North American connector sales to lead worldwide markets for the next decade
Representing a 73% share of the worldwide production of fiber-optic singlemode and multimode connectors, the North American market is estimated to surge from $131 million in 1994 to $809 million by 2005, more than 2.5 times greater than the combined European, Japanese and Far Eastern markets
The North American market for fiber-optic connectors is expected to expand markedly during the two five-year periods 1994 to 1999 and 1999 to 2005. Comprising singlemode and multimode connectors, this market--the U.S., Canada and Mexico--is predicted to demonstrate an average annual growth rate of 22.5% for the first period and 17.5% for the second. In market sales value, the total production of connectors is projected to jump from $131 million in 1994 to $362 in 1999, and then spurt to $809 million in 2005.
The North American market volume is dominated by a few companies that have a broad base in connectors, fiber-optic components, or both; Lucent Technologies, AMP Inc., 3M and Siecor Corp. account for approximately 50% of this market.
More than 95% of the North American market for fiber-optic connectors can be consolidated into five major application segments, including telecommunications, premises data networks, cable TV, military/aerospace and specialty applications. The remaining 5% is attributed to research and development, laboratory and instrument consumption.
In 1994, the telecommunications market accounted for the deployment of approximately $51.5 million of fiber-optic connectors, or 39% of the total North American consumption (see Table 1). Growth in telecommunications deployment is forecast to continue from 1999 to 2005 at an annual rate of 15% and reach $278 million.
Premises data networks garnered a 34% share and $46 million in sales for 1994. By 1999, as fiber-optic connector consumption reaches $350 million, the value share held by telecommunications is estimated to remain at 39%. Premises data networks are predicted to stay at 34%, while cable-TV applications will probably remain at 6%.
Cable-TV fiber-optic connector deployments are expected to expand rapidly during the first five-year period at a 25.6% growth rate, but will then level off at a 14.7% growth rate during the second period as more video traffic shifts onto telephone lines.
By 2005, as fiber-optic connector production increases to $809 million, and consumption reaches $758.6 million, the telecommunications systems market share is estimated to drop slightly to 37% of the total. Market share of premises data networks is expected to rise to 37% and cable-TV applications to remain at 6%. The rapid expansion of fiber connector deployment in telecommunications over the next five years is attributed to the increasing competition for regional, continental and global transport networks.
Eastern Europe and Third World expanding fiber-optic network installations will produce a positive impact on North American fiber-optic component production for export. An increased indirect impact is also expected through rapid growth in the export of telecommunications systems incorporating North American-made optical components.
Singlemode connectors abound
Singlemode fiber-optic connectors have evolved from the early biconic devices, developed by Lucent Technologies and multichannel/multipin cylindrical connectors to a wide range of choices, such as ST and compatible types, biconic, FC and PC, SC, D4, adapters and couplings, multichannel, and military specification, among others.
The North American consumption of singlemode connectors in operational applications in addition to nonproduction uses is expected to climb from $65 million in 1994 to $179 million in 1999, and to $375 million in 2005 (see Table 2). This impressive growth, averaging nearly 23% per year from 1994 to 1999, and 16% thereafter, will be driven mainly by the rapid expansion of requirements to transport very high data rates over moderate distances. It is in sharp contrast with the earlier dominant application of long-distance telecommunications lines. Data networks, ranging from local area to nationwide networks, are pushing to multigigabit rates in backbone links and to hundreds of megabits delivered to equipment ports.
The extension of telecommunications and cable-TV distribution of fiber-to-the-curb networks and the merging of telecommunications and home entertainment video are calculated to drive the dynamic proliferation of longer singlemode links from a few hundred meters to a few kilometers. These moderate-distance, very high data-rate applications will depend almost entirely on singlemode fiber and connectors. However, the rapid expansion of singlemode connector quantity will be partially offset by average price declines.
The North American market for multimode connectors is estimated to expand from $68 million in 1994 to $171 million in 1999, and to $383 million in 2005 (see Table 3). This expansion covers multimode connectors used on cables and installation apparatus, in nonproduction usage such as research and development and upgrade and inventory change adjustments. It also includes the connectors and receptacles used in optoelectronic modules and optical components, such as transmitters, receivers, transceivers, amplifiers, couplers and switches. Moreover, the estimates only encompass North American imports. ST and ST-compatible connectors will likely remain the leading multimode types.
In the past, the dramatic surge in the use of singlemode fiber for long-haul and interoffice cabling had little effect on multimode fiber demand. On the other hand, short-distance networks, such as for premises data networks, intra-enclosure applications, and subscriber distribution applications, are growing rapidly and have proliferated to the point where the higher loss of multimode fiber is tolerable.
