Redback President sees opportunity in telecom slump

The impact of the telecom downturn on the larger players is well chronicled. But even though affected similarly, some smaller players are viewing the slump as an opportunity to show their stuff. Redback Networks President and CEO Kevin DeNuccio recently shared his perspective with Network World Managing Editor Jim Duffy.

What's to spur broadband?

The FCC is protecting a class of customer that doesn't exist anymore: the data CLECs. The data CLECs are all gone. They have to release the RBOCs for an unbundling situation. DSL is not on a price curve it needs to be on. It is a high-risk business in that it doesn't make money today for most of the RBOCs. If they want them to invest in that we've got to look at the cable companies and new wireless technologies as a competitive threat to that. Meaningful regulatory change, I think, is within six months.

271 relief here is an opportunity for an SBC or BellSouth or a Verizon to go in and capture the business from the IXCs. That's what I think is going to change a little bit in terms of where data dollars get spent. That's important for us because even though we supply all the IXCs with SMS [subscriber management] gear, they're pretty small in that space. They're either for backhaul or their small DSL efforts. We're well positioned with the RBOCs and the PTTs around the world. Our core competency in subscriber management and in how you manage a network is going to play to our strengths. The way they manage DSL networks today is the most sophisticated way of any network management. When you start to think in terms of VPNs, an SMS model of managing your network is a very intelligent way of managing your network. Our customer base and our position in DSL is positioning us really well to play in how they think about re-architecting the edge of the network.

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The impact of the telecom downturn on the larger players is well chronicled. But even though affected similarly, some smaller players are viewing the slump as an opportunity to show their stuff. Redback Networks President and CEO Kevin DeNuccio recently shared his perspective with Network World Managing Editor Jim Duffy.

What's to spur broadband?

The FCC is protecting a class of customer that doesn't exist anymore: the data CLECs. The data CLECs are all gone. They have to release the RBOCs for an unbundling situation. DSL is not on a price curve it needs to be on. It is a high-risk business in that it doesn't make money today for most of the RBOCs. If they want them to invest in that we've got to look at the cable companies and new wireless technologies as a competitive threat to that. Meaningful regulatory change, I think, is within six months.

271 relief here is an opportunity for an SBC or BellSouth or a Verizon to go in and capture the business from the IXCs. That's what I think is going to change a little bit in terms of where data dollars get spent. That's important for us because even though we supply all the IXCs with SMS [subscriber management] gear, they're pretty small in that space. They're either for backhaul or their small DSL efforts. We're well positioned with the RBOCs and the PTTs around the world. Our core competency in subscriber management and in how you manage a network is going to play to our strengths. The way they manage DSL networks today is the most sophisticated way of any network management. When you start to think in terms of VPNs, an SMS model of managing your network is a very intelligent way of managing your network. Our customer base and our position in DSL is positioning us really well to play in how they think about re-architecting the edge of the network.

Are you targeting mulitcable systems operators (MSO) more aggressively given the impending collision with the regional Bell operating companies?

We are just beginning to (target them). In countries where cable companies run like the RBOCs do - they offer broadband as a wholesale service to ISPs or to content providers - there's an SMS model usually in place. We play in that kind of space around the world. In the U.S., they have not been doing that today. But they're just coming around, and they're coming around for two reasons: one is, with this open networks that they have, some power users are chewing up a lot of network processing and network bandwidth. So they're looking for a way to cordon off these high-powered users so they don't sink a whole neighborhood. The second is, are there new kinds I can offer where you might want to do user management. Up until now, there hasn't been a driver there to do a user management model in my network. We have some significant opportunities that we're working.

Would Redback consider getting into the cable modem termination system business?

Right now, I've been paring down what we do given the fact that I think we need to get more focused. To get through the downturn that we're in with the balance sheet that we have, we need to be very tightly managed as a company. We're focused now and where we have significant differentiation. We have to get our foothold and then grow from a position of strength. You mentioned optical transport. We've really backed down on our investment there, significantly. We haven't discontinued the product line but we got a very small R&D team so we really downsized the R&D team. So our product roadmap is fairly limited there. It's not a big push by us today, the optical transport space. Reality is No. 1, there's not a lot of spending there, virtually none; and No. 2, it's the kind of technology that you can throw a lot of money and engineers at and you can do it. So when I look at the competitive landscape I say the traditional guys are not going to give that up, because circuit switching is dead. Optical transport is their next biggest business. This is not sophisticated engineering; it just takes dollars to do it. There's no way a small company can keep up with these guys. Strategically, we're taking care of our customers and we're doing the features that our customers are demanding us to do. But I think we will migrate a lot of those net works to routing. Our routing and SMS differentiation is so huge compared to Cisco or Juniper or anybody else in the business, or we wouldn't have the traction we have today in a weakened state and in a weakened environment that the world is in.