If it's Fall, it's time once again for the annual Newport Conference on Fiberoptics Markets sponsored by KMI Corp. (recently acquired by Lightwave's parent company, PennWell Corp.). Last year, the talk of the conference was the prediction that severe price erosion could spell bankruptcy for lower-tier fiber manufacturers. This year's conference found everyone, including the third-tier suppliers, in a much happier frame of mind. Based on statistics presented at the conference, 1999 should be a great year for fiber--and the good times should continue to roll right into the next century.
According to KMI's general manager, Richard Mack, the fiber-kilometers of fiber installed in 1999 should reach 62.8 million, a 39% increase over last year. The old guard led the way, both from the applications and regional perspective. The leading application worldwide this year should prove to be long haul, with approximately 27.5 million fiber-km installed. This total represents 7.2 million more than the next-leading category, feeder and local applications. KMI's Neil Dunay reports that 80% of long-haul applications in North American will be a combination of non-zero dispersion-shifted, large effective area, and other fibers optimized for dense wavelength-division multiplexing (DWDM). Emerging national carriers are expected to install 29% of the new fiber going into the ground this year, a mere percentage point behind incumbent carriers such as AT&T, MCI WorldCom, and Sprint. Dunay predicts, however, that these established carriers will begin aggressive overbuilds of the older fiber plant next year.
But both Mack and Dunay say that long-distance deployments will peak next year, then begin to decline. Mack predicts fiber installation in such applications will reach 30.1 million fiber-km worldwide next year, but will then start to slip. Deployment in 2001 will shrink to 25.6 million fiber-km; by 2004, new builds will drop to 21.3 million fiber-km. Dunay concurs, saying that new route-kilometers in North American long-haul networks will climb from approximately 80,000 in 1999 to 95,000 in 2000. The count, however, will drop to 65,000 in 2001. Overbuilds will drive these deployments, accounting for nearly half of the new fiber-kilometers deployed in 2001.
Meanwhile, from a regional perspective, Mack reports that North American deployments surged this year, rising from 17.1 million fiber-km to 21.9 million. This boost offset a growth in deployments in the Asia-Pacific region from 15.5 million fiber-km to 18.2 million to enable North America to retain its status as the largest market for fiber in the world. But this predominance won't last, Mack predicts. Asia-Pacific fiber demand will outstrip that of North America as quickly as 2001, when deployments should reach 29 million fiber-km versus 25.2 million in North America. By the end of the 2004 forecast period, the Asia-Pacific region will require 47.8 million fiber-km in new infrastructure, compared to 28.5 million in North America. Western Europe will maintain its third-place position throughout the forecast period, although the amount of fiber deployed over the forecast period is expected to decline slightly, from 14.1 million fiber-km this year to 13.5 million in 2004.
With the feeder and local space expected to become the worldwide market leader in fiber deployment, a subsequent presentation on fiber builds by competitive local-exchange carriers (CLECs) proved well timed. According to KMI's Geoff Wilbur, 39 CLECs in the United States deployed their own fiber last year, with 37 of these in service at the beginning of this year. These carriers deployed approximately 480 separate networks in 198 markets.
Of course, other CLECs lease fiber to operate as facilities-based carriers, so the investment by CLECs in optical networks is even higher than these figures would first indicate. Wilbur reports that fiber has spread throughout the various market tiers. The number of fiber networks per city range from just over seven in the top 10 markets to just under one per city in the smallest 152 markets. In fact, 1998 represented the first year in which more networks were up and running outside of the 50 largest markets than inside.
Stephen M. Hardy
Editorial Director and Associate Publisher