SMDS Use on the Rise, Expected to Grow Significantly.

LAS VEGAS--(BUSINESS WIRE)--March 23, 1995--The demand for a high-speed, wide-area data service called Switched Multimegabit Data Service (SMDS) is growing and expected to rise dramatically during the next four years, according to analysts. Even so, the superiority of the cell-based service for interenterprise data communications is vastly underappreciated in the marketplace, said analysts.

Users of the SMDS service will gather next Monday, March 28, at national SMDS Interest Group and User Group meetings to be held at the Las Vegas Convention Center in conjunction with Networld+Interop to share how they are using broadband service for interenterprise data communications, thereby saving time and money, enhancing overall productivity and enabling closer collaboration with customers, suppliers and other key business partners. Daniel Briere, the keynote speaker and president of TeleChoice, a communications consulting firm, will describe the competitive advantages that SMDS provides over frame relay and asynchronous transfer (ATM), advantages that he says are largely unrecognized in the industry. Several user panels will focus on various SMDS applications, including an emerging application for crucial disaster recovery operations.

Dramatic Growth

---------------

According to industry analyst Caroline Michel of International Data Corporation (IDC), the number of customers using the nation's first public broadband service has more than doubled in the past year. Today more than 200 U.S. corporations are using SMDS, compared with 91 in 1993. IDC expects about 1,000 customers to be using the cell-based service by 1998. (Line chart available)

Total SMDS connections will grow at an even faster in the next few years as customers using the service increase the number of SMDS ports on their networks, Michel said. IDC research shows that in 1993 customers had 362 SMDS connections. At the end of 1994, nearly 1,500 SMDS access interfaces were installed or under contract. IDC expects these numbers to increase significantly to nearly 10,000 connections by the end of 1998. (Line chart available)

Subscribers to the service come from a broad range of industries, including banking, insurance, healthcare, publishing, government, education and manufacturing, Briere said. "SMDS is the ideal platform for interenterprise connectivity, and it provides several advantages that the other broadband services, such as frame relay and ATM, cannot," he added.

Today, eight network service providers -- including long-distance carrier MCI Communications -- offer the cell-based data service in the U.S. Together with over 40 equipment vendors, they are helping organizations integrate SMDS into local, metropolitan and wide-area network environments. Several PTTs also offer commercial SMDS service overseas.

Significant growth in overall revenues points to the increasing customer demand for SMDS, Michel said. The SMDS market, which was $2.5 million in 1993, has grow to $4.5 million and is expected to grow at an average rate of about 75% over the next five years. (Bar chart available.)

Best Solution for Interenterprise Connectivity

----------------------------------------------

Initially rolled-out in December 1991, SMDS is a connectionless, cell-switched data transport service that offers total end-to-end applications solutions. With SMDS, organizations have the flexibility they need for distributed computing and bandwidth-intensive applications. At the same time, because SMDS supports both existing and emerging technologies, it provides the scalability organizations need to support the applications of the future.

"SMDS is the very best solution available for interenterprise connectivity, yet it is misunderstood and vastly underrated in the data communications marketplace," according to Daniel Briere, an analyst with TeleChoice, a communications consulting firm. "The cell-based service is the ideal platform for interenterprise data communication with customers, suppliers and business partners, providing the easiest and most efficient solution for LAN-to-WAN connectivity," he said.

Briere explained that SMDS offers several relative advantages over frame relay and asynchronous transfer mode (ATM) that are not well understood:

Full mesh connectivity, with no need to assign the permanent virtual circuits (PVC) or virtual channel connections/virtual path connections (VCC/VPC) required by frame relay and ATM.

Bandwidth-on-demand and easier provisioning, eliminating the need for traffic engineering to calculate PVC or VCC/VPC sizing to establish committed information rates or the continual optimization required by frame relay and ATM.

Ease of equipment configuration and maintenance

Simplified network architecture

Greater scalability, with speeds ranging from 56 Kbps to 34 Mbps compared with 9.6 Kbps to 2 Mbps for frame relay and defined speeds for ATM from 1.5 Mbps to 622 Mbps.

"It also provides all the convenience of standardized global addressing while offering the ability to create closed user groups. Not to mention its support for group addressing and multicasting capabilities," he declared. "At the same time, it has unmatched network survivability and requires fewer user resources for network design and management."

Michel explained that organizations can achieve significant savings with SMDS because it can deliver the mesh connectivity of dedicated private-line networks with fewer access lines, less terminating equipment and without the distance-related charges of dedicated networks.

The Unsung Service

------------------

Michel dubbed SMDS as the "unsung service" because its suitability for many data environments has been overlooked, she said. "Although the users that have SMDS in place are quite pleased, there are a number of other ideal users that just aren't as aware of SMDS as they will be in the future," she declared.

Part of the problem, she explained, is that "the same attributes that make SMDS a significant transition service technology today and for the future higher bandwidth capacity, connectionless networking have limited its applicability for certain, less demanding data communications environments." That will soon change, she said, with the availability of new low-speed SMDS options, which will spur SMDS usage in these applications.

"Low-speed SMDS will have a major impact on future growth, giving users who prefer a single-service environment the flexibility of additional SMDS speed options. The ability to run a backbone or more mainstream application over a higher speed and then spread that out to lower usage sites down below T1 speeds will make SMDS an even more attractive alternative for network managers," she pointed out.

Emerging ATM technology also will spur SMDS growth, declared Michel. "Although right now there's some confusion about ATM technology, I think that ultimately it will promote the SMDS service specifications. The common protocol interface specification established for implementing SMDS over ATM-based user network interfaces means SMDS traffic will be able to travel easily over the ATM switching fabric. This gives customers a clear migration path to ATM backbones networks, as well as added bandwidth and service options for future network expansion. Ultimately the service attributes of SMDS and its network management aspects will be integrated into the Class D services or other connectionless data-oriented services," she stated.

The recent entrance of MCI Communications into the long-distance SMDS market is having an impact as well, Michel said. "Nationwide SMDS service will be attractive, but what will really promote SMDS growth on an interexchange basis will be the route of ATM and connectionless-oriented services," Michel said.

The most popular feature with network managers, Michel noted, continues to be the ease of managing a connectionless SMDS network. "SMDS is relatively simple to implement. It's easier to manage, and network mangers can change the network topology with ease. And because the bandwidth is dedicated as it's dialed up, there's not a lot of congestion issues as there are with other services."

Used to interconnect multiple-node LANs and WANs through the public telephone network, SMDS eliminates the need for carrier switches to establish a call path between two points of data transmission. Instead, SMDS access devices pass 53-byte cells to a carrier switch. The switch reads addresses and forwards cells one-buy-one over any available path to the desired endpoint. SMDS addresses ensure that the cells arrive in the right order.

The benefit of this connectionless "any-to-any" service is that it puts an end to the need for precise traffic-flow predictions and connections only between fixed locations. With no need for a pre-defined path between devices, data can travel over the least congested routes in an SMDS network, providing faster transmission, increased security and greater flexibility to add or drop network sites.

For more information on SMDS or the SMDS Interest Group, contact Vivian Beaulieu, Executive Director; SMDS Interest Group Inc.; 303 Vintage Park Drive; Foster City, CA 94404-1138; 415/578-6979, FAX [phone]. -0-

NOTE: To obtain accompanying graphs/visuals, please contact Ann Jansen at 503/648-3545 or request from the Business Wire photo library. User case stories can be requested from Ann Jansen.

CONTACT: Agency Contact: Ann Jansen, 503/648-3545

Email: [e-mail]

or

Client Contact: Lynn Epstein, 503/643-1681