Only three carriers will remain in Europe

At July's WDM & Metro Optical Networking conference, independent consultant Gzim Ocakoglu raised some provocative points about the painful implementation of DWDM in metro networks in the aftermath of pan-European carrier consolidation.

'Determining whether there is still a business case for implementing DWDM in the metro network" was the provocative title of Ocakoglu's presentation at Cannes. He also gave an overview of metro DWDM investments in Europe so far and a startling summary of the substantial consolidation of pan-European carriers - so far...

"Consolidation is not yet over," he said. "Ultimately, there will be only three or four major pan-European players left."

During 2001-2002 there were very few optical network investments. Deployments of metro DWDM by pan-European and large national players was limited, while activity in dynamic optical networking was severely reduced. On the positive side there were announcements made by Tellium for Cable & Wireless and Dynergy, and by Ciena for Telecom Developpement in May.

Ocakoglu also noted that, despite the capacity glut leading to bandwidth price drops, there is still 60-80% backbone traffic growth in pan-European networks. LambdaNet, for example, has actually tripled its IP traffic in Europe.

The current reality is that, while there are some pan-European operators that are fibre-rich in metro (such as KPNQwest), others are fibre-thin (such as Flag Telecom, which has a limited number of fibres and has therefore turned to DWDM). Beyond these categories yet others still do not have their own metro reach.

Access infrastructure is still far from complete for national operators. The number of active ADSL lines in France, for example, is expected to grow from 1m to 5m by 2005. So, Ocakoglu feels that there is no real bandwidth glut in the metro domain.

In the meantime, the consolidation of operators is leading to surviving carriers buying the assets of failed carriers to extend their reach, leading to the integration of networks where the types of nodes and routing are not necessarily the same.

Consequences of consolidation
"The consolidation of operators is hitting overall spending because of the presence of existing, redundant or complementary assets, while the integration of assets will take time and money," says Ocakoglu.

However, the growth of broadband investment and access infrastructure for residential and business markets is having a positive impact on metro investments. For example, Deutsche Telekom will start deployment of SHDSL at the end of 2002; Easynet is offering SHDSL for the corporate market together as well as ADSL for the residential market; and NTL is offering broadband access (albeit via cable) to Internet service providers.

Market research firm RHK says that the optical metro market, which was USD380m in 2001, will re-emerge in 2003 (though in the second half!). This gives everyone "18 months to re-think their systems", Ocakoglu says.

In the meantime, key factors for the success of metro platforms are that they are: low-cost (less than USD11,000 per STM-16 wavelength in a metro ring, rather than the current from USD30-60,000); scalable; and future-oriented - incorporating re-configuration, optical switching, tunable lasers, and intelligent control.

Metro's current characteristics
There is still much SDH traffic in metro networks, Ocakoglu notes. For example, the aggregation of lower-order traffic (below STM-4) and the deployment of higher-order SDH systems; the combination of wavelength traffic (STM-64 and STM-16 lambdas) and the mix of high- and low-order SDH traffic (sub-STM-1 to STM-4 and STM-16), and the deployment of DWDM systems and lower-order SDH systems.

Data traffic is characterised by the growing deployment of data interfaces - GbE, Fibre Channel, Fast Ethernet, ESCON, digital video - and the aggregation of specific data -Fibre Channel, ESCON, Fast Ethernet, or video muxing etc. Dedicated point-to-point access connections involve specific access interfaces and short-term customer demand.

Service providers' major metro concerns are therefore:

• future-proofing the network to scale with the traffic growth;
• making the business case work (metro DWDM needs to beat fibre plus SDH for TDM traffic as well as fibre plus optical IP solutions); and
• retaining the existing operational benefits of SDH - manageability, provisioning, and protection).