Company officials predict fiber-optic market surge
GEORGE KOTELLY
Fiber-in-the-loop systems and switched digital-video services for multimedia applications, new markets and global communications are expected to skyrocket the worldwide usage of fiber-optic cables, components and networks through the year 2000, according to speakers at the 18th Annual Newport Conference on Fiber-optics Markets in Newport, RI, last October.
A host of company officials delivered strategic analyses to the 150 attendees on the predicted sharp rise in future fiber-optic market, application and product revenues. They also covered a range of lightwave-related topics, including worldwide trends, broadband networks, intelligent highways, and cable and component usage.
Sponsored by Kessler Marketing Intelligence Corp. in Newport, RI, the conference, whose theme was "The Fiber-optics View of the World," attracted attendees from 95 companies and 12 countries.
John Kessler, president of KMI Corp., opened the conference with a discussion of multimedia technologies, applications and systems, and an overview of the worldwide fiber-optic market. He said, "The variation in [multimedia] providers and users points to a multitude of applications rather than a single "killer" application, such as video-on-demand." Based on an investment model developed by the New Brunswick Telephone Co. in Canada, declared Kessler, revenues from cable-TV services will not result in payback for more than 10 years.
Published KMI forecasts on numbers of multimedia subscribers have been drastically scaled downward, noted Kessler, because of fewer fiber-in-the-loop installations. For 1995, KMI previously predicted 1.1 million subscribers. Latest updates now put that figure at 900,000. Similarly, the 1996 KMI forecast estimated 3 million subscribers. "We have cut that forecast to 1.4 million," remarked Kessler.
He added that education, such as distance learning, might produce more revenues than entertainment in future multimedia markets. Kessler cited that nearly 100 distance-learning systems are using fiber optics, and numerous proposals are calling for linking hundreds and thousands of schools in several states. For example, Bell Atlantic`s Operation New Jersey calls for connecting 3300 of the state`s schools by the year 2000.
Switching to worldwide market data for fiber-optic cables, transceivers and connectors, Kessler estimated that market at $6.2 billion in 1994 and reaching $7.2 billion by the end of this year. Growing at a rate of 19%, from 1995 through 2000, this fiber-optic market is projected to jump nearly 2.5 times to $17.38 billion, he claimed.
Keynote address
In the conference keynote address, Jay Hassan, president of global interconnect systems business at AMP Inc., Harrisburg, PA, emphasized that "the only hurdle standing between us and communications nirvana is wide deployment of the essential infrastructure. Bandwidth is a critical component to almost every new communications vehicle. It goes without saying that across-the-board installment of fiber optics is a key precondition to their adoption and success."
He further commented, "And regardless of the upfront costs of full deployment, the cost of taking a wait-and-see approach to fiber-optic deployment could be even higher." Comparing copper to bags of sand protecting the copper coast, Hassan advised, "As fiber costs keep falling, as its technology continues to improve, and most importantly, as users continue to demand more and more capability, the waves of the future will keep crashing in."
N. D`Arcy Roche, divisional vice president and general manager of premises systems and services at AMP, updated the talk he gave at last year`s conference on "Fiber`s Assault on the LAN Desktop Market." He acknowledged that his 1995 prediction that fiber`s cabling cost at $147 per drop would decrease below that of Category 5 copper at $122 did not happen. However, he noted that the premium cost of fiber has been cut in half to $12 this year with fiber`s cost per drop at $146 and copper`s cost per drop rising to $134.
The cost differential will be resolved soon, according to Roche, by the following local area network trends:
Centralizing LAN electronics in one closet per building
Improvements in network management
Increasing fiber-desktop links
Decreasing component and electronics pricing and fiber premium payback in six months to two years.
Covering trends in premises cabling, Paul Kopera, senior marketing manager at Anixter Bros. Inc., Skokie, IL, cited that the barriers to the installation of fiber to the desktop included:
Many network applications are not data intensive
Many users are running low-speed information transfers
The common fiber misperceptions of high cost, extreme fragility and difficult handling still persist.
