Few visitors, fewer freebies but no lack of innovation

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This year's European Conference on Optical Communications in Copenhagen, Denmark was attended by delegates from over 50 countries, with subjects covered including protection of intellectual property, diversification and business survival in the present economic climate, as well as a number of alternative fibre technologies.

One of the opening sessions saw the IEEE's Lasers and Electro-Optics Society (LEOS) attempt to guide those optical start-ups about to enter the fray and also provide a helping hand to delegates seeking to consolidate their businesses in difficult times.

The protection of intellectual property was a key issue in this session, which was opened by Johan van der Linden, who is responsible for optoelectronics-related applications at the European Patent Office in The Hague.

"The first thing a bank or venture capitalist asks to see when you're trying to raise cash is your patent portfolio.

"Patents can now make up 90% of a company's tangible assets in today's knowledge economy," says Van der Linden. "However, there is still confusion as to how a company should protect its intellectual property (IP)."

In the USA, the general rule is that, if you've invented something, then it's yours. You usually have a year and a day to patent it, even if you have previously made it public.

This "first to invent" rule compares to the "first to file" rule across Europe, with companies being able to file in one country and then being given another year to file in every other country.

Van der Linden said an alternative to filing in a single country first and then other individual countries was to seek a European patent with his organisation. This would cover 24 countries and, he said, cost less than filing in just three different countries separately. The average cost of a European patent for 10 years is EUR30,000, he says, which includes translation for each country, legal fees and registration fees.

Van der Linden said that, despite the economic downturn, the number of patent applications was still increasing, having risen by 60% over recent years.

The issue of patent infringement also came to the fore, with one US delegate in the audience claiming that US optical companies had informed their engineers not to look at patents during their work, because there was a "three times damages" rule if companies "knowingly infringed" others' patents when developing new products.

Van der Linden said there were no European laws covering patent infringements and it was up to individual countries' courts to set penalties.

As for the existing financial difficulties potential start-ups now face, the problem was summed up by Michael Kjaer, chief executive of fibres company Crystal Fibre of Denmark. "In the first half of 2000 there was EUR15bn in venture capital for technology companies, but by the first half of 2002, there was only EUR3bnUAnd what is now left is needed to keep the existing firms going."

If firms were to be successful, said Kjaer, they must make sure they have the key competencies on their payroll: design, patenting, production, measurement, packaging, and sales and product management. But, even in a downturn, firms are struggling to find all these skills at the same time, says Kjaer, and that they should expect to struggle in their hiring.

As well as making sure they have the right people to survive, Kjaer also recommended that companies could potentially reduce their "cash burn" by diversifying from their core products. Existing customers could be the source of new ideas for new products that could generate new sales for less patient financial backers.

However, such diversification can mean that a company becomes less focused on what it was set up to do. This can create tensions among the workforce, warns Kjaer.

On the question of increasing sales from intellectual property, Wouter Deelman, CEO of ThreeFive Photonics in The Netherlands, said that engineers had to be dragged out of their labs to come up with new ideas for patents.

ThreeFive had previously tried offering all sorts of incentives to engineers to come up with new technologies to patent, he says, but had failed miserably as a result of engineers not feeling they had time to spend on the process. It was only when ThreeFive had taken all its engineers to a hotel for the weekend that the company was able to come up with 33 patent ideas, some of which will eventually generate extra funds for the business, he said.

In a keynote speech the following day, Anders Olsson, chief operating officer of US-based CENiX, attempted to give delegates some pointers to how they could overcome the market gloom, but not before he followed others in painting a difficult picture for the optical industry.

"We have seen 500,000 jobs go, EUR2 trillion slashed from market cap, a 45% cut in capital spending, venture funding down by 70%, and engineers becoming financial liabilities when once they were once worth EUR10m each," he said. "Maybe all this is down to greed and wishful thinking.

"There are too many companies, the market for revolutionary products has virtually disappeared, and most venture capitalists don't take risks, they just copy what other VCs do."

"You may have been worth EUR100m not so long ago, but if someone now offered you EUR5m, you'd have to take itU it's over, there is no Nortel out there who will offer you EUR1bn just because you have demonstrated a new protocol," said Olsson.

"In terms of current product prices", he said, "maybe the problem is that our industry is run by engineers rather than marketers. You can get Americans to pay more for a bottle of water than they do for the same amount of petrol, and you can't get customers to pay for a product that enables you to access all the data that has ever appeared."

But, willing delegates to take a slightly more positive outlook, Olsson said: "There is light at the end of the tunnel: data traffic is still doubling every year; there was 100% growth in US broadband usage over the last year; and pirates can't wait to do the same with video as Napster did with music, but they need the networks to do it."

Markets to be in, according to Olsson, are the EUR700m 10Gbit/s module market, tuning products, hybrid integration platforms, and waveguide amplifiers.

Among the many technical issues covered during the conference were cheaper fibre for residential users and peer-to-peer optical networking.

Ton Koonen of the COBRA Institute at the Eindhoven University of Technology called for the industry to consider polymer optical fibre (POF) to deliver more powerful broadband to homes and small businesses.

POF is much cheaper than silica fibre and much more powerful than traditional coaxial cable, he said. Tests have shown that Gigabit Ethernet over POF to the home could be achieved over 1km. Also, POF is very modular, allowing additional desktops and wireless units to be easily accommodated.

Koonen said the real issue surrounding POF was not material costs but installation costs. The industry must arrive at price points which allow competitively priced access boxes.

Optical peer-to-peer technology was advocated by Scott Campbell of the Communications Research Centre in Canada.

The Canadian government is considering such a solution for research and educational establishments. It was pointed out by someone in the audience that Boeing is already building its own internal optical communications network (see feature [Fibre networks:coming to a premises near you]), and that peer-to-peer would be ideal to complete collaborative research and design in such an environment.

Campbell agreed that there was no reason why optical peer-to-peer could not be adopted by businesses too, and that the technology was easier to set-up than existing virtual private networks and more flexible than client/server solutions.

While the continuing downturn undoubtedly concentrated minds at this year's ECOC conference, there was very much a determined will to help take this industry forward.

Antony Savvas
LWE Contributing Editor,
and Networks and Telecoms writer

Antony Savvas is a freelance networks & telecoms writer. Email: a_savvas@yahoo.co.uk