In the field of optoelectronics and optical communications, Sweden consistently punches above its weight. A combination of geography and traditional curiosity, on the one hand, and technology initiatives, on the other, explain Sweden's success.
By Matthew Peach
The great variety of optoelectronics-related companies in the Stockholm area is mainly due to a visionary research collaboration initiated almost 15 years ago involving both academia and industry, contends Wavium's Claus Popp Larsen.
Three key Stockholm-based organisations with early and influential interests in optical technologies are Ericsson, Telia and Sweden's Royal Institute of Technology (KTH). These have traditionally had constructive working relationships and generated a steady exchange of people and ideas. Larsen believes that virtually every opto-start-up during the last decade originates from one or several of these organisations.
In the late 1980s the Swedish government funded a strong opto-community at KTH, partly supported by Ericsson and Telia. Research in components as well as systems was carried out. A few years later Ericsson, Telia and KTH started attending the European RACE projects supported by the EU commission.
These research projects evolved in the mid-1990s into the RACE Multiwavelength Transport Network project, which was headed by British Telecom and also joined by a handful of other European organisations. The MWTN project demonstrated the world's first all-optical network deploying optical switches and optical add/drop multiplexers and controlled by a network management system. This was one year before the Americans demonstrated something similar.
Ericsson supplied the optical switches for the project and was by then among the world leaders in these components. Generally, a tremendous expertise in both systems and components was concentrated in Stockholm, and Ericsson started the development of commercial components and systems. However, at the same time GSM telephony was growing into an enormous cash cow for the company, Wavium's Larsen argues, and the optical business never got the same attention by the top management as the mobile systems and handsets.
In the mid-1990s, a number of companies were founded - mostly by former KTH employees who were involved in the early research programmes. In 1998 a group of engineers from Ericsson formed Qeyton (making optical metro networks), which was acquired by Cisco in 2000 for close to a billion dollars. And at about the same time ADC acquired Altitun (a company making tunable lasers that had come out of KTH in 1997) for around the same amount of money.
Virtually everyone in the opto-societyofsociety community people personally in either Qeyton or Altitun, and some realised that pursuing a good idea could be very successful; it was not only in the US these things could happen. And even some of the other start-ups started generating revenues. Meanwhile, Ericsson's top management still didn't prioritise the opto-area, and many engineers were ripe for joining a start-up. So around the top of the "telecom bubble" many new high-tech opto-companies (both developing systems, subsystems and components) were founded, most of them by former Ericsson employees, some with KTH background, and one, Wavium, was spun off from Telia.
Stockholm-based Wavium, founded in 2000 by Carl Wickman (CTO), Stefan Larsson and Sten Hubendick, is a telecoms company focused on optical fibre networks. Larsen says, "We showed product for the first time at last year's Nordic Telecom Week, and we are currently developing forms of cooperation with customers and partners to enhance our systems."
The idea was to build highly flexible networks (Fig.1) based on small optical crossconnects (OXCs) handling whole wavelengths, and everything should be controlled by a sophisticated management system (Fig. 5, overleaf). The first products were released early 2002 including the management system, an extremely compact 16x16 OXC with electrical switch core, and a CWDM transmission system capable of supporting up to 8 channels. Furthermore, terminal multiplexers (for point-to-point transmission) and add/drop modules enabling rings will be released shortly. A larger OXC is to be released late this year.
Larsen says, "We have started targeting the Scandinavian market to secure reference customers. This is partly because Scandinavia is our home turf, and partly because the Scandinavian countries have a relatively well-developed fibre-infrastructure carrying high-bandwidth services. The next step will be obtaining European customers before eventually moving towards the US and Asia.
Southern Sweden and Stockholm's start-up frenzy has considerably calmed down now, and instead the engineers are busy working on prototypes and refining products, and so far all of start-ups have survived. An interesting point is that there is only little overlap in products between the companies in the Stockholm region, so they are mostly complementing each other rather than competing.
Telia International carrier
Mats Krigh, network division director of operations and maintenance explains how Telia International Carrier, a subsidiary of the former national PTT Telia AB, is operating in the deregulated landscape.
Telia has been so named since 1994; before that it was Televerket - the government-owned PTT. Now it is 70% owned by the state and 30% by the public - a popular share amongst Swedes.
For 150 years Telia has developed, enabled and refined a wide range of communication solutions. In the last three years alone, the Telia subsidiary Telia International Carrier has established a global infrastructure with a network of underground highways where data, images and voice travel between people, companies and continents, just like the Vikings used to travel the world. The network stretches from Russia in the East to California in the West, from Telia headquarters in the Scandinavian IT-region to Spain in the south.
