How to Optimize Network Spending with Preowned Original Optics

Executive Summary

Network transceivers represent a significant portion of network capital expenditures for many enterprises, typically ranging from 10% to 15% of total network product spending. However, the traditional approach of buying brand new optics directly from OEMs often leads to unnecessarily high costs. This whitepaper presents a compelling alternative: adopting preowned original optics, which not only offer a cost-effective solution but also maintain high network reliability and ease of management without the complications associated with third- party products.

Introduction

In the dynamic field of network infrastructure management, cost optimization remains a crucial and ongoing challenge for Information G Operations (IGO) leaders. The common practice of purchasing brand new optics directly from OEMs incurs significant expenses due to high markups. By contrast, integrating preowned original optics into network systems offers a substantial reduction in expenses, without sacrificing quality or network integrity.

Analysis

When an organisation is typically quoted a bill of materials we see no exception made in the pricing of the optics compared to the other devices. Why should there be an exception? When considering the actual cost of the optics compared to the sale price you understand the mark ups that are involved. This means huge margins for the OEM and huge savings opportunities lost for the client. Regardless of pressure for increased discount on optics we rarely see the OEM’s concede to a level which the independent channel is capable of. Along with the negotiations you typically have to deal with the barrage of misinformation from the OEMs on buying outside of the channel.

OEM FUD: Knowing the policies from the law

It is all too common that when the OEM’s are challenged with customers looking to buy outside of their channels we see a number of ‘policies’ or ‘misinformation’ cited:

The original warranty is not covered.
If optics are causing the issue you will not be supported.
Preowned comes with more failures
Anything bought outside of the channel can be subject to security issues.

To address those concerns it’s important to differentiate.

The original warranty is not covered

In this case the independent provider will offer their own form of warranty along with the warranty without the need to typically use the OEM. Warranty cases with optics are very rare. A common practice is to collect the faulty optics in bulk and deal with warranty issues on a one time basis.

If optics are causing the issue you will not be supported

We often see the OEM’s quote their policy when trying to have clients steer clear of buying outside of the channel. This typically lays the foundation for a clients understanding of where they stand. Here we consider an example from Cisco:

Cisco’s Policy On Optics and Maintenance Coverage:

When a customer reports a product fault or defect and Cisco believes the fault or defect can be traced to the use of third-party memory products, cables, GBIC's, filters, or other non-Cisco components by a customer or reseller, then, at Cisco's discretion, Cisco may withhold support under warranty or a Cisco support program such as SMARTnet™ service.

In this case the important parts to note are that issues only arrive when referring to third party optics. The other part worth mentioning is that if the optic is believed to fault is traced to the optic.

Therefore if you are using genuine preowned optics these issues will not arise.

Preowned comes with more failures

Transceivers are critical network components that convert electrical signals into optical signals and vice versa, enabling high-speed data transmission over fiber optic cables. While generally reliable, they can experience failures due to various reasons related to their components or environmental factors. Here are some common parts and aspects of transceivers that might cause failures:

Laser Diodes: The laser diode generates the light that is sent through the fiber optic cable. It can fail due to overheating, excessive power supply, age, or manufacturing defects.
Photodiode: This component detects the light at the receiving end. Failures can occur if the photodiode is damaged or becomes less sensitive, which can happen due to prolonged exposure to strong light sources or electrical surges.
Electrical Interface: The electrical interface of a transceiver connects to the network equipment. Issues here can include soldering problems, connector damage, or corrosion, which can disrupt the electrical signals being transmitted.
Transceiver Firmware: Software glitches or corruption within the transceiver’s firmware can lead to improper functioning or failure to communicate with network equipment.
Optical Components: Elements like lenses and mirrors within the transceiver that focus and direct the light can become misaligned, dirty, or damaged, affecting the signal integrity.
Temperature Extremes:Transceivers have specified operating temperature ranges. Operating outside these limits, either too hot or too cold, can lead to component stress and failure.
Mechanical Stress: Physical damage from dropping, improper handling, or excessive vibration can cause internal components to break or become misaligned, leading to failures.
Dust and Contaminants: The optical ports of transceivers are sensitive to dust and other contaminants. Even small particles can obstruct the path of the light, significantly degrading the signal.

