At the recent Telecoms@The Internet show in London, it was not Sun Microsystems Inc, nor Bay Networks Inc, nor Worldcom Inc that enthralled the telcos, telecom equipment makers and Internet Service Providers in attendance. Rather, it was a 31-year-old Russian named Alex Mashinsky from a little-known New York company called Arbinet that attendees rushed to talk to after his presentation. Why? Because four-year-old upstart Arbinet is in the business of selling operators a relatively cheap, but incredibly powerful, personal computer-based switch that can provide tandem and multi-node switching. Arbinet’s CLN Central Local Node switch, which was named Best of Show at the Computer Telephony Expo in New York in April, is based on standard Power PC processors running Santa Cruz Operation Unix, Dialogic Corp’s computer telephony boards and Fore Systems Inc ATM components. Arbinet has added its own Telephony Operating System that can run multiple applications simultaneously, including switching, international callback, conference calling, voice mail, debit card, fax store-and-forward, internet access and both voice and fax over IP networks. In a single personal computer chassis, Arbinet can provide up to seven T-1 connections (168 ports) or eight E-1s (240 ports).
By Marsha Johnston
Arbinet’s current configuration, located in New York and in eight POPs overseas, comprises 75 switches connected to more than 400 T-1s, giving it a 10,000-port capacity. Little wonder then, that, as conference manager Izi Muraben says, Mashinsky had a very, very strong impact on the equipment vendor community because he said a lot of things to the telcos that the equipment vendors would like to have said but couldn’t because of existing relationships. Alex wasn’t burdened by past history, and he told the telcos that they must revisit their infrastructure. Martin Helebrant, assistant to the vice president for network and value-added services at SPT Telecom in Prague, was among the telcos impressed by Arbinet’s approach. From a technical point of view, the product is quite smart, but the question is how it is used, he said, adding that, today, it is better for non-real-time data traffic than for voice, given the unreliability of IP networks. It is best for countries with a high volume of traffic that is not real time, such as voice. For speaking person to person, you will have problems because most IP networks don’t have a guaranteed level of service, so it’s hard to be sure you will get the network response in the fraction of a second needed to fool the human ear, he explained. But for the rest, he said, it allows you to divert data traffic to dedicated lines, transform it to the IP protocol and gain a reasonable upgrade of your network utilization and reduce congestion. You can also send it in this form through leased lines, avoiding high international arbitration costs. But SPT is not buying it immediately because it has only a small-scale dedicated IP network. We don’t have large amounts of IP traffic, particularly internationally. The largest Internet Service Provider in the Czech Republic has maybe 6,000-7,000 users. The demand for IP capacity is not surging at the moment, so maybe we don’t need [Arbinet] yet, Helebrant said. Nonetheless, Mashinsky, of course, is categorical. The question is if Arbinet and Dialogic are going to do to the large switch vendors what Microsoft and Intel did to the mainframe vendors. I think so, and it is going to happen faster than anyone thinks. Today we are the only player, but in the year 2005, 80% of calls will be on open platforms from Cisco, Arbinet and others.
Major players are shifting
The major players are shifting to open standards plus open architecture. I think someone needs to wake up Siemens, he says. Arbinet is not terribly communicative about which operators are using its system, since the equipment is often used for controversial refile and callback services. But reliable sources say that at least one major player, AT&T Corp, is using Arbinet equipment for its WorldNet services in Japan and South America. Furthermore, say the sources, when AT&T installed Arbinet in Japan, enabling its customers to pay $0.79 per minute instead of Kokushai Denshin Denwa Co Ltd’s $2.50, KDD’s stock dropped $3,000m in worth in a single day. Says Mashinsky, Operators can pay for the switch in four weeks. Controversy over avoiding arbitration costs doesn’t bother SPT Telecom’s Helebrant. Rather, he believes Arbinet’s product fits the arbitration business perfectly, because you can use the private network to bypass expensive parts of network. When reminded of that some people call that cheating, he said. Does business have morals? No, just legalities. If it is not prohibited, why not do it? Indeed, Arbinet’s business has apparently attracted several American companies who have expressed an interest in buying the startup, and at least one is believed to have made an offer. Specific details of the discussions are being closely guarded for commercial reasons. It would not be surprising for Mashinsky to sell the company now, since the big switch manufacturers are shifting their strategies more in his direction. Witness the alliance between Alcatel Alsthom SA and Cisco Systems Inc. Says Helebrant, According to Alcatel and Siemens, who are our court-appointed network suppliers, they will be offering upgrades to their S12 and EWSD equipment to provide similar capabilities to Arbinet, in a year, maximum two. At that point, we would have to decide. Although it might be beneficial to bring a new piece of equipment into the network, from an operational point of view, it might cost less to upgrade the existing network.