NFOEC: Toil and trouble, post bubble
Analysts Adam Quinton of Merrill Lynch and Nikos Theodosopolous of UBS Warburg gave a dire forecast for 2003, reporting the sector will likely see more...
Analysts Adam Quinton of Merrill Lynch and Nikos Theodosopolous of UBS Warburg gave a dire forecast for 2003, reporting the sector will likely see more decline before any possible upswing in 2004.
It was more than just the heat and smog keeping attendance down at the National Fiber Optic Engineering Conference (NFOEC; Dallas, TX; Sept. 15–19). The post-bubble business world has surviving telecom companies nursing their wounds, and travel budgets are one of the first expenses to go. Empty booth spaces and job seekers seemed more apparent than attendees. Out of 8000 registrants (a 13% drop from 2001), more than 4400 were exhibitors.
The plenary session was crowded, however. A dynamic Intel (Santa Clara, CA) presentation preceded a subdued one from Lucent (Murray Hill, NJ). Intel announced the industry's first mixed-signal circuitry manufacturing technology combining analog and digital in the same process. The resulting transport processor can be used as a framer or crossconnect. A speaker from SBC Communciations (Dallas, TX), spoke on the future of broadband. He said statistics from his company's polls indicated that 63% of DSL-internet users would give up their morning coffee rather than lose their broadband. Nearly 60% would give up cable television.
Coarse wavelength-division multiplexing (CWDM) is making a run for the metro market, at about a third the cost of dense wavelength-division multiplexing (DWDM) technology. Advanced Fiber Communications (Petaluma, CA) announced a carrier-class optical add/drop multiplexer (OADM) using CWDM in the metro/access space. Transmode Systems AB (Stockholm, Sweden) provides a 16-channel CWDM system for the metro/edge.
Most of the big existing systems companies, like Nortel (Brampton, Ontario) and Lucent, are mired in toil and trouble, post-bubble. With long-haul infrastructure being overbuilt, carriers can only afford urgent upgrades of weak links in their networks. Vendors and carriers have a mess of somewhat incompatible layers of transmission, but solutions are not straightforward and too many multisource agreements (MSAs) only complicate the problem. "Open standards are better—anybody can join," said Daniel Chen, assistant VP of the OPTO Business Unit at Mitsubishi Electric (Sunnyvale, CA), whose involvement in establishing computer industry standards resulted in universal PC cards.
Start-up businesses have to compete intensely for the few open markets among the smaller local carriers. But carriers are hesitant (with good reason) to buy from new systems vendors because the longevity of new companies is questionable. "A few are likely to survive; most won't," said Jeff Hecht, a fiberoptics author and Laser Focus World contributing editor, echoing the predictions of many analysts.
On the encouraging side, practicality has come to the fore. Companies are shelving 40-Gbit/s systems and focusing on markets with actual customers. Companies such as Intel, Honeywell (Richardson, TX), NEC FiberOptech (Cupertino, CA), Santel (Newark, CA), Siemens (Addison, TX), and Vitesse (Camarillo, CA) are focusing on equipment for 10-Gbit/s data rates. In the 40-Gbit/s arena, the hot item is testing equipment from companies such as Agilent, to test components and systems being developed during the downturn.
Etalon technology is appearing in many guises in telecom components. Fiberspace (Woodland Hills, CA) featured an etalon-based tunable laser demo at their booth, and a wavelength locker garnered from its recent acquisition of Tunable Photonics. Accumux Technologies (Camarillo, CA) demonstrated a dynamically tunable, etalon-based dispersion compensation module for 10-Gbit/s rates over 40 channels on the C-band as well as any selected channel within the C-band.
Although the "technical" sessions largely consisted of vendors promoting their particular technology, sessions held over two days were full. Attendance at the tunable-laser session was healthy, featuring presentations by iolon (San Jose, CA), Nortel, and Agility (Santa Barbara, CA).
In the network design session, "All-Optical Networking in the Metro: Yeah or Nay?'" Ram Palissery of Telcordia Technologies concluded that while all-optical networking is architecturally desirable, the technology has not progressed enough to make it as cost-effective for the same performance level as can be obtained from optical-to-electrical-to-optical (OEO) technology. "There is a lot of work to be done to develop a transition plan for carriers," said Palissery.
Not surprisingly, hundreds attended the "Perspectives on an Industry Recovery" session. Analysts Adam Quinton of Merrill Lynch and Nikos Theodosopolous of UBS Warburg gave a dire forecast for 2003, reporting the sector will likely see more decline before any possible upswing in 2004. The third speaker, venture capitalist Krish Prabhu of Morgenthaler Ventures, lightened the mood with his observation that when the industry was doing well, analysts said it would go on forever. Now that analysts predict more hard times ahead, "it must be time for a turnaround," he quipped.