be integrated into existing networks or used to build an entirely new network. To be sure, unless new construction is being undertaken, most operators aren't looking for many end-to-end solutions these days.

Aurora Networks expects to sign MSO deals by year's end, he says. Right now, most of the company's equipment can be shipped within four weeks, he says. But all the equipment will be readily available in the first quarter of 2002.

?We've talked to a lot of operators that aren't in the market for a system upgrade now,? Dahlquist admits. The company expects most of its business to be in new-build construction ? plants that are being newly constructed or areas that might already be developed but not previously wired for cable service ? or in areas where operators stand to gain a substantial amount of new business by adding some equipment.

The company's equipment can eliminate the need for costly hub buildings, squeezing equipment into small pedestals that aren't such eyesores for local neighbors and less costly to operate, Dahlquist says.

A traditional 20,000-home hub requires 60 power supplies, while Aurora Networks' equipment requires only 19, Dahlquist says. About 900 RF (radio frequency) amplifiers are required with the traditional hub architecture; Aurora Networks' equipment eliminates the need for RF amps altogether. The cost to power a traditional hub over ten years is about $760,000; the cost to power Aurora Networks' equipment over the same period is estimated to be about $240,000.

Dahlquist also says that it costs an average $4.7 million over ten years to maintain a traditional 20,000-home hub, while Aurora Networks equipment shouldn't cost more than $1.2 million over a ten-year period.

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