AT&T is making a rather nerdy announcement Tuesday about "white box" networking gear, but it's actually a rather big deal. Last week, the company started putting real network traffic onto hardware that it put together from a variety of chip, hardware and software partners. The test network gear comes in a couple flavors and was placed in San Francisco and Washington, D.C.

Who is involved: AT&T is working with a tiny software start-up SnapRoute, which was started by a bunch of ex-Apple employees. Chip partners include Barefoot Networks, Broadcom, and Intel, while units of Delta Electronics and Edgecore Networks assembled the gear to AT&T's specifications.

Who is on the outside looking in: Traditional network gear makers Cisco and Juniper Networks aren't part of this and risk losing out on some serious business down the road unless they get a lot cheaper and more open, as this opens the door for AT&T to make its own networking gear.

Why it matters: Not only can white box gear be a lot cheaper to install, support and service, but AT&T also has far greater visibility into what's going on inside. With the test gear, AT&T executives say they can literally see what is happening with each packet of data, allowing for greater security as well as potentially opening the door to new lines of business. AT&T CTO Andre Fuetsch compared the increased visibility to the difference between an X-Ray and an MRI.

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