Phone companies to invest $64 billion in next-generation multiplexers by 2008, says Insight Research

24 July 2003 Boonton, NJ Lightwave -- In an effort to keep pace with continuing strong demand for data services, phone companies will invest almost $64 billion over the next five years in next-generation add-drop multiplexers (ADMs), contends a new study from Insight Research Corp. An ADM is akin to an on-ramp/off-ramp in a telecommunications network, moving slower-speed traffic on and off higher-speed portions of a network.

Jul 24th, 2003

24 July 2003 Boonton, NJ Lightwave -- In an effort to keep pace with continuing strong demand for data services, phone companies will invest almost $64 billion over the next five years in next-generation add-drop multiplexers (ADMs), contends a new study from Insight Research Corp. An ADM is akin to an on-ramp/off-ramp in a telecommunications network, moving slower-speed traffic on and off higher-speed portions of a network.

Increases in Ethernet usage, the number of new providers requiring network attachments, and continued strong end-user demand for data services will force carriers to make ADM upgrades. In order to forecast ADM demand industry wide, Insight Research constructed a two-stage model. Network traffic was modeled to show its impact on demand for new ADM installations. The traffic demand model was then cross-checked by estimating the number of potential installation sites before modeling the number of ADM installations per site.

"Most of the industry buzz is about Ethernet edge switches, but with the RBOCs in the driver's seat, SONET is getting a make over," reports Robert Rosenberg, Insight Research president. "We anticipate that WDM technology will be deployed in conjunction with next-generation SONET, making it possible to add transport capacity to the metro ring without disrupting current operations. This type of non-disruptive upgrade strategy is favored by the RBOCs, and it will drive the marketplace," he adds.

Annual revenue from the sale of ADM devices is estimated to rise from its 2003 level of $1.4 billion to almost $22.5 billion by 2008; it will closely follow growth and other changes in traffic volume.

The report, "Next Generation Add-Drop Multiplexers 2003-2008," provides a detailed analysis of the US market for SONET ADMs, next-generation SONET ADMs, Ethernet ADMs, and Optical ADMs. The report also forecasts unit shipment by location within the network and provides revenue forecasts for the four classes of ADMs. An extensive traffic-demand model underpins the market estimates. For more information, visit www.insight-corp.com/reports/adm.asp.

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