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Bigger Role Seen for Defense R&D
From: InfoSec News <isn () c4i org>
Date: Wed, 24 Oct 2001 02:16:17 -0500 (CDT)


By Carolyn Duffy Marsan
Network World

ARLINGTON, VA. -- A lack of venture funding for start-ups combined
with a heightened fear of cyberterrorism may bring greater prominence
to a long-time, behind-the-scenes investor in high-risk network
research: the Defense Advanced Research Projects Agency.

DARPA, the research and development arm of the U.S. Defense
Department, has a track record of funding key technologies used in
military and commercial communications systems. DARPA is best known
for creating the Internet in the early 1970s, but in recent years the
agency has driven the development of wavelength division multiplexing
and Gigabit Ethernet.

"DARPA doesn't get anywhere near the credit it deserves for the
contributions it makes to research in communications," says Mike
Schmidt, technical director for the leveraged technology group at BAE
Information and Electronic Warfare Systems. "A lot of the patents that
come out have roots in the [Defense Department]. . . A lot of the
hot-shot engineers you find at start-ups came out of the [defense]

After last month's terrorist attacks, DARPA's role in funding research
in such areas as high-speed optical networks and cybersecurity may
become even more important as the commercial world looks to the
military for better ways to protect information assets.

Last month's terrorist attacks will "enhance" DARPA's role in
communications-related research, predicts Bill Collatos, managing
general partner of Spectrum Equity Investors, a venture capital firm
that invested in a start-up that evolved out of a DARPA grant.

"There are two implications of cyberterrorism," Collatos says. "One is
how to protect against it, and the second is how to anticipate it and
deal with it. Both mean processing a lot more information at higher

Housed in an office building in Arlington, Va., DARPA's 140
technologists award matching grants to university and corporate
researchers to prototype promising technologies. The agency's $2
billion annual budget includes $590 million for research related to
advanced networking and high-performance computing, according to
Federal Sources, a market research firm.

DARPA traditionally works with defense contractors, but in recent
years the agency has sought out network equipment suppliers, such as
Hewlett-Packard, Lucent and IBM, to participate in research projects
related to microelectronics, photonics and wireless communications.

DARPA's goal is to develop network components that can be used in
commercial and military systems.

"When [technologies] go into the commercial world, that improves the
yield, uniformity and reliability of parts," explains David Honey,
deputy director of DARPA's Microsystems Technology Office. "And the
costs go down."

One commercial network technology that DARPA helped advance in the
late 1990s is the vertical-cavity surface-emitting laser (VCSEL) used
in Gigabit Ethernet systems. DARPA worked with several companies,
including HP (now HP spinoff Agilent Technologies) and start-up
PicoLight, on VCSEL research.

"DARPA played a very big role in funding VCSEL-related research over
the last 10 years," says PicoLight founder and CTO Jack Jewell. "VCSEL
technology is the workhorse for Gigabit Ethernet fiber-optical links
and . . . for parallel optical switches for the core."

Last fall, Agilent began shipping a parallel optical module using
VCSEL technology that was developed with $18 million in DARPA funding.
The module delivers 30G-bit/sec capacity in 1.5 inches of board space.
Customers include switch, router and server manufacturers.

The DARPA funding "helped to accelerate the [parallel optical]
program, which was quite sophisticated and parts-intensive," says
David Dolfi, a department manager at Agilent's Communications and
Optics Research Labs. "What that money enabled us to do is try and
explore several different avenues - two or three different types of
integrated circuit design, laser design and thermal packaging."

Sometimes DARPA research projects spawn start-ups. BAE Information and
Electronic Warfare Systems created a separate company called
TeraConnect to commercialize a high-speed opto-electronic module
developed under a DARPA grant. BAE brought in venture capitalists to
finance TeraConnect's product development.

"One of the things that DARPA helps provide is funding to get a
technology to a certain maturity level," BAE's Schmidt says. "That
makes DARPA more important in the rolling out of technologies from the
defense industry because the market now demands that maturity."

Founded in the fall of 1999, TeraConnect raised $40 million from
Goldman Sachs, Spectrum Equity and Kodiak Venture Partners.
TeraConnect has shipped prototypes of its module - which is four times
faster than today's technology and has a smaller footprint - to
router, switch and server manufacturers.

"One of many factors in attracting venture capital was that DARPA had
seen enough value in the technology to fund it," says Glenn Thoren,
vice president of business development at TeraConnect. "Everyone we
spoke to was willing to invest."

Spectrum Equity invested in TeraConnect because it could demonstrate a
compelling technology, thanks to its DARPA-funded beginnings.

"If you forget that DARPA is a government agency, it's like one more
source of venture funding that doesn't have a form of equity
ownership," Collatos says. "It's the best of both worlds because it
funds cutting-edge technology without dilution to other private

Moving beyond the TeraConnect work, DARPA is now funding the
development of optical components at the board and chip level that can
be used for commercial routers and servers as well as weapons systems.

"We are migrating optical data networking deeper and deeper into the
hardware itself," DARPA's Honey says. "Optical components inside
systems provide higher data speeds and no cross talk. . . . The box
gets faster and smaller."

Honey says DARPA is spending $45 million to $50 million per year on
optical data network research.

"The on-chip optical interconnect work that we are funding today
should be available to corporate users in about eight years," Honey
says. "It will take a little longer to get it into defense systems."

DARPA also is developing a new class of antennas for mobile, wireless
communications. Instead of broadcasting communications out in all
directions, the new antennas can send communications in one direction
at a time.

The antennas are designed to be low-cost and support voice, data and

"With directional antennas, communications can't be overheard or
jammed unless you're between us," says Jim Freebersyser, a program
manager in DARPA's Advanced Technology Office. These antennas will
provide "faster data rates, a lower probability of detection and

DARPA is spending $15 million to create a directional antenna network.
The first demonstration of the technology is scheduled for February.

Commercial applications of directional antennas include communications
to vehicles including taxis, trucks, trains and airplanes. These
antennas would provide higher data rates and less interference than
today's cellular networks, and they would allow cellular carriers to
use their spectrum more efficiently, Freebersyser says.

DARPA officials say the economic downturn is encouraging more
companies to work with them on network research projects such as
these. Traditional defense contractors are finding it easier to
attract and retain top scientists for DARPA projects, and commercial
labs are more eager to compete for DARPA research dollars.

"This is the first time in 10 years where [network research] is better
on the government side" than on the commercial side, Freebersyser

Observers predict DARPA will play an important role in keeping network
innovation alive during the lean years.

"DARPA is going to be instrumental in making higher-risk investments
that many companies won't make in an economic downturn," says
TeraConnect's Thoren. "DARPA is going to play a very large role in
what the next-generation network technology looks like."

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