Even though multimode fiber is more expensive than singlemode fiber because of costly preforms, the difference becomes diminished relative to other higher network costs. The larger core of multimode fiber--more than an order of magnitude larger diameter than singlemode--however, facilitates interfacing and interconnection. These attributes permit the use of less-expensive connectors, which are specifically designed for installation by less-skilled technicians in less time.
For vehicle, intra-enclosure and some local area network (LAN) applications, which require the high-volume production of identical harnesses, a manufacturing trend is toward inexpensive connectors that are factory-attached by automated machinery. Leading suppliers in these high-volume interconnection solutions include AMP Inc. and Molex Fiber Optics Inc.
Various types of multimode connectors include ST and compatibles, SMA, SC, D4, adapter/couplings, multichannel, military specification and others.
In general, singlemode connectors cost more than multimode connectors. Singlemode joints demand tighter tolerance dimensions, higher dimensional stability of the connected parts with respect to temperature and more skilled labor needed for installation, mainly because of a smaller fiber core diameter. High-performance, singlemode connectors typically use imported ceramic ferrules, which are usually the most costly part of connectors.
Because of increased user demands for low-cost connectors, manufacturers are improving their processes for faster termination and better polishing. Suppliers such as AMP offer connector types with no epoxy, and 3M provides hot-melt connectors that come preloaded with an adhesive that just needs heating. These types of connectors are especially attractive to independent cable assemblers and building installers who value fast assembly time.
Some connector manufacturers have reduced their connector parts count by a preassembly process, thereby aiding in faster field assembly. There also is a strong industry trend toward a greater percentage use of cable assemblies with connectors attached at the factory or by an intermediate supplier, rather than during field installation.
One reason is that the requirements for high-reliability, Bellcore-qualified parts have not changed. Consequently, more users are choosing factory-assembled parts over field assemblies as factory-tested connectors have proved to be more dependable. Leading suppliers of factory-assembled connectors, such as Lucent Technologies and Siecor, report that this segment of their business is steadily growing, and is currently 20% to 30% of their total volume.
Market phase changes
The fiber-optic connector field has moved through two market phases and is now entering a third. The first phase consisted of modifying existing radio frequency (RF) and cylindrical multipin connectors to accommodate optical feedthroughs. At that time, leading suppliers were strong in the electronic connector field.
The second phase consisted of designed-for-fiber connectors, led by AT&T`s (now Lucent Technologies) biconic connector, followed by Nippon Telegraph & Telephone`s FC/PC and SC connectors, and AT&T`s ST connector. Then, connector design leadership shifted from historical connector leaders to historical communications- system leaders. This shift resulted because telecommunications applications began to dominate the fiber-optic connector market.
The industry is entering a third phase of miniaturized, multichannel connectors optimized for intra-enclosure and premises fiber applications. Data communications networks are expected to strongly influence the evolution of these connectors. Early market leaders are Lucent Technologies (with the MAC-II connector) and Nippon (with the MT and MU connectors), but strong new competitors are expected to emerge. Some of these competitors are figured to build a base on licensed technology. The U.S. Advanced Research Projects Agency is also playing a key role in supporting the development of new optical interconnect technology.
Network use expands
Historically, fiber-optic network deployments have been strongly dominated by long-line networks such as interexchange, interoffice, submarine and cable-TV trunk. Now, however, the installation and usage of fiber-optic networks are shifting toward shorter length, more-complex, data-intensive LANs, subscriber broadband distribution architectures and military LANs. In addition, over the next decade, market sales are expected to focus on the expanding capacity of existing long-haul, fiber-optic networks by adding higher data-rate optoelectronics combined with wavelength-division multiplexing technology.
On the user side, business and residential communication service subscribers are all demanding more bandwidth. Also, these subscriber bases are opting for greater service similarity, with video increasingly penetrating the office environment and the computer increasingly penetrating the home. These trends are also being accelerated by the movement toward telecommuting.
The strength of bandwidth demand is tempered by cost. Due to optoelectronic technology advancements and increased deployment volume, the cost of bandwidth per gigabit-kilometer is projected to decrease rapidly. As costs drop, more subscribers are anticipated to increase their bandwidth contracts. Also, the value of services available through greater bandwidth is figured to increase strongly, as perceived by subscribers. These trends will probably lead to strong demand, supported by subscriber willingness to pay for rapidly increasing bandwidth capacity in business premises, metropolitan, regional, national and global networks. u
Stephen Montgomery is vice president and chief operations officer at Electronicast Corp. in San Mateo, CA.