North American fiber demand to begin slow rise in 2004, says KMI Corp.

Aug. 29, 2001--The report is an update of a November 1999 report that accurately forecast a downturn in the United States long-distance fiber and cable market starting in 2001.

According to a recent KMI report, Fiberoptic Networks of Long-Distance Carriers in North America: Market Developments and Forecast, fiber deployment will slow significantly over the next two to three years. The report is an update of a November 1999 report that accurately forecast a downturn in the United States long-distance fiber and cable market starting in 2001. The report's geographic coverage comprises the United States, Canada and Mexico.

As a result of the slowdown, industry consolidation is likely for the next two years. Carriers that survive the downturn in relatively good health will be in a strong position to prosper from the coming broadband boom as more end users shift away from dial-up modems and put more traffic on the Internet backbone.

At the end of 2000, North American carriers had deployed some 672,000 route-km of fiber optic cable in long-haul networks. At an average count of 52 fibers per cable, nearly 35 million km of fiber have been deployed, five times the amount just four years earlier.

After reaching a peak of some 140,000 route-km in 1999, annual deployment of cable is expected to fall back to just under 35,000 route-km by 2003. With increasingly higher fiber counts cushioning the decline in terms of fiber-km, annual deployment of fiber drops from a peak of just over 10.8 million fiber-km in 2000 to about 7 million fiber-km in 2003.

Beyond 2003, improved business conditions and friendlier capital markets, combined with a resurgence in bandwidth demand (caused by new broadband applications), will lead to positive growth in annual long-haul fiber deployment, though still at levels below those of the peak years 1999 and 2000.

Fiber count rise helps offset decline in fiber deployment

Due to higher fiber counts in each successive year for new builds, annual fiber deployment in fiber-kilometers portrays a slightly different pattern than that of annual cable deployment in route-kilometers.

Whereas annual cable deployment peaks in 1999, annual fiber deployment peaks a year later (at nearly 10 million fiber-km), as the jump in average fiber count more than offsets the decrease in new route-km deployed during the year.

About KMI Corp:

KMI Corporation, a fiber optics market research firm, provides reports on worldwide fiber optics markets, bi-monthly newsletters, fiber optics route maps, and conferences on global, regional and undersea fiber optics markets. For more information, visit www.kmicorp.com.

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