June 15, 2010The flurry of recent 100-gigabit announcements highlights how companies are lining up in the race to the next optical transmission speed hike. A handful of 100-Gbps wavelengths may have been deployed but the starting pistol is the IEEE’s 40 and 100 Gigabit Ethernet standards whose ratification is imminent.
The advent of 100-Gbps coherent transmission also signals a more fundamental change in the industry. Electronics now plays a central role in optical networking and this has important consequences for firms at the various manufacturing layers of the industry. Acquiring such expertise is already showing signs of market overheating – albeit, compared to a decade ago, “localized hotspot” is more apt.
Cisco’s acquisition of CoreOptics is the most noteworthy of recent announcements. Here is a return of in-house component expertise to a system vendor.
Does the move reflect a more general trend of system vendors embracing in-house components after all the divestments of a decade ago? It seems unlikely. ACG Research argues the acquisition is a move by a router vendor to address packet optical transport. Cisco may also have decided it needs the technology in-house to move quickly to win business with important operators that want coherent technology.
Cisco’s acquisition is also noteworthy for other reasons. Cisco has a proven track record of successful acquisitions, and with CoreOptics it removes a leading coherent player from the open market -- a player that had been working with other optical vendors.
In other announcements, Infinera has ditched its 40-Gbps photonic integration circuit (PIC), turning to 100-Gbps PICs and coherent technology instead as it seeks to deliver a telling return for its technology. And Alcatel-Lucent has become the second vendor after Ciena/ Nortel to offer a commercially available 100-Gbps system.
Module vendors Oclaro and Opnext have also been busy. Oclaro has partnered with IC specialist ClariPhy Communications to develop and promote coherent technology while Opnext’s in-house 100-Gbps technology is part of operator trials.
These announcements reflect how squeezing more capacity out of long-reach fiber is becoming harder. More advanced modulation schemes are required, as are clever algorithms to cope with channel distortions. The advent of 100 Gbps also means vendors now prize coherent technology expertise, and in particular the ability to develop a coherent receiver ASIC. Such an ASIC comprises very high speed analog-to-digital (A/D) converters and a digital signal processor. It can even include advanced forward error correction, all on the one chip.
The good news is that electronics is up to the challenge. Moore’s Law, with its several decades of exponential growth, is coming to optics’ aid. A 45-nm CMOS process ASIC is fast enough to process the data generated by A/D convertors operating at a mind-boggling 64 gigasamples/s.
And silicon will only become more important as systems move beyond 100 Gbps and employ yet more sophisticated modulation schemes. Systems will also become smarter, even changing the transmission schemes and rates used between end points depending on channel conditions.
It is just this coherent ASIC that is causing market overheating.
The development cost for the 100-Gbps ASIC is between $15 million and $20 million. System developers known to be developing their own ASICs include Ciena, Alcatel-Lucent, Infinera, Huawei, and now Cisco. Others developing silicon include Opnext, ClariPhy, Mitsubishi (which is supplying Japanese vendors that in turn are supplying NTT), Multiphy, and at least two other merchant chip companies. Then there are questions regarding the plans of startup Acacia Networks, Fujitsu Microelectronics, and Semtech’s Sierra Monolithics.
One leading FPGA company has said there are at least six companies in Asia Pacific developing 100-Gbps coherent silicon. Add to that the question as to what JDS Uniphase, Mintera and Finisar plan to do? That gives between 12 and 24 ASIC developers.
Even taking the most circumspect case -- a dozen players each spending $15 million -- $180 million is being spent on developing coherent ASICs. It will take a long time and many deployed 100-Gbps wavelengths -- especially given the pricing pressures associated with optical networking -- before the industry gets its return on investment.
Equally, though, can leading optical system vendors and transponder makers afford to let others own such core optical transmission technology?
Roy Rubenstein is the editor of the blog Gazettabyte