To ensure the reliability and optimal performance of transceivers, various tests can be conducted to identify and eliminate potential issues related to their components and functionality. Here are several key tests and procedures commonly used:

Visual Inspection: This is the initial step where the transceiver and its components are visually inspected for any obvious signs of damage such as broken connectors, physical deformities, or contamination on optical surfaces.
Optical Power Measurement: Using an optical power meter, the output power of the transmitter (laser diode) and the sensitivity of the receiver (photodiode) are measured. This test ensures that the light levels are within specified limits, which is crucial for maintaining signal integrity.
Bit Error Rate Test (BERT): This is a critical test for determining the data integrity capability of the transceiver. It measures the rate at which errors occur in the transmitted data stream, helping to identify issues with the laser, receiver, or signal interference.
Electrical Interface Testing: Using specialized equipment like a digital communications analyzer, the integrity of the electrical signals at the transceiver’s interface is tested to ensure they meet industry standards and are free of electrical noise and interference.
Environmental Stress Testing: Transceivers are subjected to a range of temperatures and humidity levels to ensure they operate correctly under varying environmental conditions. This can help identify potential failures due to temperature extremes or humidity.
Vibration and Shock Testing: These tests simulate the physical stresses a transceiver might experience during transportation or in a high-vibration environment. It helps ensure that the internal components are robust and the unit will function reliably in its intended application.
Spectral Analysis: For wavelengths used in the transceiver, a spectral analyzer can be used to verify that the wavelengths are within the specified range and that the spectral width is compliant with network standards, which is important for avoiding crosstalk and ensuring compatibility with fiber optic infrastructure.
Loopback Test: This involves sending a signal from a system through the transceiver and back to the system to check for any loss or change in the signal. It tests both the transmitting and receiving functions of the transceiver simultaneously.
Cleanliness Check: Using a fiber optic inspection microscope, the cleanliness of the optical connectors is examined. Any dust or debris can be cleaned using appropriate fiber optic cleaning tools to prevent signal loss or damage to the connectors.

By conducting these tests, potential issues in transceivers can be identified and addressed before they lead to network failures, ensuring reliable and efficient network operations.

Anything bought outside of the channel can be subject to security issues.

We have seen increasing comments made from OEM’s around security of supply chain assurance as we see clients less interested in the other statements made from them. Security is currently front and centre of all IT’s strategies. Everyone wants to ensure they are not the company on the front page of the news having a security compromise.

In the case of optics, lets explore what the potential risks are:

Physical Tampering:
Technically, it is possible to modify or add components to optical transceivers in a way that could capture or intercept data. Optical transceivers, which are devices that convert electrical signals into optical signals and vice versa, are fundamental in network communications, including internet infrastructure. Modifying these devices could potentially allow for data interception or manipulation.

The addition of a hardware implant or modification could be designed to tap the optical fiber data streams that pass through the transceiver.

Such modifications might involve:

Signal Splitting: A mechanism that diverts a portion of the optical signal to another device where it can be decoded and analyzed.
Integrated Chips: Adding small, sophisticated chips within or alongside the transceiver that could perform additional tasks like duplicating data, storing it, or transmitting it to a remote location.
Firmware Modifications: Altering the device’s firmware to change its behavior, potentially allowing it to silently forward copies of data.

However, implementing such modifications without detection involves significant technical expertise and access to the hardware during some stage of its distribution or operational deployment. It also raises substantial security, legal, and ethical concerns.

The only way in which this can be achieved then is through physical access to the optics both at production stage and when on customer sites.

For any type of attack like this to typically be effective then the following would have to be in place:

1. Access to the transceiver at any point to load chips

2. Access to the customer site to implement changes on the network and gather data

3. A link to an outside network to allow for data to be transmitted.

Some points worth noting in regards to practices which would make this extremely difficult.