Called the Viking Network, it is Telia's foundation for the global communication of the future.
Says Krigh, "In particular, Ericsson and Telia have enjoyed a deep working relationship. However, since deregulation the relationship has been getting weaker. This has happened mainly because Telia experienced cost pressure. In other fields, such as for telephony and mobile switching, Ericsson continues to be an important developer but generally it is now just another supplier to Telia."
Telia had quite a lot of competition in the metro network to provide telecoms to smaller companies. This put pressure on Telia to develop better solutions for network management.
Optical fibre developments started to develop in the mid-1980s. Telia was an extensive user and developer and the reason was simple: Sweden is a very developed country. A relatively modest population of nine million people live in a large landmass of 450,000 sq. km. So the needs for optical transport are strong.
Sweden started to use the low attenuation window (1550nm) early. And Telia learned how to build networks that was more because of its demographic position and advanced state of development.
Companies other than Ericsson supplying Telia started in around 1985. Initially (and pre-deregulation) these were foreign companies such as Fujitsu for high-speed applications but Japan was headed towards the SONET protocol, while Sweden was moving towards SDH. Telia started to use SDH in 1992 so supply from Japan dropped off.
After deregulation in the mid-1990s, other companies such as the national railway company (Ban Eerket) and Telenovia came into the carrier market so the suppliers that used to supply Telia had new customers. There had been a trend for foreign companies to break into the Swedish market, then, post deregulation, Swedish companies started to rise in the IT boom of around 1998. Many of these companies have roots in Ericsson, such as Lumentis (see page 14).
"Sweden started early with analogue solutions," says Krigh, "And also with mobile telephones. This has not only been due to deregulation but also because of the culture in Sweden. Interest in communication is high. We started to use the Internet early. The Swedes have traditionally been explorers.
"We had an extensive SDH network before DWDM started. We have a dense network, especially in relation to the size of the population. Also, we started IP routing and local switching early. Banks for example have been able to use IP since 1997/1998.
"Telia is still an incumbent in Sweden and what's important for us is that we haven't spent too much on 3G licences; the state did not require a fee but we had to show our plan. 3G licences were not owned by Telia; we made a partnership with new mobile telecoms company Tele 2 therefore it has been pretty economical for us, with lower debt. However we have similar problems to other European carriers in terms of market share development.
Recently Telia has acquired its Finnish counterpart Sonera. A significant advantage of this deal is in looking to merge the networks. This will give access to more customers as well as developing the mobile and fixed network customers. Telia also wants to be the lead supplier in the Baltic states including Latvia, Estonia and Lithuania.
"As for new projects," says Krigh, "the company is in the process of making internal business more efficient - for both domestic and international carrier aspects. There's currently a big shake-out in the companies trading in the international carrier market so there's a lot of price pressure.
"We have a high development rate today and we are launching new products for IP services and the Internet, such as IP-VPN products. TIC is also in the process of metro networks to make the footprint denser and to increase the volume of data and voice for international services."
Also located in Stockholm, Optillion designs, develops and manufactures fibre-optic transceivers (Figs. 2 & 3, below) for 10Gbit/s, enabling high-speed data and Internet communications for metro and enterprise networks. Optillion's first line of products available this year is targeted at the 10Gbit/s Ethernet market. Based on the same technology platform, Optillion has initially developed two transceiver products compliant with the XENPAK industry standard.
Products are intended for data aggregation and switching, trunking in metro networks, point-to-point links and test systems for the 10Gbit/s Ethernet market. Typical customers would be network equipment suppliers and manufacturers. Optillion is currently working with three target markets: the LAN market, in which the end customers are enterprises; the MAN markets, with the service providers and carriers as end-customers; and the emerging Cable TV market, in which the end customers are Cable TV operators.
CEO and President Dr. Patrik Evaldsson (Fig. 4, overleaf) told Lightwave Europe, "The large telecom companies such as Ericsson and Telia have always had strong research and development activities. Participation in the European Union-funded programs such as RACE and ACTS have also enabled development of new technologies.
"In the early 1990s companies like Ericsson led the development of optical networking in conjunction with other European companies in the RACE project MWTN.
"The Swedish government did put money into universities and research institutes through NUTEK and other organisations. This resulted in strong research at KTH in Stockholm and Chalmers University of Technology in Gothenburg. Many of the talented people in these universities are now the core competence in the fibre-optic companies in Sweden," Evaldsson said.
Optillion's first line of products are targeted at the 10Gbit/s Ethernet market. The TOP 3010 is a fibre-optic XENPAK transceiver for 10Gbit/s Ethernet (1310nm) for link distances up to 10 km. Sampling now to companies selected among the Ethernet switch manufacturers addressing both the Enterprise LAN and the emerging MAN market.