He suggested that future networking might consist of virtual local area networks, which would provide high-speed connectivity between a prespecified group of end nodes and a readily alterable node arrangement. According to Kopera, the network benefits would encompass more efficient overall bandwidth allocation and security based on transient connectivity. Fiber to the desktop will come, he said, when technology and applications converge.
The U.S. market for fiber-optic cable and the worldwide market for singlemode transmission equipment was analyzed by Richard Mack, vice president at KMI Corp. He projected that the amount of installed fiber-optic cable would jump 30%, from 6.1 million fiber-kilometers in 1994 to 8 million fiber-km in 1995. The surge in installed cabled fiber is expected to continue at a compound annual growth rate of 13% and reach 15 million fiber-km in the year 2000, he stated.
Growing at rates of 20% for several years, multimode cable installations are predicted to climb from 513,000 fiber-km in 1994 to 700,000 in 19950--a strong 37% growth rate. This jump is mainly attributed by Mack to the increased use of fiber for premises network backbones.
The forecast for cabled fiber volume associated with local exchange carrier deployments of hybrid fiber/coaxial cable and fiber-to-the-curb networks has been pushed back by at least two years, noted Mack, because regional Bell operating companies have delayed their plans for aggressively building and operating video-dial-tone networks. The trunk and feeder links of local exchange carrier networks, however, remain active installation areas through the 1990s because of the potential of long-distance services, interexchange carrier competition and high-capacity business applications.
Turning to the worldwide market for singlemode transmission equipment, Mack expected this market to climb 29%, from $8.7 billion in 1994 to $11.2 billion in 1995, and continue at a 21% compound growth rate to $29.3 billion in the year 2000.
A review of the trends, directions and migrations of cable-TV hybrid fiber/coaxial-cable networks was evaluated by Tim Wilk, director of strategic planning and technology at Scientific-Atlanta Inc. He pointed out that by 1995, cable-TV architectures will have passed approximately 96% of all homes in the United States.
Wilk described the channel capacity breakdown as follows: 45% of cable-TV networks are structured as all-coaxial cable operating at 400 megahert¥, 40% of cable-TV networks are built as hybrid fiber/coaxial cable operating at 450 to 550 MH¥and 15% of cable-TV networks are installed as all-fiber-optic cable operating at 750 MHz. As for reverse-path activation, only 10% to 15% of cable-TV networks provide two-way transmission.
"The cable-TV industry is installing more fiber miles this year than in 1994," said Wilk, "and these fiber-rich architectures are greatly improved over the pre-1989 coaxial [cable] tree-and-branch networks and their 5% to 7% failure rates."
For future hybrid fiber/coaxial-cable networks, he proposed that new regional headends will be interconnected to remote serving hubs over fiber rings using both 1550-nanometer analog and digital technologies; local fiber trunking will include reverse bandwidth, 750-MH¥upgrades and smaller serving areas; and a 1-gigahert¥bandwidth will provide upstream telemetry, television channels, downstream video and two-way telephony, personal communications and telecommuting digital services in a passive cable architecture.
Just returned from a trip to the People`s Republic of China, Charles Xu, analyst at KMI Corp., disclosed some revealing data about that country`s optical fiber and cable markets. He appraises China as a huge market with great growth potential. For example, in 1994, the country installed 1.06 million fiber-km of singlemode fiber in national, provincial and county telecommunications exchanges. That number represented almost 14 times the volume of fiber-optic cable installed from 1986 to 1990. Xu comments that installations are estimated to grow at an annual average rate of 21% from 1994 to 2000 and reach 3.25 million fiber-km. At present, the deployment of multimode fiber appears minimal.
According to Xu, approximately 90% of the optical fiber are imported, and 80% of the optical cables are supplied by domestic manufacturers. By the end of this year, he said, approximately 120 domestic cable companies are expected to have a combined annual capacity of 2.5 million fiber-km, which will exceed the country`s present needs. Currently, the proposed local-loop network architectures include fiber to the area, fiber to the building and fiber to the curb. q