The Light Fantastic - or how to make money with fiber optics ;-)

The Light Fantastic
By Marc Duchesne, U.I. user interface
 
Over the past five years, the drivers in the fiberoptics industry have
moved from research and development to marketing, and financial
security has taken precedence over engineering innovation.  Hot
technologies such as DWDM have not been fully realized due to the
fixed goals of lowering costs and increasing ROI, which will very
likely remain the dominant trends for the next 18-24 months.
Key players cannot remain stagnant, however: new domains and segments
must be exploited.  The "last mile" - the "broadband access network" -
must be addressed.  The principal challenges facing the Installation
and Maintenance (I&M) specialist, therefore, are twofold:
In I&M, customers are seeking one-stop specialists, and any valuable
provider of test and measurement equipment must be prepared to offer
"drive-through" I&M solutions
The much-talked-about last mile boom is near, with the industry
beginning to climb out of the economic downturn.  There will therefore
be a great need for new, specialized tools for technicians, and I&M
companies must be ready for this.
The fiber optics I&M industry has an almost magical quality about it. 
By virtue of the very nature of what it entails, the market will
continue to grow and will always exist.  The question now is: where
will it go?
 
The Old Timers
A quick glance at the fiberoptics industry over the mid-80s – mid 90s,
between the first singlemode long-haul systems and the Telecom Act,
and the telecommunications market deregulation in Europe, shows that
until 1998 this industry was pretty much technology-driven. Every
single progression in transmission capacity or regeneration span
length was due to improvements in the fiber manufacturing process or
in the laser technology. For instance, the quick migration from the
first ‘long-haul' optical transmission systems on multimode fibers in
the early 80s to the first singlemode systems, which appeared around
1985, was made possible by the production and availability of higher
quality singlemode fibers and the 1310nm laser diodes. Telcos and
carriers were able to more than double the regeneration spans from
10-15 km to 30-40 km, at last making optical transmission
cost-effective for their trunk networks. The appearance of the 1550nm
lasers one or two years later was a tremendous step forward: a new
transmission barrier of 50 miles (80km) was reached, allowing the
service providers to install high-capacity (at this time ca. 200 Mb/s)
optical systems between the major cities of their territory. The first
commercial EDFA optical amplifiers entered the long-haul arena in
1992-93, almost immediately followed by the first WDM transmission
systems: incumbent telcos all over the planet then deployed optical
core networks with SONET/SDH systems. The foundations of what were
becoming known as the "Information Superhighways" were ready.
 
The New Deal
Two years later, in 1995, two major events were to change the face of
the Telecommunications world: The US Telecom Act, which was slated for
release by the Federal Communications Commission in 1996, and the
termination of the patents regarding telecoms fibers manufacturing
processes, that were to expire before the end of 1995.
The groundbreaking implications of the first paragraph of the FCC's
Telecom Act were  immediately apparent: " The Telecommunications Act
of 1996 is the first major overhaul of telecommunications law in
almost 62 years. The goal of this new law is to let anyone enter any
communications business -- to let any communications business compete
in any market against any other. The Telecommunications Act of 1996
has the potential to change the way we work, live and learn. It will
affect telephone service -- local and long distance, cable programming
and other video services, broadcast services and services provided to
schools"*. The door was opened to unprecedented levels of competition
in the telecoms arena. The forthcoming deregulation in Europe,
scheduled to start January 1st, 1998, was also a key element in the
tremendous tornado of activity and legislation that led to the New
Economy world the telecommunications industry found itself entering on
the eve of the 21st Century.
In the meantime, Corning and Lucent Technologies (formerly as AT&T)
were to lose the patents that protected the manufacturing processes of
the SMF Standard Singlemode Fibers, a.k.a. ITU-T G652, and the DSF
Dispersion Shifted Fibers, a.k.a. ITU-T G653, which they had held
exclusively since the 70s. Between them, Corning and Lucent owned
roughly 90% of the telecom fibers market, providing all major service
providers across the planet with state-of-the-art G652 and G653
fibers. Their strategy to overcome the fast-approaching situation
where the production of those soon to become mainstream products, was
to develop new fibers for new needs: enter the famous
non-zero-dispersion-fibers, a.k.a. ITU-T G655, aimed at resolving the
issues of intrinsic dispersions within the fibers at 10Gbit/s and
beyond. The DWDM systems which were to be deployed by the various
players, boosted by the US Telecom Act and the European Telecom
deregulation, now had their own transmission media: those same new
fibers.
 
The New Economy
1998, and the telecoms industry was running at full-speed, with the
deployment of optical links across oceans and continents, the Internet
penetrating the consumer market with free access services, and the
hype of marketing entering fiberoptic technology!
For the first time ever, fibers have a name, no longer an obscure
number: Corning' s LEAF or Lucent's TrueWave are but two examples.
Also, for the first time since the earliest commercial applications in
the early 80s, optical transmission systems were based on proprietary
technologies: although the famous ‘ITU Grid' was meant to guarantee
some interoperability between equipments from different vendors, all
major WDM systems suppliers but one, Ciena, were providing turn-key
solutions that included fibers, cables, hardware, and transmission
equipment. Each Network Equipment Manufacturer, or NEM, was then using
a specific region of the wavelength grid defined by the ITU-T
authority, effectively locking out its rivals from its own established
base.
This was a perfect solution for the numerous new entrants in the
telecommunications marketplace, who could then entirely rely on the
NEM for the complete network construction "food chain", from design to
system turn-up and maintenance. The fact is that those new service
providers or carriers were penetrating deeply into the optical
communications business having started from scratch, with almost no
technical knowledge or experience in this domain. Hence the critical
role played by the optical system supplier, which could offer both its
new technologies and help the new entrant to build its own value
proposition.
The magic of fiberoptic technology was gone.
This was the time of the "New Economy Virtuous Circle", when investors
showered tremendous financing on the new entrants, which promptly
signed enormous contracts with the network equipment manufacturers,
which also received tremendous financing from investors.
 
