The alternative method (with roots in frame relay, ATM and the Internet) is to use packet switching. Rather than setting up a dedicated circuit, packets find their way through the network. Network routers read information in the header of a packet to determine the route for the next hop and forward the packets appropriately.
With telcos handling more and more data traffic as opposed to voice (telephony), packet switching offered a more flexible way forward. SDH circuits can be used to carry ATM cells as well as Ethernet frames. Packet networks allow telcos to use techniques like statistical multiplexing, dynamic bandwidth allocation and quality of service (QoS) management to get better utilization of their networks.
Packet switching is inherently self-healing. If a route is congested, the routers will divert packets over an alternate path. However, packet switching is not without its drawbacks, notably packet loss and jitter. Packets can also arrive out of sequence. For normal office data, transport control protocol (TCP) is used to manage packet loss by retransmission of lost packets. For the huge data streams of real-time video, this process is not appropriate.
Adding fiber capacity
As telcos looked to drive down the cost per bit of connections, the technique of wavelength division multiplexing (WDM) was developed. Each optical carrier (wavelength) can carry 2.5Gb/s data, with 10Gb/s and 40Gb/s systems also possible. WDM uses different laser frequencies so that more than one channel can be transmitted over a fiber. The first system could combine up to eight different wavelengths, and is now called coarse WDM (CWDM). Later improvements in technology enabled 100 different wavelengths or more to be used. This is referred to as dense WDM (DWDM).
For fiber circuits, the main cost is getting access to property to lay cables, and for the installation — digging the trenches. The cost of the fiber is a small proportion. WDM allows the capacity of existing fibers to be instantly increased at a marginal cost.
SDH/SONET is being replaced with DWDM optical transport networks (OTN) and Carrier Ethernet. An OTN comprises the fiber links plus terminal equipment to multiplex, route and manage the data signals.
Carrier Ethernet is a development of the regular Ethernet used to build LANs and WANs. It can be used as an alternative to SDH/SONET, or carried over SDH/SONET as a point-to-point circuit. It provides a good solution for converged voice, date and video circuits. Native Carrier Ethernet adds services like QoS and service management over the regular Ethernet technology of LANs. The Carrier Ethernet networks can detect and heal faults, and allow operators to offer SLAs that meet performance parameters like packet loss. Carrier Ethernet is offered as standardized services, including point-to-point (E-Line) and multipoint-to-multipoint (E-LAN).
With the advent of Carrier Ethernet, the interface to a network is now more likely to be a 1Gb/s or 10Gb/s Ethernet port. A 1Gb/s circuit can carry three 270Mb/s circuits; 10GigE can carry six 1.5Gb/s HD circuits.