CIR pegs optical bandwidth services as growth market

June 28, 2002--Despite continued problems in the telecom sector, a new report from Communications Industry Researchers (CIR) predicts that revenues from high-bandwidth services using optical infrastructure will continue to grow, reaching over $5.7 billion in 2006.

Jun 28th, 2002

June 28, 2002--Despite continued problems in the telecom sector, a new report from Communications Industry Researchers (CIR, www.cir-inc.com) predicts that revenues from high-bandwidth services using optical infrastructure will continue to grow, reaching over $5.7 billion in 2006. The new report, "The Market for Optical Bandwidth Services," further predicts that the biggest opportunities will go to those carriers who have patience, offer their customers diversified offerings, and show a willingness to be judged by real profit measures.

In CIR's opinion, the optical bandwidth services market is another opportunity that both vendors and compromised analysts have managed to distort. The years 2000 and 2001 saw overly optimistic wavelength service and Gigabit Ethernet forecasts that were predicated on the success of companies such as Yipes, Global Crossing, Cogent, Telseon, and Sphera, all of which CIR describes as financial failures. Wall Street became enamored with the ability of these companies to deploy fiber-optic backbones with OC-192 capabilities rather than their business cases for generating profit. Meanwhile, vendors touted optical services as the way in which carriers could increase revenues without ever considering such important factors as the lack of available first-mile fiber and the complex internal workings of major service providers, according to CIR.

The new report states that the downturn has led to the hype being replaced by despair. However, the doom and gloom obscures what CIR believes to be real opportunities for carriers to earn revenues from optically based services. CIR's report describes LAN extension, managed services, optical virtual private networks (VPNs), and "burstable" optical services as offerings for which there is proven demand. Carriers can achieve significant revenues from SONET circuits, which are projected to grow almost 350 percent over the period forecast, and from wavelength services that should enjoy a similar growth pattern, CIR says.

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