Inventory management – In the case of Recirc IT we only determine serial numbers to customers once an order is loaded. The time then between loading the order and deploying the stock is roughly 8 to 12 hours.
Supply Chain Security – Once the stock is ready it is then delivered using a secure service like DHL or FedEx to a customer site.
Customers On Site security – IF the optic has been compromised any outside agency would then have to gain access to a customers premise to further tamper which we also see as rare.

When considering all of these facts the opportunity for an optical transceiver to cause any type of issue is extremely rare. In terms of the public domain no issues has been reported in regards to a Cisco or Juniper Optic.

Such modifications might involve:

Signal Splitting: A mechanism that diverts a portion of the optical signal to another device where it can be decoded and analyzed.
Integrated Chips: Adding small, sophisticated chips within or alongside the transceiver that could perform additional tasks like duplicating data, storing it, or transmitting it to a remote location.
Firmware Modifications: Altering the device’s firmware to change its behavior, potentially allowing it to silently forward copies of data.

The only way in which this can be achieved then is through physical access to the optics both at production stage and when on customer sites.

Recommendations:

Redirect the cost savings achieved from transceiver purchases towards enhancing network agility through investments in automation, analytics, or intent-based tools.

As highlighted earlier, achieving capital savings of 5% to 10% on networking purchases requires minimal effort. Typically, these savings are either reintegrated into the budget or redirected to other network infrastructure initiatives. It is advisable to channel these savings towards advanced network automation and analytics tools. Such investments significantly enhance network operations and agility, which is crucial given the frequent reports of underfunding in network automation and management projects from network operations teams. Furthermore, the initial investment for these tools is not prohibitive, as many vendors offer economical acquisition models that reduce entry barriers. Notable providers of network automation and analytics include Anuta Networks, Red Hat, and Corvil.

Reallocating savings to automation, analytics, and intent tools equips enterprise network teams to meet the evolving demands imposed by complex application architectures, the Internet of Things (IoT), and software-defined methodologies. These tools are essential for modern network automation platforms, as outlined in the "Market Guide for Network Automation," and network analytics platforms, as detailed in the "Critical Capabilities for Network Performance Monitoring and Diagnostics" and "Innovation Insight for Algorithmic IT Operations Platforms."

IGO leaders aiming to maximize network infrastructure savings should consider the following strategies:

Remove Optics from Bill Of Materials Elsewhere

In a network or server refresh we typically see that optics make up around 20% of both the cost and the volume of the materials. There are two strategies to employ. Either look to negotiate with the OEM to reduce the cost of the optics. Seek pricing from parties outside of the OEM channel for pricing.

Leverage Market Dynamics:

Avoid Fear, Uncertainty, and Doubt (FUD): Do not succumb to OEM pressures that discourage the use of alternative optics. Embrace the use of preowned original optics to reduce dependency on OEMs, thereby avoiding the premium prices and restrictive practices often associated with new OEM products.

These recommendations enable IGO leaders to effectively lower costs while maintaining control over their network infrastructure and avoiding the pitfalls of OEM dependency and exaggerated new product costs.

Questions to Ask an Independent Supplier

There are a large number of independent network suppliers, with similar marketing messages. It can be difficult to ascertain differences between suppliers, but asking the following questions of your prospective third-party supplier will help to determine if they are an appropriate fit:

What is your testing process to ensure compatibility with my OEM
What is your warranty policy (if limited lifetime warranty, provide details)?
How many paying customers do you have using similar components in my geography?
How many paying customers do you have using similar components in an enterprise and network of similar scale to mine?
How many total transceivers have you sold in the last year?
How do you verify that components are not counterfeit?

Conclusion:

In a current economic environment where enterprises struggle to find ways to make savings the world of transceivers are an easy target to remove significant savings from capital projects without having an impact on security or policy.

We very rarely see the OEM’s steep to discounts beyond 75% on transceivers. Aside from that now average list price of 25 / 40 and 100 gig optics are in the tens of thousands. Its crucial to analyse this part of the bill of materials to determine prices and if any savings can be made.

Optics represent a consumable and low risk part of the network, taking savings from this part of a bill of materials to drive towards revenue driving or innovation is essential. Evaluate the providers carefully to ensure security and testing implications can be addressed, if complications do arise then ensure a good warranty process is in place.

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