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AT&T just completed a first-of-its-kind test — and Cisco should be terrified

Julie Bort
scared screaming haunted house

(David McNew/Getty Images)
A week ago, AT&T did something with network technology that's never been done before, and companies like Cisco and Juniper Network should be terrified.

AT&T ran a test using data from its customers that proved it could build a superfast, reliable network with inexpensive no-name computer switches, some open-source software, and software from a startup.

The no-name hardware devices AT&T used are known as "white box" switches in industry speak.

But that's not all. AT&T's test, conducted last Tuesday, successfully sent data from one white-box switch in Washington built with one kind of computer chip to another one in San Francisco from a different vendor using a different computer chip.

That means a company doesn't need to buy all its networking gear from one vendor to have everything work well together.

AT&T used this network gear with its homegrown network-management software, called ECOMP, that makes sure all the data gets to where it's supposed to go.

And AT&T has given ECOMP to the Linux Foundation, meaning anyone can take that software, use it, and contribute to it. That includes other telecom network providers, some of whom are trying it now and would likely be interested in the low-cost hardware AT&T just tested.

Software eats the network

AT&T has basically proved Facebook's vision of how data networks should be built — even when it comes to an enormous, powerful network like AT&T.

Mark Zuckerberg

(Facebook CEO Mark Zuckerberg.Stephen Lam/Reuters)
Facebook has been pushing a new way to build networks, an approach referred to generally as software-defined networking, or SDN.

Instead of baking all features into expensive, high-end networking gear — Cisco's model — SDN uses cheaper hardware. All the powerful features are built into the software, which can be purchased from another company.

SDN promises to make networks more affordable and easier to manage.

Facebook didn't invent SDN, but it has been proving the concept works in its large-scale data centers.

More importantly, it has been inventing all kinds of brand-new networking technology based on the SDN vision. It gives its software and hardware designs away, too.

Several years ago, Facebook launched an organization called the Open Compute Project to develop the vision of giving away hardware designs, known as open source hardware. OCP encompasses more than just networking, but it has been such a big focus that Facebook launched a similar project for service-provider networks, the Telecom Infra Project.

SnapRoute Jason Forrester

(SnapRoute CEO Jason Forrester.SnapRoute)
OCP has taken off. AT&T joined last summer, looking for help with its project to revamp itself in the SDN image.

While AT&T created its hardware for this project — it didn't use standard OCP products — a bunch of OCP players helped AT&T, including:

  • SnapRoute, a startup created by the former Apple networking team in direct response to what they experienced when building Apple's networks running things like the App Store and Siri. SnapRoute makes a software called a network operating system that can be loaded into lots of different hardware.
  • Barefoot Networks, a network hardware startup founded by the famed network pioneer and Stanford professor Nick McKeown. Barefoot Networks is building a new breed of chip for network equipment that can be changed and programmed. While that may not sound revolutionary, it is — most networks today are built on fixed-function chips.
  • Broadcom, which makes industry standard chips. AT&T used some of its cutting-edge network chips. Broadcom has been a big player in helping Facebook build OCP network switches.
  • Delta Electronics and Edgecore, two of the manufacturers of network switches based on Facebook/OCP designs.

Why Cisco and Juniper should be scared

While AT&T didn't say it was ditching Cisco, it did say this method of building networks was its future.

"With this trial, we went from using traditional switches the size of multiple refrigerators to a chip that can literally fit in the palm of your hand," Andre Fuetsch, CTO and president of AT&T Labs, said in a press release. "We think white box will be a big part of the future of the wide area network."

It has been saying such things for years.

Chuck Robbins, chief executive officer of Cisco Systems in Laguna Beach, California October 20, 2015.

REUTERS/Mike Blake

(Chuck Robbins, CEO of Cisco Systems.Thomson Reuters)

And at least some people on Wall Street have noticed that the big networking vendors were not part of AT&T's test.

Nomura analyst Jeffrey Kvaal published a research note on Wednesday called "AT&T's Gain ... Vendors' Pain" on the implications of AT&T's test.

"Conspicuously absent from the trial were Cisco, Juniper, and Arista," he wrote, noting that AT&T is a big customer for Cisco and Juniper, as well as Arista, but to a lesser extent.

"AT&T's network automation is already hurting vendors," he added.

While Cisco offers an SDN product called Application Centric Infrastructure, it is available as a software option for only its biggest, most powerful high-end family of switches, the Nexus 9000. Cisco says ACI has been selling well; however, as Business Insider has reported, while customers like the Nexus 9000 switches, ACI has a reputation in the industry for being difficult to install and use.

Plus, Cisco's legendary top engineering team that built that product publicly quit Cisco last summer.

Seeing the writing on the wall, Juniper and Arista have begun to sell versions of their network software that could run on white-box switches.

Cisco is working on a similar thing, internally called Lindt, according to a report by Kevin McLaughlin in The Information, although Cisco wouldn't publicly confirm that.

But selling the software without the high-end hardware could lead to a major decline in revenue for Cisco and possibly cannibalize its largest, most important product lines.

Imagine being able to buy Apple's iOS, put it on a $99 phone, and have it all work great.

That's the quandary Cisco faces. And AT&T just made this problem very real and very public.

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