OFC/NFOEC ’06: Is the phoenix rising?

ANAHEIM, CA - Judging by many of the presentations at this year’s OFC/NFOEC conference (March 5-10), the state of the optical telecom industry continues to lie somewhere between “party time” (the telecom boom) and the “end of the world.”

That was the sentiment expressed by Mariam Mirianashvili, product marketing manager for Fiber Optic Devices at California Eastern Laboratories (Santa Clara, CA), in her talk during the Paths to Profitability-Global Perspectives program during the Executive Forum. And she was certainly not alone; earlier in the Forum, during the State of the Industry Panel: Strategies from Systems Companies, it was announced that “The mourning period for optical is officially over,” a statement reiterated by Hans-Juergen Schmidtke, VP of product management at Siemens (Munich, Germany), who highlighted the consumer applications that are driving the convergence of voice, video, and data.

For the first time in many years, systems vendors are seeing increasing sales and demand for what Schmidtke calls “multimedia” subsystems-network equipment that can deliver broadband information to make the convergence of voice, video, and data possible, at rates customers can afford. Despite clear disagreement between Rajiv Ramaswami, VP and general manager of the Gigabit System Business Unit and Transceiver Module Group at Cisco Systems (San Jose, CA), who believes that 10 Gbit/s Ethernet is the area of growth and 100 Gbit/s speeds are overkill, and David Welch, founder and chief strategy officer at Infinera (Sunnyvale, CA), who conversely views 100 Gbit/s Ethernet as the true driver of photonic integration with growth already outpacing 2.5- and 10-Gbit/s systems, the message of renewed optimism in the health of optical telecommunications was obvious.

Cautioned exuberance

Still, this upbeat view was framed by a gloomier outlook for telecom service providers in the Executive Forum keynote address by John Ryan, senior fellow at ADVENTIS (Boston, MA). Ryan explained that while capital equipment expenditure (CAPEX) is starting to increase-which is great news for component and systems companies-operating expenses (OPEX) will need to be cut in order to offset revenue slumps for telecom service providers. Ryan anticipates that service providers such as NTT, SBC, and Verizon are facing a potential service-revenue drop of as much as 50% over the next 5 to 10 years, translating to layoffs on the order of 20% in coming years to maintain profitability. It seems that consumer demand for broadband service is outpacing the price they are willing to pay for it.

Noting that while margins for optical component manufacturers are “still sickly,” Ryan sees a potential return to profitability in 2006. He also sees the drive to reduce OPEX as increasing the profit margins for companies such as Verizon, whose installation of 7-million fiber kilometers for fiber-to-the-home (FTTH) applications outpaced the combined fiber installations for all other major telecom companies in 2005.

Multimedia applications: IPTV

Without a doubt, Internet Protocol Television (IPTV) is one of the applications driving the need for consumer bandwidth. In the Executive Forum’s IPTV-Buzzword or Bonanza panel, it was obvious that IPTV is still only within reach of the upper middle class, in part due to the fact that the fiber infrastructure needed to support the service is most economical in new housing developments. Compared to cable and dialup, fiber-to-the-premise (FTTP) networks offer high bandwidth both upstream and downstream: incredibly, Verizon’s FTTP network passes 3 million homes today, offering 15-Mbit/s upstream and downstream IPTV services at a price of $50-$100 per month for subscribers, according to Glenn Wellbrock, director of Network Technology Development at Verizon (New York, NY).

All of the Executive Forum presentations by the Utah Telecommunication Open Infrastructure Agency (UTOPIA; West Valley City, UT), Verizon, and Optical Entertainment Network (OEN; Houston, TX), as well as the presentations given at the OFC/NFOEC IPTV panel at Tuesday’s Press Luncheon Event by Lucent (Murray Hill, NJ), Alcatel (Paris, France), and Detecon (Reston, VA), emphasized the role of the consumer as the determining factor in the success of IPTV deployment. “My kids don’t watch TV, they watch TiVo,” exclaimed Jacob Larsen, director of Multimedia Network Solutions at Lucent, who pointed out that broadcast television is just not adequate for today’s youth, considering that many parents like to control what their children watch on television and when.

To satisfy this consumer appetite, all presenters agreed that whether you view IPTV as its own architecture, or as simply another application, the scalable broadband network that is necessary for IPTV implementation is forcing the evolution from Broadcast Passive Optical Network (BPON) architectures to Gigabit PON (GPON). But whatever the architecture, IPTV has already been deployed to nearly 200,000 subscribers in France (according to ANT Software in Cambridge, England, supplier of content-rendering software for IPTV networks), as well as additional deployments in Europe and the United States, and more than 20 million IPTV subscribers are expected by 2010 based on a recent report from The Diffusion Group (TDG; Plano, TX)

Widgets galore

Perhaps the best indicator of health for optical communications at OFC/NFOEC was the proliferation of companies offering seemingly identical widgets-most notably, transceivers-while still managing to forecast respectable sales growth beyond 2005. But not all widgets are created equal: Bookham (San Jose, CA) introduced a family of 10 Gibt/s extended-reach and extended-temperature transceivers, Avago Technologies (San Jose, CA) introduced its Fast Ethernet fiberoptic transceivers (and announced shipment of its one-millionth RoHS-compliant transceiver), Picolight (Louisville, CO) displayed its 850 and 1310 nm vertical-cavity-surface-emitting (VCSEL) serial and parallel fiberoptic transceivers, NeoPhotonics (San Jose, CA) announced a family of GPON transceivers for FTTP applications (and in January announced shipment of one million bi-directional transceivers for FTTH), and Zarlink (Ottawa, ON, Canada) showcased the first 20-Gbit/s parallel fiberoptic module for the InfiniBand standard. And for supporting transceiver manufacturers, Hamamatsu introduced the new G9911 family of low-voltage InGaAs PIN receiver optical sub-assemblies.

While most of the transceiver offerings were for 10-Gbit/s systems, Agilent (Palo Alto, CA) is targeting both the more common 2.5-Gbit/s market with its low-cost N5980A bit-error-rate-tester (BERT) for transceiver manufacturers, as well as the “future” high-speed market with its industry-first E4898A 100-Gbit/s BERT. Anritsu (Tokyo, Japan) is taking a more modular approach with its MP1800 Flexible BERT, accommodating both 2.5- and 10-Gbit/s transceivers, up to 43.5 Gbit/s.

On the hardware side, FIBERPRO (Daejeon, Korea) introduced an acoustic fiber cable identifier for network maintenance and installation, and Timbercon (Lake Oswego, OR) introduced stainless-steel ribbon cable assemblies for high-density, harsh-environment interconnect applications. While seemingly less sophisticated than their optoelectronic counterparts, cable assemblies and connectors are still critical to the overall function of an optical fiber network.
- Gail Overton