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

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 can build a super-fast, reliable network with inexpensive no-name computer switches, some open source software and software from a startup.

In industry speak: that no-name hardware devices AT&T used are known as "white box" switches.
But that's not all. AT&T's successful test, conducted last Tuesday, sent data from one white box switch in Washington built with one kind of computer chip to another one located in San Francisco from a different vendor using a different computer chip.

That proves that companies really don't need to buy all their networking gear from one vendor in order to have everything work well together.

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

And AT&T has given ECOMP away 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 out now, and would also 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

Stephen Lam/Reuters

To clarify: Facebook has been pushing forward a new way to build networks, an approach generally referred to as software-defined networking (SDN).

Instead of baking all features into expensive, high end networking gear (aka Cisco's model), an SDN network uses cheaper hardware. All the powerful features are built into 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 own large-scale data centers.

More importantly, it's been inventing all kinds of brand new networking technology based on the SDN vision. It gives its software and hardware designs away for free, 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 networking has been such a big focus hat Facebook launched an similar project for service provider networks, called the Telecom Infra Project.

SnapRoute Jason Forrester


SnapRoute CEO Jason Forrester

OCP has taken off beyond Facebook's wildest dreams. AT&T joined last summer, looking for help with its own internal project to revamp itself in the SDN image.
While AT&T created its own hardware for this project (it didn't use standard OCP products), a bunch of OCP players were the ones that helped AT&T. They include:
  • SnapRoute, a startup created by the former Apple networking team in direct response to the heartburn they experienced when building Apple's networks running everything from the App Store to Siri. SnapRoute makes software called a network operating system, that can be loaded onto lots of different hardware.
  • Barefoot Networks, a network hardware startup by 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, the chip maker that makes industry standard chips. AT&T used some of its cutting edge network chips. Broadcom has been a big player helping Facebook build OCP network switches.
  • Delta and Edgecore, two of the manufacturers that also make 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 that 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. We think white box will be a big part of the future of the wide area network," Andre Fuetsch, CTO and president of AT&T Labs said in the press release. It's actually been saying such things for years.

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

Thomson Reuters

Chuck Robbins, CEO of Cisco Systems, talks about the future of mobile during the Wall Street Journal Digital Live (WSJDLive) conference

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 put out a research note on Wednesday on the "implications" of AT&T's test called "AT&T's Gain . . . Vendors' Pain."

"Conspicuously absent from the trial were Cisco, Juniper, and Arista," he wrote and noted 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."

While Cisco does offer a SDN product called Application Centric Infrastructure (ACI), it is only available as a software option for its biggest, most powerful high end switch, the Nexus 9000. Cisco says ACI has been selling well, however as we previously reported, while customers like the Nexus 9000 switch itself, ACI has a reputation in the industry for being difficult to install and use.

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

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

Cisco is rumored to be 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 be a major decline in revenue for Cisco and, possibly, cannibalize its largest, most important product lines.
Put it this way: imagine being able to buy Apple's iOS software, 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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