Guarded optimism on telecom prospects at OFC

At this year s OSA Photonics and Telecommunications Executive Forum in Los Angeles, telecom executives gathered expectantly to find out what s in store for the year to come.

Speaking at the opening session, John Ryan, president and founder of US analyst firm RHK, predicted that "2004 will be a good year, although not a great year", driven largely by global economics being "better, not wonderful, but better". Guarded optimism maybe, but for a telecom industry more used to words of gloom and doom, it s a pretty good start.

Ryan explained that the reluctance of service providers to buy from start-ups has led to many innovative technologies falling by the wayside over the last few years.

But with systems vendors starting to ramp equipment development and carriers financials returning to health, Ryan believes that 2004 will see growth in the optical components arena.

Ryan picked out storage networks as one promising opportunity for components vendors. Enterprise firms looking for storage infrastructure are increasingly turning to networked, as opposed to direct-attached, storage. Ryan predicted that by 2007, 70% of storage capacity will be in storage-area networks and network-attached storage.

"The evolution of the storage business creates component opportunities," he said, citing the emergence of 4 Gbit/s Fibre Channel as a prime example.

Other market opportunities include Gigabit Ethernet and the datacom arena, while Ryan reckons that there will be increasing interest in dynamic optical components and devices for use in high-density TV (HDTV). But for component vendors hoping that the fiber-to-the-premises (FTTP) market will prove lucrative, he is a lot less optimistic.

Industry divided over FTTP prospects
The Asia-Pacific region leads the way in FTTP deployment. In Japan, for example, government subsidies enabled the build-out of a large FTTP infrastructure, with 10 million subscribers expected by 2005.

Elsewhere, Ryan says, deployment of FTTP is restricted by regulatory problems, while Digital Subscriber Line (DSL) deployment is soaring. Add to that the high installation costs for FTTP and he does not see the technology making much impact in the near future. "It s not clear that fiber to the edge will provide a tremendous service differentiator, it basically just provides bandwidth," he said.

Ryan s view is not shared by all. Speaking in a panel session looking at whether optical technology can win out in the last mile, Jim Sackman, CTO at access specialist Advanced Fibre Communications enthusiastically told delegates that "fiber deployment is real, and it s coming." Sackman explained that it s not possible to send HDTV over DSL. In today s market environment, where new service opportunities are the be all and end all, it just doesn t make sense to restrict FTTP to greenfield builds.

Elsewhere, Tom Mock, senior vice-president for strategic planning at equipment maker CIENA, believes that there is still life in copper access, although he also agreed in part with Sackman. "It s not as simple as saying that optical access will replace copper access," he said. "It s a mix, probably evolving over time towards fiber."

Giovanni Barbarossa, CTO and vice-president of business development at Avanex believes that FTTP deployment will happen, but he is not sure when. He said that the component maker has an interest in FTTP, with some development projects under way, but added that "it is something we don t want to get too excited about".

Offering the carrier s viewpoint, Ben Vos, director of transport, switching and routing technology development at Sprint, says that Sprint is looking to optical for new installations, but not necessarily replacing working copper systems. He added that the ability to bundle entertainment services into existing offerings is an important factor.

Looking more generally at carrier requirements, Vos explained that for core transport, Sprint is considering next-generation DWDM technology, such as ultralong-haul systems, as a possibility for future deployment. But for now, the carrier is exploiting its large base of legacy dense wavelength-division multiplexing platforms. Technology advances, such as tunable lasers, 25 GHz channel spacing and retrofits to upgrade systems to 40 Gbit/s, will help extend the life of that legacy equipment.

Vos says that Sprint is also looking to optical switching to provide alternative restoration schemes and flexibility, although he does not see a move to all-optical networks for some time, if ever. "I think we ll be in an optical-electrical-optical environment for a long time to come. It s most cost-effective and most flexible."

Tami Freeman is deputy editor of FibreSystems Europe in association with LIGHTWAVE Europe.