The debate about whether Synchronous Optical Network/Synchronous Digital Hierarchy (SONET/SDH) is being pushed aside by the "golden child" technology-dense wavelength-division multiplexing (DWDM)-has raged for more than a year. To look at the future market for SONET/SDH multiplexers, it's necessary to examine both technologies closely, read the analyst reports, speak to the vendors...then maybe toss a coin.
All the talk about DWDM replacing the need for SONET/SDH electronics in the network core does have some merit, but it depends on what section of the market you reside in. In fact, it's a lot like the old "fiber versus copper" story where fiber seems to be the most desirable medium, yet copper keeps bouncing back with "new and improved" features. To say that SONET/SDH is going to disappear like copper, may indeed be a question of "when"--but how soon is "when" is the million-dollar question.
Industry analysts covering the SONET/SDH multiplexer market appear to agree that the market, at least for SONET/SDH electronics, will continue to grow for at least a few more years. However, in the same breath, they predict a leveling or declining market to begin in about five years.
"We're looking at worldwide growth at upwards of 20% compound annual growth rate (CAGR) during our forecast period from 1998 to 2003," says Robert Rosenberg, president of Insight Research Corp. a telecommunications market and research company. "Most of the double-digit growth is in the SDH realm, particularly in Europe, followed by Asia, and then the rest of the world. North America has the slowest growth."
The outlook reflects a couple of trends in the market. First, although SONET/SDH is declining as a backbone technology as optical DWDM becomes the transmission technology of choice with long-haul carriers, there are other market areas where SONET remains comfortably in control, if not growing.
"The prediction is that we're definitely going to see the arrival of direct-to-optical backbone networks which will relegate SONET to the cities," says Bill Kleinebecker, senior consultant with Technology Futures Inc. (Austin, TX). "Then, it's a question of how quickly the cities' requirements are going to grow. But in terms of its presence in national and international networks, I think it will give way to the direct-to-optical systems. But the good news for SONET is that it will move toward the end user, where it is the 'most confident' technology. It has worked out its learning curve in terms of cost and the competitive local exchange carriers (CLECs), Internet service providers (ISPs), and other parties still feel more comfortable with SONET."
Lawrence Gasman, president of Communications Industry Research Inc., says his firm's latest reports indicate a fairly "bullish" forecast for SONET/SDH multiplexers, mirroring Kleinebecker's view. He points out that a company building a local loop or private network is now buying an OC-3 (155-Mbit/sec) SONET multiplexer instead of the traditional T1 (1.554-Mbit/sec) or T3 (44.736-Mbit/sec) multiplexer, because that's all it needs.
"Quite frankly, DWDM is not even on the radar screen at this point," says Gasman. "DWDM would have to deliver a system at a price point or level of simplicity that really doesn't exist yet in order to even mildly interest customers. There used to be a lot of T1 and T3 multiplexers available, but they're being replaced by SONET. That, along with the sheer number of network builds taking place, is boosting the SONET multiplexer market for the foreseeable future."
The number of network builds planned and underway is the second catalyst keeping the market strong. It is particularly evident in Europe and the SDH realm. As Europe's cross-border telecommunications infrastructure grows, the demand for SDH electronics is growing with it, despite the need for less units per network with DWDM technology.
"What we see emerging in the last year or so is a whole host of new pan-European network build-outs across borders," says Barry Flannigan, who is an analyst with Ovum, an industry research firm with offices in London. "There are a number of factors. Liberalization is obviously allowing operators to expand into multiple national markets. It's also due to a real growth in the demand for international service within Europe. So, despite a need for less SDH multiplexers, a real move toward transmission-network simplification is resulting in operators using a combination of high-speed SDH multiplexers and DWDM, which means less overall multiplexers in a single network. But there are a lot more networks being built."
The future of SONET/SDH may lie in its ability to complement DWDM, rather than compete against it. Developing new multiplexer products that are interoperable with multiple technologies is the logical path for vendors to take. The "pure" SONET multiplexer may get a temporary reprieve from extinction by gaining a foothold in the local network space, but unless it is fitted with new features for complimenting growing technologies like DWDM and Asynchronous Transfer Mode (ATM), it will soon be overwhelmed.
With that in mind, manufacturers are "beefing up" their products for use in hybrid applications, providing better scalability, and interoperability. But can they get products to market fast enough to keep the market strong? Chris Sleath, senior marketing manager for the transport systems division of ADC Telecommunications Inc. believes it will be a tough race for vendors to win.
"I still see a relatively long life for SONET/SDH, but it's difficult to remain optimistic unless modifications are made to these products," says Sleath. "We should expect to see increased speeds for SONET/SDH in the future. The need to modify SONET/SDH to adapt to growth in data communications [is strong]. I expect that new technologies, particularly DWDM and ATM, will win out in the future. These newer technologies can be developed quicker than the existing technology can be modified to deliver high-speed services."
Whether modifications are made or SONET/SDH develops a dominance in new market areas, optimism runs high among most manufacturers. For Marconi Communications Inc., neither pure optical nor SONET/SDH networks can stand alone. Rather, they must complement one another to deliver customers quality service at an affordable price.
"There are some cases where services such as Gigabit Ethernet or Internet protocol (IP) could be placed directly on the fiber strand or wavelength," says Marconi's Steve Grady, vice president of market development for transport and voice-over-IP (VoIP). "These fiber networks, however, take on a mesh-like architecture that is extremely difficult to deploy and manage. Network restoration cannot be accomplished at the same time as SONET/SDH networks. Furthermore, when services are placed directly on the glass via customer-premises equipment, carriers will lose quality-of-service visibility and create a troubleshooting nightmare. Marconi sees an evolution where SONET/SDH and DWDM coexist and are integrated into a single platform."
The coexistence of both technologies is a view shared by other manufacturers, including Nortel Networks--a company with a stake in both synchronous and DWDM systems. According to Nortel, operators are seeking fundamental values in transport systems such as scalability, the ability to deliver the lowest cost per bit, manageability, and reliability.
"DWDM offers fundamental advantages in its ability to scale to gigabit and even terabit capacities, as well as to enable convergence through its inherent transparency," says Serge Melle, vice president of marketing and sales for the optical-network division of Nortel. "We envision networks where DWDM provides the optical highway and synchronous systems provide cost-effective on-ramps to these highways by aggregating multiple services at the edge."
NEC America believes SONET/SDH has spread from the core of the networks to the edge, and now to the access area, providing somewhat of a "new life" for SONET/SDH equipment. In the access area, NEC sees great potential for SONET/SDH multiplexers to quickly enable bandwidth expansion.
"There is a great comfort level among installers and engineers with SONET/SDH," says Steve Cortez, manager of product planning at NEC America's public-networks group. "That comfort level translates into faster and more reliable network growth. SONET-enabling technologies still serve as the de facto standard for highly survivable and fault-tolerant optical-ring strategies in both the core and access networks. SONET optical interfaces should still maintain a steady deployment rate for the next three to five years."
Finally, what about all that SONET/SDH infrastructure that is already functioning out there?
It's doubtful there are any telecommunications providers willing to scrap billions of dollars worth of legacy equipment. What they are looking for is new products that will enable bigger, better, and faster networks while making the most of their previous investment.
For a roundup and comparison of SONET/SDH multiplexers, see table.