OFC/NFOEC 2010 REVIEW: 2009 recession and 2000 bubble wounds finally healing

San Diego, CA--After disappointing attendance figures in 2009 (only 9500 compared to the nearly 12,000 attendees in 2008), attendance at the 2010 Optical Fiber Communication Conference and Exposition and the National Fiber Optic Engineers Conference (OFC/NFOEC) in San Diego from March 21-25 was up to 9700 attendees. The just more than 2% increase was very welcome; however, many long-time exhibitors told me that they would continue to keep their exhibits smaller, noting that they "knew who their customers were." Although there were just 500 exhibitors at the conference this year compared to 550 in 2009 and 600 in 2008, booth traffic was relatively steady and evidence of "hype" was nowhere to be seen; discussions centered on actual installations and an optimistic feeling that slow and steady growth was here to stay.

OFC/NFOEC figures will probably never again reach the 17,000 attendees and well over 1000 exhibitors during the bubble years, but who cares? As we all know, the bubble hype was not warranted and left a wake of misery for many. I’ll take slow and steady growth at any time, and I’m sure that telecom industry veterans share that sentiment.

The modest 2010 attendance increase was encouraging for several possible reasons: It may indeed signal the end of the great recession of 2009; equipment sales for most companies are on the rise; and all while communications bandwidth demand and high-speed network growth continue on their exponential paths.

On another note, OFC/NFOEC is truly an international conference. This year, U.S. paper submissions (1025 total) were not in the majority. Instead, 31% of paper submissions (1025 total) were from Europe and 37% were from the Pacific Rim.

Honoring Kaofucius

In the OFC/NFOEC Plenary presentation on Tuesday morning, Tingye Li, a pioneer in the field of optical communications and now retired from AT&T Bell Labs, explained why this year’s conference was dedicated to Nobel Prize winner Charles Kao--the “Father of Fiber Optics” who proposed the use of glass for communications transmission; specifically, pure silica as the best material. Li reminded the audience that the Latin inscription on the reverse of the Nobel Prize medal means “Those who enriched life with inventions.” Kao’s leadership in developing optical fiber certainly falls into that category, since optical fiber communications are now critical to our world. Li also described Kao as a tireless promoter of his technology, and told the audience that “Fucius” in Chinese means great teacher, making Kaofucius a very fitting title for this worthy technologist.

In addition to honoring Charles Kao, the Plenary also honored Randy Giles with the 2010 Tyndall Award. Jointly sponsored by the IEEE Photonics Society and the Optical Society of America (OSA), the Tyndall Award is presented annually to a single individual who has made outstanding contributions in any area of optical ¬fiber technology. Giles, currently director of the Optical Subsystems and Advanced Photonics department in Bell Labs at Alcatel-Lucent, was honored for pioneering the modeling and use of erbium-doped fiber amplifiers for lightwave systems, demonstrating the first optical add/drop multiplexers by means of Bragg-grating technology, among many other achievements.

High growth, small profit

A Plenary presentation from Philippe Keryer of Alcatel-Lucent was among the conference presentations that pointed to the high growth, but small profit outlook for telecom equipment providers. Even as traffic growth exceeds 100% annually, voice revenue growth is only 2.5% per year and data revenues 13% annually. Keryer said that there is a strong need to increase revenue while reducing costs and that “networks must grab revenues from the Internet” and take advantage of the wireline and wireless convergence now taking place.

Several presentations in the Monday afternoon “Beyond Telecom and Datacom: Optical Interconnects for the Computercom Era” discussed concerns that even while traffic needs continue to expand, sales for optical communications components (like transceivers) would grow, but not at the same pace and with low profit margins. Thomas Scheibe of Cisco described how, as 1 gigabit per second (1G) networks grew, they eventually gave way to 10G, and are now yielding to 40G and even 100G networks in some cases--each with a slightly longer lifetime than the last since new technologies take longer and longer to adopt.

At the Tuesday afternoon Press Luncheon, Daryl Inniss of market research firm Ovum revealed another startling statistic: Even though network traffic continued unabated throughout the 2009 recession (at exponential growth rates), capital equipment sales for wireline and wireless communications dropped 13% and 7%, respectively, compared to 2008.

And yet, some companies are managing to find profits in locations where others said they couldn’t go. One example is the continent of Africa, which was just wired by optical fiber off its eastern coast by SEACOM. President of SEACOM Brian Herlihy spoke both at the Plenary and at the Press Luncheon, describing how 75% African ownership in the link was key to convincing Africa that it needed a better communications infrastructure to grow its gross domestic product (GDP). Herlihy pointed out that every 10% increase in high-speed Internet correlates to a 1.3% GDP economic growth, according to a study by the World Bank. Not only did SEACOM install the fiber, but it conducted Town Hall sessions in both rural and city areas to understand the impact of communications on fishing, tourism, and education, all while acknowledging that since the cable went live in January 2009, Internet growth is accelerating beyond all projections, and service prices to consumers are dropping drastically.

Healing the bubble wounds

In the farewell March 15, 2010 issue of Optoelectronics Report (which has morphed into the Laser Focus World Business Center at http://www.optoiq.com/index/photonics-technologies-applications/lfw-business-center.html), my article entitled “Have ‘telecom bubble’ wounds finally healed?” explored whether or not optical communications companies were hiring, fiber-optic installations were increasing, and who was finally making some money.

Among the findings, a report posted March 9 by Tracy Ford at RCR Wireless News on www.telecomcareers.net said that about 3800 fewer people were employed in February compared to January in the telecommunications sector. However, employees in the communications equipment sector were up 800 in February.

As for bandwidth growth and equipment installation growth, a forecast on active optical cables (AOCs) from Information Gatekeepers Inc. (IGI; www.igigroup.com) predicts that the total length of optical fiber shipped inside AOCs is expected to range from 35 million meters in 2010 to 986 million meters by 2014--nearly a three-fold increase in four years! It also forecasts that AOC market revenue will grow from $137 million to over $2.45 billion during the same time period.

And now for sales: Huawei (Shenzhen, China) said that contract sales reached $30.2 billion in 2009, a 30% increase from 2008; Infinera (Sunnyvale, CA) Q4 2009 revenues were $90.2 million compared to $83.4 million in the previous quarter; and JDSU’s (Milpitas, CA) Communications Test and Measurement revenue of $176.9 million for Q4 2009) increased 23% from the previous quarter, while its Communications and Commercial Optical Products revenue of $112.3 million was an 11% increase compared to the previous quarter.

All in all, it would appear that the bubble wounds have nearly disappeared and the 2009 recession is on the way out. Stay tuned for financial reports from major optical communications equipment providers in 2010; it will be an interesting year to watch and anything can happen! And please plan to attend OFC/NFOEC 2011, which moves from San Diego to Los Angeles, CA from March 6 - 10, 2011.

--Gail Overton; gailo@pennwell.com; www.laserfocusworld.com.

Most Popular Articles


Click here to have your products listed in the Laser Focus World Buyers Guide.

Article Archive

View Laser Focus World past articles now.

Social Activity

  •  
  •  
  •  
  •  
  •  
Copyright © 2007-2014. PennWell Corporation, Tulsa, OK. All Rights Reserved.PRIVACY POLICY | TERMS AND CONDITIONS