Worldwide fiber-optic markets to grow unabated
GEORGE KOTELLY
Fast-developing optical-communications technologies, applications and products affirm the strong growth in fiber-optic-related networks and services for the next 10 years, according to speakers at the recent 19th Annual Newport Conference on Fiberoptics Markets, held in Newport, RI.
Company executives from the United States and abroad, as well as market analysts, proclaimed to the more than 190 conference attendees that fiber-optic cables and networks are rapidly encircling the world because of the increasing demand by users for more bandwidth to handle the dazzling array of new interactive communications services. They also explained how companies are expanding their facilities to handle the expected surge in nearly all fiber-optic markets.
In addressing the Kessler Marketing Intelligence Corp. (KMI) conference on "Navigating Fiber`s Future: Smooth Sailing or Rough Seas?" the speakers covered a diverse and ambitious optical-market scenario, including wavelength-division multiplexing (WDM), optoelectronics and photonics technologies; telephone, cable and automotive company strategies; electric utility, state highway and business office installations; networking activities in Africa, Europe and North and South America; and fiber, cable and interconnection sales.
Richard Mack, vice president of KMI Corp., opened the conference by analyzing the market for singlemode fiber-optic cable installations in North America. He expects this market to increase steadily from 10 million fiber-km in 1996 to 16 million fiber-km in 2001. Mack attributes this growth to three major factors:
The entry of new carriers into increasingly competitive telecommunications, data, and video services markets via planned fiber-based networks
The extension of networks by many carriers and the termination of fiber at more locations in networks, especially at sites closer to the subscribers in access or distribution networks
The trend toward higher-fiber-count cables in telecommunications and cable-TV applications
Mack also noted that applications of WDM this year are aimed at relieving congestion on previously installed fiber cables in long-distance and trunk backbones. Initial customers for WDM technology include the leading interexchange carriers, such as AT&T, MCI, Sprint and ldds Worldcom. These companies have long-distance routes in service that were installed in the 1980s, when lower fiber counts were used. WDM technology lets these carriers increase capacity without overlaying new fiber cable on older routes, where no unused fibers are available. However, according to Mack, "The evidence from routes being installed or planned in 1996 is that the availability of new high-channel WDM technology is having no impact on fiber counts."
KMI analyst Charles Xu offered a study of fiber-optic singlemode interconnect hardware, which includes unmounted plugs, cable assemblies, wall-mount and rack-mount panels, shelves, and distributed frames. He estimates that the North American market totaled $262.3 million in 1995 and should increase by 11% in 1996, to $291.2 million. The market is projected to continue growing at an average annual growth rate of 10.6%, to $436.2 million in the year 2000.
Xu said that, in 1995, about 8 million singlemode connectors were installed in North America. He predicted that this number will more than double, to 17 million in 2000. The United States is figured to maintain a 90% market share during that time.
He also reported that, in 1995, nearly 80% of singlemode plugs were supplied by 3M, ADC Telecommunications Inc., Alcoa Fujikura Ltd., Lucent Technologies Inc., Seiko Instruments USA and Siecor Corp. He foresees the connector market for the next few years being driven by
an increase in the long-distance segment that reflects emerging long-distance car riers building fiber networks, as well as network builds by newly licensed long-distance carriers in Mexico,
rapid deployments of cable-TV fiber networks by multiple system operators and competitive access providers and by local telephone companies pushing fiber closer to customers for multimedia services,
increased demand for fiber-optic components by utility, railway and water authorities; oil and energy companies; transportation systems; and government, military and commercial networks.
In the conference keynote address, Herwig Kogelnik, director of the photonics research laboratory at Lucent Technologies` Bell Laboratories, emphasized, "This is the year of wavelength-division multiplexing." He said long-distance network operators in 1996 have started deploying WDM systems involving thousands of fiber amplifiers and hundreds of WDM Synchronous Optical Network (Sonet) terminals. These efforts are aimed at satisfying the need for increasing bandwidth per user, higher path reliability, protocol transparency, and straightforward operation and management.
Added Kogelnik, "The speed of commercial integrated circuits is progressing by a factor of 10 in 10 years, while lightwave systems have progressed by a factor of 100 in 10 years; WDM technology is providing the parallelism needed to maintain this rate of systems progress." He said the next-generation lightwave network will move from 8 to 16 channels and then to 32 channels. Present 2.5-Gbit/sec WDM transmissions will soon jump to 10 Gbits/sec and move quickly to 40 Gbits/sec. Network spans now at 360 km will be extended to 600 km and then to 2000 km because of expected advancements in erbium-doped fiber amplifiers.
Covering the European fiber-optic cable markets, Peter Kurze, KMI analyst, concluded that, in 1996, the western European fiber-optic cable demand should total 4.8 million fiber-km, with singlemode fiber grabbing a 91% market share. The three leading applications include junction and local telecommunications at a 34% share, long-haul telecommunications at 33% and cable TV at 22%. Kurze added that, by 1998, this market should grow to 6.5 million fiber-km, with singlemode fiber garnering a 90% share. Junction and local telecommunications applications are expected to dominate cable installations with a sharp increase to 51%, with long-haul telecommunications dropping to 19% and cable TV slipping to 18%.
According to Kurze, by 2001, the western European market is figured to grow to 10.1 million fiber-km, with singlemode cable share falling slightly to 88%. Again, junction and local telecommunications applications should continue to show growth in installations, with a 65% share; cable-TV and long-haul telecommunications are expected to have a 12% and 9% share of installations, respectively.
Kurze estimates that western European fiber-cable sales will total $1.2 billion in 1996, with singlemode fiber accounting for 82% of sales. He foresees market sales as increasing to $1.5 billion in 1998 and to $2.1 billion in 2001, with singlemode sales decreasing to 81% and 77%, respectively.
KMI senior analyst Tom Soja examined the relationships between the suppliers of, and the markets for, optical fiber and fiber-optic cables for near-term relief of the current fiber shortage. According to Soja, approximately 22.8 million km of optical fiber were cabled and installed in 1995, including submarine cable (see figure). Slightly more than 33% of that total was installed in the United States; 17% and 6% of that total were installed in Japan and China, respectively.
Soja projects an 18.6 % worldwide average growth rate for the next six years, resulting in the installation of 63.2 million fiber-km by 2001. During this period, he envisions a growth slowdown in the U.S. market, while the eastern European market rises markedly by 36% and the Asia-Pacific market by 20%. By 2001, China is projected to install nearly twice the volume of fiber as the next-largest market.
The leading worldwide optical-fiber cable producers, said Soja, are Siemens (13%), Lucent Technologies (12%), Pirelli (11%) and Alcatel (10%). He sees the worldwide projected capacity as being 11% higher than the amount needed to meet the forecast for 2001. In the near term, however, capa city might temporarily exceed production requirements by 25% to 27% from 1998 to 1999.
After fiber prices fell an average of 13% to 15% per year from 1983 to 1996, Soja expects them to level off and possibly increase slightly. In 1996, he calculated fiber prices to be in the $0.06-per-fiber-m range. Soja estimates that prices should approach $0.03 per fiber-m by 2001. q