Its longer-wavelength sister product is the TOP 5010, another XENPAK 10Gbit/s transceiver intended for 1550nm transmissions for linking distances up to 40km. Optillion says it will start sampling to selected customers in May 2002.
Both products are targeting the LAN/MAN market segments, with the TOP 5010 particularly focused on the MAN environment, given its longer reach.
Optillion has established its own automated manufacturing facilities that are dimensioned for flexible capacity ramp-up.
Considering market and opportunities, Evaldsson said, "We see that 2002 and parts of 2003 will still be very difficult. However, the underlying drivers are there for building out the capacity of the network. Therefore, the fibre-optic industry will exhibit healthy growth over the next decade. Now it is about weathering the storm and positioning oneself with the technology that will be needed when the market takes off.
"The driver today is not the technology itself, but what it can do for the customer. Equipment manufacturers must provide equipment that can reduce operator costs. This translates into for example software that allow them to easier manage and reconfigure the network. An example of this is MPLS and GMPLS. On the hardware side it means reducing installation cost and to have efficient mechanisms for protecting mission-critical traffic. Component manufacturers must move up the value chain and provide more integrated sub-systems. New manufacturing processes are important or technology that enables high volume manufacturing, since this will drive down the overall cost of manufacturing, installation and operation."
Radians Innova AB, headquartered in Göteborg (Gothenburg), to the west of Sweden's capital city, employs over 40 people, of which 50% holds a masters or doctor's degree. It is a privately-held company that has attracted major Scandinavian investors such as Investor, Innovationskapital and Industrifonden, as well as JDS Uniphase. Radians closed a new round on financing of USD3.7m in April 2002 that will secure further development.
The company supplies continuous tunable laser sources (TLS). Radians' main product line is its family of modular ECL-based laser sources, called Radians PICO, which are used as sources in test and measurement equipment. The PICO offers a combination of continuous wavelength range, tuning speed, accuracy and repeatability in a modular construction suiting the OEM sector.
Typical customers include both established manufacturers of fibre-optic test and measurement equipment, and start-ups. The value of the market for TLS used for test and measurement purposes in the telecom sector is estimated to about USD150m in 2002 or about 5-10% of the total fibre-optic test equipment market - which includes R&D, manufacturing, field and monitoring applications.
Radians was founded in 1978 as a spin-off from Chalmers University of Technology, Gothenburg, and started out as an R&D company in optronics. The company introduced one of the first continuously tunable laser source, InTun, on the market in 1988. The first modular TLS was introduced 1998. Radians has built its success on know-how and experience in optronics, integrating optics, micromechanics and electronics.
At OFC 2002 in Anaheim in March, Radians introduced an enhanced model, the PICO-E, including a version for the S-band. The modular PICO-E features a broader temperature range in a narrower cassette with internal vibration absorption, as well as microprocessor-based control electronics. Volume production for PICO-E for the CL-band will start in June 2002, and PICO-E for the S-band in September 2002.
The company's senior management has substantial experience in the high-tech telecom industry. Per Danielsson, was appointed president and CEO in June 2001. He was previously general manager for the digital products division at Saab Ericsson Space. Per holds a Masters degree in Electrical Engineering at Chalmers University of Technology.
Comlase AB, Stockholm, designs and manufactures pump lasers for optical fibre and waveguide amplifiers, for both metropolitan and long-haul applications. The company was founded in January 2001 by a number of international experts from leading-edge companies and academic institutions such as Ericsson, Spectra Physics, Asea Brown Boveri (ABB), and the Royal Institute of Technology (KTH).
Comlase is now developing cooled and uncooled pump laser chips and modules on an accelerated schedule leading to large-scale volume production, leveraging its internal competence as well as our close working relationships with external partners.
Comlase recently revealed its new type of pump laser. Comlase developed a proprietary method to treat the laser chip in the pump laser module, which prevents the intensive light from degrading the light-emitting surface. This gives manufacturers of optical fibre and waveguide amplifiers the opportunity to make savings of 50% or more and achieve significant reductions in amplifier size and power consumption, the company claims.
The range includes an uncooled 980nm pump laser in a mini-DIL module. In this laser the patented passivation method enables reliable operation over a wide temperature range. In addition to being highly cost effective, this module also only consumes around 0.5W of power.
"Small uncooled pump lasers will be key components for building the cost-effective and flexible networks needed in today's market," says Carsten Lindström, CEO of Comlase. "Our line of innovative laser products has gathered enormous interest in the market, and we are already sampling several strategic customers."