 
The New Era
But this was also the beginning of a horrendous vicious circle, which
ended in the 2002 divestiture of almost every one of those new
entrants, be they service providers competing against the incumbent
telcos, or carriers leasing their fibers to those two segments.
The reason for this divestiture is the same reason that the numerous
start-up companies that were born in the Internet explosion died when
the Internet-bubble burst: a nice business plan with bright ideas but
no market, read no customer, no end-user. Put more seriously: at the
beginning of the 21st Century, half the planet do not use a telephone,
the majority of access to the Internet is from the office and not from
home, and most cell phones are used by teenagers for instant voice
chatting. When the harsh truth of this reality recently blew up in the
faces of the Telecom Act's "babyboomers", they all abandoned – or are
in the process of abandoning – the business, leaving behind them
beautiful up-to-date telecommunications infrastructures, with brand
new singlemode fibers that are future-proofed, and enough bandwidth
capacity to seamlessly and simultaneously carry the UMTS and Internet
communications to the subscribers.
 
This is the time of customer focus, it is the time to listen to the
end-user, and most of all, it is the time for plenty of new services
and applications, especially in the test & measurement arena.
Let us consider some of the fantastic opportunities facing us now that
the magic of fiberoptics is back!
 
The Great Magic Circus
One of the hottest topics of discussions between carriers or service
providers and their suppliers today is: could they be network
equipment manufacturers or test and measurement companies too?  There
are two major reasons for the demand that they increase the diversity
of their functions: on one hand, the ongoing consolidation within the
telecoms industry sooner or later leads operators to integrate network
infrastructures that have been deployed by former rivals into their
own systems, bringing about the need for specialist expertise. On the
other hand, the same operators have to cope with limited resources in
terms of instrumentation and workforce, a critical issue made all the
more important by the fact that fiber characterization requires both
high-end solutions and skilled engineers.  Aiming to provide a
complete description of the physical status and actual optical
performances of the fibers, fiber characterization applies to existing
optical infrastructures and also to new networks: expert knowledge of
optical cables installed during the mid-80s and 90s, qualification of
existing fibers for WDM transmission, and fine-tuned analysis of new
cables for dispersion compensation are all essential.
The expert knowledge of existing fiber-plant is necessary both for a
complete check-up of the health of the cable and for the verification
of the capability of the fibers to carry certain transmission systems
like WDM at 10 Gbps per channel. This requires several
substantiations, such as visual inspection of the cable plant itself
and many different tests, such as fiber signature, chromatic
dispersion, polarization mode dispersion, and spectral loss
measurements. All procedures require high-level expertise, and must
therefore be performed by skilled engineers and technicians with
enough technical background and knowledge to arrive at the proper
conclusions, thus enabling the service provider or the carrier to
determine whether its optical infrastructure is or is not able support
that kind of system.  On new installations, the goal of fiber
characterization is slightly different: the singlemode fibers that
have been in production since 1998 are aimed at high bit rate
transmission, for example 10Gbps TDM, featuring perfectly controlled
dispersion parameters with low PMD and low CD. Measuring those
parameters helps to verify if dispersion compensators must be
eventually used and, if so, where. As well as this basic requirement,
it is often also required that the fibers be characterized for the
next generation systems, such as the legendary 40Gbps per channel on
long-haul WDM systems.
A quick look at optical network infrastructures around the planet
shows that more than the half of the fiber count will have to be
characterized within the next couple of years, either by network
operators willing to integrate existing cables sporting unknown
fibers, or else by service providers looking for key technology
differentiators, such as 40G systems. This is one reason why so many
carriers and service providers are seeking for help from their
traditional partners and suppliers.
So what is a market where the demand is high for fiber
characterization but only a few suppliers can deliver the necessary
experts from network equipment manufacturers or test and measurement
companies?  It is a perfect marketplace for high-growth, profitable
business!  Whether or not it will be long-lasting business is the
question.  The answer is most probably "Yes", due to the fact that the
complexity of optical networks has been steadily increasing whilst the
average skill of available workforce has been correspondingly
decreasing.
 
Happy Days
With behemoths like Global Crossing or Worldcom in the centres of
their respective storms of controversy, the turmoil that has been
agitating the telecommunications marketplace for months seems to have
driven the entire industry to an appreciable U-turn. It seems the
industry has retreated back behind the frontier of the 1996 Telecom
Act. Investor confidence has all but vanished, and the
telecommunications landscape will soon look very similar to the
computing industry: a hand-full of giants sharing 90% of the market,
developing and deploying new solutions and services with the help of a
cascade of primary and secondary contractors and sub-contractors. 
This is an excellent opportunity for small companies to become key
players.  The major incumbent telcos will come back into the
spotlight, with almost all their rivals born from the Telecom Act
having since been wiped out. They will then have to integrate
thousands of fiber miles in their own networks, throwing wide the door
for engineering and consulting firms to help them with expertise,
fiber characterization, and documentation before opportunity even has
a chance to knock.  With core networks consolidated, access networks
almost completed, the telcos will master the entire optical
infrastructure from long-haul to the last-mile. The competition either
dead, dying, or at least having slunk off to lick its wounds, they
will then have the unique opportunity to control the very bottleneck
of broadband access: the last mile. With so many fibers now waiting
for a signal to carry, the "new" service providers will have to find
some way to turn
them from vacancy to occupancy.
 
 
* FCC, http://www.fcc.gov/telecom.html
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copyright (c) July 2003, Marc Duchesne, U.I. user interface
[EMAIL PROTECTED]
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