Corning predicts continued growth in worldwide fiber demand
By ROBERT PEASE
Although company officials are quick to say that market forecasting is not their primary business, when Corning Inc. presented its future outlook on worldwide fiber demand at the Optical Fiber Communications Conference in San Diego, CA, a large audience listened and took notes. According to the fiber-optic cable manufacturing giant, the 1999 growth in global demand for fiber and fiber products is expected to be stronger than last year.
Demand for optical fiber in 1998 totaled more than 50 million km and represented an overall growth rate of approximately 10% compared to the previous year. While this figure was lower than expected, Alan Eusden, vice president and general manager of Corning`s Telecommunications Products Div., said the company expects growth to be stronger in 1999.
The main driver will be the demand for increased bandwidth which, in turn, is being driven by the world`s insatiable appetite for data capacity. Additionally, an increase in deregulation around the world is yielding an increase in the number of global carriers. Opportunities in fiber are no longer limited to long-haul carriers and undersea networks. The introduction of fiber into the metropolitan area and even the premises space is further supporting the strong fiber market. In fact, Corning predicts market applications to increase by 150% in the metropolitan areas, more than 30% in long-haul networks, and close to 30% in undersea systems.
Economic slowdowns in some countries, particularly in Russia and parts of Asia, proved one of the main obstacles to global fiber deployment in 1998. The demand was also slowed by an ample fiber supply and fierce competition in the industry. But despite these obstacles, opportunities continue to present themselves for fiber-optic technologies and applications.
According to Eusden, the theme for 1998 was globalization. "In 1982, the optical-fiber industry deployed about 100,000 km of fiber," said Eusden. "Since then, we`ve seen about a 10% annual growth through 1998 to about 50 million km. Future bandwidth demand will require higher-fiber-count cables. Carriers are already deploying more capacity than they need for themselves with the intention of selling, leasing, or trading capacity."
North America continues to lead the way in worldwide market demand with a share of approximately 20% (see Fig. 1). Eusden divided the North American market into long haul, cable television, local-exchange carriers (LECs), competitive local exchange carriers (CLECs), premises, and an "other" market segment that included utilities, exports, intelligent transportation systems, and other smaller players (see Fig. 2).
In 1998, the long-haul carrier segment represented 15% of the total North American fiber market and deployment was up by 50%, making it the strongest growth segment. Cable TV, representing 25% of the market, showed a 10% growth rate with more than 5 million km of fiber deployed. Another 25% of the market was held by LECs, with deployment increasing by 10%, representing more than 5 million km. Much of this growth is a result of second lines being deployed to accommodate high-speed Internet, not to mention a significant increase in fiber-to-the-curb architectures. Eusden says local carriers have put fiber close to 2% of all homes in the United States.
The CLECs made up 10% of the market with more than 2 million km of fiber installed. This market grew by more than 45% in 1998 and can expect continued strong growth in 1999, Eusten predicted. Since 1996, the number of CLECs has grown from 300 to 3000.
The North American premises market appears to be tougher to characterize, with a 5% market share and a prediction for slowing growth. Yet new technologies and a growing army of fiber-to-the-desk advocates make it a market that deserves attention.
"Fiber-to-the-desk is an elusive, yet promising, piece of the premises network market," said Eusden. "The entire industry is looking out for it. It could well turn out to be our `Holy Grail.`" Yet, by extending optical fiber all the way to the desktop over centralized networks, maintenance can be simplified and bandwidth bottlenecks can be avoided. Any increase in this market may be negligible in 1999, but industry analysts predict this segment will expand significantly over the next three to five years.
The final segment includes exports, utilities, military, and other smaller market segments. These combined markets account for the remaining 20% of the overall fiber market. The prediction for 1999 is for a continuation of 1998 patterns, in which deployment grew by 20%. Utilities led the way in this area, with a growth rate of approximately 30%.
Outside of North America, Eusden reported, the worldwide fiber demand actually slowed in 1998. Regions most affected by the economic crisis showed the most significant decreases.
Japan showed a 25% decline in fiber demand, much worse than anticipated. NTT`s reorganization caused construction delays and the market was further affected by competition and recession. Japan is expected to rebound in 1999. Latin America is also expected to rebound somewhat in 1999 after a 40% decrease in 1998. Privatization and political struggles were largely responsible for the decrease, but Eusden believes better days are ahead for this region.
Other Asian areas, including China, South Korea, and India, showed an overall 10% increase last year. The continued strength of the Chinese market helped to offset an economic crisis in South Korea and conflict in India. Increased growth in this area is forecast for 1999.
Meanwhile, Western Europe continues to battle regulatory issues, but a growing demand for bandwidth resulted in a net 5% growth in 1998.
"In Europe, we expect to see an emphasis on building new long-haul networks and connecting major metropolitan markets," says Eusden. These factors should lead to more robust growth in European fiber demand this year.
The rest of the world, particularly South Africa, experienced 40% growth but is expected to slow in 1999. South Africa soared (experiencing a growth of 200%), experiencing significant expansion and investment in its telecommunications infrastructure. Meanwhile, Russia merely crept forward, although it is expected to increase its market in the near future.
Studies have shown the demand for bandwidth in undersea cable doubles every two years. According to Kevin Able, commercial operations manager for submarine fiber at Corning, one source estimates that the undersea bandwidth requirements over the next five years will increase to as much as hundreds of terabits per second. With industry deregulation, new methods of electronic commerce, and the explosive growth of the Internet in both commercial and residential applications, that number is expected to climb even higher.
By the year 2000, industry analysts predict that 1.7 million km of fiber could be installed in major global undersea networks. Although some fiber-optic cables are specifically designed for undersea networks, not all undersea cables require special fiber.
"Fibers primarily used in terrestrial applications also do quite well in submarine applications," said Dale Niebur, product line operations manager in Corning`s Telecommunications Products Div. "This is often forgotten."
Last year, the long-haul submarine fiber-optic cable market remained strong, showing very significant growth in the amount of fiber being deployed. In fact, nearly three times the volume of fiber was deployed last year in long-haul undersea systems compared to 1997.
Eusden said increasing activity and strong volumes are expected to continue into 1999. Several major undersea players have announced bandwidth increase initiatives and technological upgrades in their transoceanic cables.
Corning concluded that the combination of greater bandwidth demand, increased Internet usage, the expanding number of telecommunications carriers and system developers, along with the impact of deregulation, both in the United States and internationally, will continue to drive fiber deployment. The company anticipates worldwide fiber demand to remain strong in 1999, showing an approximate 20% growth rate. q