WDM markets to continue upward trend, but analysts recommend caution

WDM markets to continue upward trend, but analysts recommend caution

Analysts at Ovum Inc., an independent information technology, telecommunications, and new media analyst group in Burlington, MA, expect the global market for wavelenght-division multiplexing (WDM) to exceed $8 billion by 2005. The main driver for WDM today is the need to increase network capacity and relieve fiber network congestion resulting from an explosion in telecommunications traffic, particularly data.

The report, WDM: Global Strategies for Next Generation Networks, suggests that a significant chapter of the WDM story will be the transition of telecommunications networks toward all-optical networking technology. That, says Ovum, has profound implications for how next-generation telephone company networks will evolve, which in turn will dramatically affect the cost of transmission and the development of high-bandwidth services.

Despite the expected success of WDM in the future, Ovum warns that market hype is currently running ahead of market reality for this technology. Analysts are concerned that equipment vendors may be exaggerating product capabilities and market size to cash in as telephone companies prepare networks for the next century.

Much work remains to be done before the benefits of all-optical networks are realized, according to Ovum analysts. The concerns lie in the immaturity of the technology, which means there are still significant barriers to overcome as WDM evolves over the next decade. These barriers include the lack of network-management and performance-monitoring capabilities for WDM technologies; a need to understand how WDM will interact with other network technologies; immature standards, combined with a slow standardization process that is hard pressed to keep pace with market developments; and proliferation of proprietary systems, which makes interworking between networks and vendors difficult.

Ovum also points out that WDM`s successes thus far have been mostly limited to point-to-point long-haul terrestrial and submarine links. But improvements in the price and functionality of WDM will make it a cost-effective option on shorter links in metropolitan and access areas of the network. Coupled with an increasing demand for bandwidth, this cost-effectiveness will drive market growth over the next decade.

Ovum`s complete report is available at a cost of $3150 by contacting Ronald Serio at (800) 642-6886, (781) 272-6414 ext. 11. Also, e-mail: rfs@ovum.com.u

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