The compact mini-DIL module is the accepted standard for next-generation pump lasers. Pump lasers using these small, cost-effective packages will replace or complement existing pump laser technologies in optical amplifiers and systems worldwide.
Near neighbour Transmode Systems develops and delivers optical solutions for the metro edge networks. The design objectives are cost-efficiency and flexibility. Currently, the technology best suited to meet these objectives is CWDM (see Lightwave Europe, April 2002).
Transmode was founded in 1992, and spent the first years developing primarily media converters and building up a global customer base. The company has much experience in datacom and telecom networking, optical technologies and network management systems. Since 2000, Transmode has focused on CWDM as a key optical technology to fully exploit existing networking protocols. Transmode has been shipping CWDM systems since March 2001, introducing OADM in August 2001 and launching the first True Logical Ring products in November 2001.
The company recently appointed a new CEO Isaac Olasoko. Previously, Isaac was VP business development at Alcatel Europe.
Olasoko said, "In the early 1990s, Ericsson invested heavily in optical transmission systems and achieved a number of major technology breakthroughs. Ex-Ericsson R&D engineers decided to capitalise on these breakthroughs by starting their own optical transmission companies, of which Transmode is one.
"In Stockholm, Sweden, the city council began rolling out fibre in 1994 to serve the region's 25 municipalities via a city carrier, Stokab. City carriers operate local networks and compete with incumbents by leasing fibre or networks that belongs to a city. Insufficient space in the streets of Stockholm for several different operators networks and the disruption that would be caused if each operator were to dig up streets to lay fibre led to the creation of Stokab. Other cities in Scandinavia are now following suit."
Transmode Systems has become an associate member of the standardisation body ITU-T. "This will enable us to more closely follow and influence the standardisation work in the CWDM and related fields," added Olasoko.
Further than this, the company plans to expand its eight-channel CWDM system with eight more channels. This will enable customers to upgrade to 16 channels in steps of one or more channels without interrupting the existing traffic. Transmode expects to ship the first 16-channel systems in mid-2002.
Xelerated, Stockholm, is a fabless semiconductor company developing network processors, traffic managers and associated software for high-end networking equipment. The company's products can, for example, form part of routers, switches, firewalls, and load-balancers.
The company's first products, the Xelerator Network Processors and Traffic Managers, represent a unique offering on the market allowing system vendors to build flexible router and switch line-card solutions with a the ability to differentiate their products through extensive application programmability while maintaining guaranteed wire-speed performance. The chips can be used together or as stand-alone products, as the customer sees fit. Both chips are based on the company's novel architecture; the packet oriented pipelined architecture, known as Packet Instruction Set Computing PISC, which ensures a uniform programming environment and management method. In addition to the actual chip-set, Xelerated develops extensive software and development tools to simplify and speed up customers' integration into their own system solutions.
The company received its initial financing from Startupfactory (a Nordic venture capital firm based in Stockholm, Helsinki and Lund, investing in Nordic companies in the IT, datacom and telecom industries).
The market for global infrastructure equipment has in the past year seen a decrease due to the overall market downturn. Network processor units (NPUs) targeting high-performance networking equipment, however, are seen as a shift in technology, and many believe this sector will keep on growing. According to Semico Research Corp, this market is expected to reach USD3.3bn in 2005. In May, Xelerated launched its 10Gbit/s network processor offering, featuring three devices, the X10, the X10d and the X10q, with one, two and four 10Gbit/s ports respectively.
"Xelerated offers a high-capacity network processor solution that meets the rigorous demands of established system vendors by combining the much-wanted programmability with guaranteed wire-speed performance. We have seen that traditional approaches, such as RISC and configurable state machine solutions, are not viable for high-end systems," said Xelerated's CEO Johan Börje.
"Our offering can simultaneously handle functionality, such as ACLs, policing, statistics, multicast and load balancing - at wire speed. We already have Tier 1 customers signed up for the first samples, which will be delivered this summer. We are launching one of the highest-performance network processors in the industry, capable of handling traffic at speeds from 1Gbit/s to 10 Gbit/s and beyond," said Linley Gwennap, principal analyst of The Linley Group. "With the best port density on the market, these chips will be cost-effective in supporting feature-rich packet processing in systems such as metro, edge and core routers and switches," he said.
This brief tour of Sweden - or Sverige to the Swedes - revealed a wealth of talent and invention, but above all optimism about the industry. An example of Swedes making their own luck - beyond technical innovations - was in Telia's recent avoidance of getting too badly stung when the 3G licences were up for sale at inflated prices. Often, survival in this business is most easily achieved by some ingenious second-guessing of what the market will do next.