Integrated components a key to telecom comeback
The foundation for expanded bandwidth availability is being laid this year, with increasingly visible results expected in 2003 and beyond.
BY PETER WESTAFER
Anew generation of physically small, high-performance, low-cost, multiservice equipment is required to achieve new economic thresholds that will enable service providers to make money selling high-bandwidth services-and to expand the subscriber base for these services. These system products will be based on successive new generations of integrated components, beginning with today's hybrid transceivers and transponders and evolving to sophisticated single-chip optoelectronic products based on exotic technologies.
These new components promise to achieve cost metrics that allow the optimum deployment of optical versus electronic functionality, establishing an economic paradigm that will enable entirely new business models for service and content providers.
The endgame in optical and optoelectronic integration holds great promise for low-cost, mass-market components that will enable the vision of "unlimited bandwidth." However, the road to that utopia will be evolutionary, benefiting different market segments along the way.
Today, small-form-factor transceivers and transponders are announced regularly for speeds up to 10-Gigabit Ethernet and OC-192 SONET. Systems-level functionality is being integrated into traditionally passive devices such as arrayed waveguide gratings (AWGs) by the addition of channel-monitoring and gain tilt control functionality. All of these developments provide footprint and development cost benefits for the systems manufacturer. These benefits, along with operational efficiencies, will be transferred directly to the service provider-and to the end user in the form of very-high-bandwidth services for reasonable cost.
The ultimate integrated component will be a variant of monolithic integration, meaning that the entire "chip" or "IC" will be produced in a limited number of steps on single or multiple closely related substrates. These "photonic chips" will be produced with excellent yields and at low cost. Electrical functions will be combined with optical as needed for maximum efficiency. Components based on "nanophotonics" technology are very interesting in this regard because of their claimed ease of manufacture and general robustness of structure.
Even today, there are major benefits to be gained through the hybrid products being produced by established components houses and startups alike. These products typically offer good performance characteristics because the multiple components that make up the hybrid are individually produced under optimum conditions, then assembled using automated pick and place technology. Applications today include transceivers and other combinations such as multiplexer/demultiplexer and variable optical attenuator products.
Markets to watch
What is the hot market or are there more than one? Is it metro, still trying to remove the bandwidth bottleneck between the 10-Gbit-based long-haul networks and Gigabit Ethernet (GbE) LANs? Is it storage networks, their worth having been proven as a result of the Sept. 11 tragedy? Or is it cable television multiple system operators (MSOs), many of whom already have fiber very close to the residential subscriber and have achieved leading penetration for residential broadband data services?
We don't believe that today's integrated components have achieved the cost targets required to enable widespread metro/access penetration. Some exceptions are corporate GbE access and storage networks, serious business applications that need speed and reliability-and can bear relatively higher costs. We believe that storage networks could lead the way in the early recovery, with metro/access seeing little activity until well into 2003-04. But, after 2003, the price/performance of integrated components should improve to enable metro access to become a tremendous growth market.
From the carriers' point of view, the rubber must now meet the road. Although a new overlay network might solve a carrier's problem cleanly and elegantly, the cost to scrap equipment that is not yet depreciated and has available capacity is unacceptable in most situations. New systems must take a multiservices approach. Decisions will have to be made regarding the most effective deployment of protocol-agnostic optics and protocol-specific electronics. A major benefit of mature integration is that the cost differential between the two will be reduced so the choice can be made based strictly on function and on the architecture of the system product.
"Willingness to pay"
DSL and cable-modem services at between 1.5 Mbits/sec and 6 Mbits/sec have established a "willingness to pay" benchmark for broadband access at between $50 and $100 per month for residential and small-business use, depending on the level of service. We believe that this number will not be allowed to increase dramatically for mass-deployment optical access. Rather, the definition of what constitutes broadband access will be adjusted upward.
And herein lies another benefit of integration beyond the small size, lower cost combination: The ability to include performance monitoring and other visibility and control functions within the optical component will provide major operational benefits for carriers.
For mass-market deployment, manual intervention for turn-up and reconfiguration of individual service must be minimized and carriers need ways to charge for the bandwidth delivered. In other words, significant progress must be made in the economics of integrated optical components to the support widespread availability of optical access.
This year, optical components based on hybrid and monolithic integration are laying the foundation for becoming an important driver in the recovery of the telecommunications sector. The expected technological progression of these components is neatly matched to the needs of network expansion. The resulting expansion of bandwidth in metro networks should surpass the explosion of long-haul backbone network capacity between 1996 and 2000.
Peter Westafer is director of market research for Chaffee Fiber Optics (Ellicott City, MD), a fiber-optics market research, consulting, and publishing firm. He is the author of the report "Integrated Optical Components and Subsystems," on which this article is based.