Sycamore's Deshpande targets telecom revolution

Sycamore's Deshpande targets telecom revolution
REUTERS

MUMBAI, FEB 1: The chairman of a hot high-tech firm which made a blockbuster debut in the US last year said on Tuesday that its technology was set to revolutionise telecoms the way personal computers changed computing in the 1980s. Optical networking, a laser technology that accelerates telecommunication speeds while bringing down costs, will dramatically lower the cost of telephony and the Internet, Gururaj "Desh" Deshpande, who founded Sycamore Networks, said. "The improvements (in telecom networks) are going to be dramatic," Deshpande said."The whole architecture has to change. The whole way you do business has to change," he said.

A pointer of this change came on Monday, when the Massachusettes-based company announced a deal involving up to $200 million with Enron Corp to sell optical network products. Enron plans to sell bandwidth, without being a service company itself. In future, firms will not need to own networks in order to sell communication services, Deshpande said.

Optical networking involvesthe use of light beams instead of electrons to carry information including voice, video and pictures on fibre optic networks, dramatically cutting time and costs by eliminating the need to build signal boosters that are needed to expand old networks.

Deshpande said a typical network capacity of two gigabits per second, which now costs $200,000 a month and six months to roll out for an Internet service provider (ISP), will cost 50 per cent less every year because telecoms will grow the way microchips grow now. "We are going to change that (time) from six months to six days to six minutes to real time in three years," he said.

For the ultimate customers, this could mean high-quality videos being sent over computer networks at the speed of light at low costs, and would throw open new media possibilities.

Sycamore, which had its initial public offering (IPO) amid a technology boom on Nasdaq last October, soared nearly 500 per cent on the first day, settling at $184.75 from its $38 pricing. Deshpande waspersonally richer by $3.2 billion within hours. Sycamore, which set a three-for-one stock split last week, closed is now ruling around $319. Deshpande said Sycamore was scheduled to launch in Europe next week, and planned to add two customers every quarter. Sycamore's revenue grew to about $19.5 million in the quarter ended October from $11 million in the previous quarter. Deshpande said the latest quarter "will probably see a healthy growth."

Bigger telecom networking companies like Lucent and Nortel Networks are competing against Sycamore, and a host of startups are set to enter the market, but Deshpande said his firm was scoring fast because of its nimbleness and ability to deliver products fast.

Among other optical networking companies are Optical Networks Inc, which is yet to go public, and JDS Uniphase. Deshpande said optical networking can help developing countries tremendously. "Countries like India which haven't invested in infrastructure can leapfrog," he said.

Indian-born Deshpande earlierfounded Cascade Communications Corp, which was sold for $3.7 billion to Ascend Communications Inc, which Lucent in turn bought for $24 billion last year. "This time we want to keep it independent," he said. He was in Bombay to attend Nasscom 2000, an international conference focusing on India's booming software industry.