Hurry up and wait: Tunable lasers and filters see a delayed market
Emerging applications are expected to propel the broad tunable-laser market to more than $500 million by 2005. However, wide adoption into networks has been delayed because many applications are expensive and in the early stages of development.
by Tom Hausken
Tunable lasers and filters are facing something of the same challenge today as transistors did years ago. There is widespread agreement that the use of these tunable elements would provide many advantages over existing fixed-wavelength lasers and filters in emerging telecommunication networks. But, like transistors before them, they remain too expensive for widespread adoption into systems. To achieve more widespread use, new, compact tunable lasers and filters must be incorporated into applications in which they can bring an immediate advantage. Even adoption of these new devices into some initial applications has been delayed.
Several factors are responsible for the delay. First, the technology itself is only just emerging from R&D labs. A number of companies are racing to bring new approaches to tunable lasers to the market. Some have been qualified by equipment vendors, while others are just getting started. But equipment vendors have not always been satisfied with results so far. Tunable filters are at an even more formative stage. While the industry has called for years for an all-optical wavelength converter device to translate channels from one wavelength to another when connecting through an all-optical crossconnect, wavelength converter devices are still essentially R&D samples.
Second, if the equipment vendors are hesitant to introduce a new technology into their systems, carriers are just as hesitant to incorporate new applications into their networks, especially as the industry endures its worst downturn ever. Carrier revenues are declining, and capital expenditures are being cut dramatically. Incumbent carriers are settling into their more familiar conservative style. Upstart carriers are pulling back, or entering bankruptcy. There is little interest to invest in system upgrades, even one that promises to reduce operating costs. The current situation makes it even more important that tunable lasers find a compelling first application.
Tunable lasers have been used for years in test-and-measurement systems. The performance of these optomechanical external-cavity lasers is impressive, but some high-end subsystems can cost as much as $75,000. These lasers are the "Rolls Royces" of the industry, and will remain so. Experience gained on these lasers, however, has led suppliers to develop lower-cost and miniaturized versions for wider acceptance, along with other new approaches.
And, while it may seem hard to believe today, some early WDM systems used tunable filters to align multiplexing and demultiplexing elements with the uncertain and varying central wavelength of early fixed-wavelength lasers. These early systems, installed only seven years ago, could not rely on filters with fixed central wavelengths to successfully thread a channel from the source to the receiver for the life of the system. The tunable filters in this application were quickly supplanted by fixed-wavelength filters of ever-increasing quality, but systems designers are again considering tunable filters in WDM systems for other applications (see "New applications open new markets," p. 15).
The Devil is in the Details
The possibility that all fixed-wavelength lasers would be replaced with a universal tunable element is a particularly interesting emerging application because it would mean that tunable lasers and filters would gain especially large unit sales. Such large sales volumes in tunable optics would lower the price of lasers. While tunable lasers will always be more complex and at least somewhat more expensive than their fixed-wavelength counterparts, large unit sales would go hand-in-hand with lower prices for the tunable lasers themselves (see "The paradox of spare line cards," p. 14).
Tunable lasers and filters are far from this goal, however. Even examining the issue from several perspectives, it is clear that prices must come down dramatically to be considered for such a widespread application. However, without such a promising application to move manufacturing forward, prices are unlikely to decline rapidly.
The situation is very much like the situation that transistors were in decades ago. The transistor, despite its obvious advantages, was not an immediate success in the marketplace. Early transistors were too expensive to replace tubes in electronic circuits. Without a niche application to raise unit sales and bring down the cost of manufacture, transistors would remain locked out of the market. Early applications were limited to missile guidance and satellite systems in which transistors offered something that tubes could not—miniature and lightweight electronics for an application that was not cost sensitive. Only later did the transistor go on to become orders of magnitude less expensive than the electronic tube.
Other less ambitious emerging applications will have to pull the sector forward. Each offers its own interesting opportunities. Indeed, our examination of a "most-likely" scenario indicates that the market could be greater than $500 million by 2005 (see figure, p. 13). This total market includes an array of devices, including tunable lasers, tunable filters, wavelength converters, wavelength stabilizers (necessary to operate the tunable lasers), direct or integrated modulation, and electronics to control the tuning. The market for tunable lasers, including test-and-measurement applications, is much smaller.
The path ahead includes interesting challenges, as well. Systems designers need time to settle on approaches. Products need to be qualified. Carriers must be willing to try new ways of operating their networks. But in these difficult economic times, they are not in the mood.
What are suppliers to do?
Suppliers are already responding by cutting spending in hopes of riding out the current downturn until sufficient sales can materialize. Larger companies like Agere Systems, Alcatel Optronics, Fujitsu Quantum Devices, and Nortel Networks can leverage larger corporate R&D and financial assets until a turnaround. Companies like Agility Communications have received additional funding to stay afloat. Startups like KaiLight Technologies, Fiberspace, and Princeton Optronics may have started late enough to adopt lean business plans from the outset, and with the proper expectations may ride out the downturn.
Tunable lasers, filters, and wavelength converters are coming, but at a pace that is consistent with the current downturn in the market. When the unit sales do finally turn a corner, components suppliers with proven technologies and who are still standing can expect great rewards for their patience.
Tom Hausken is director of optical communication components at Strategies Unlimited, 201 San Antonio Circle, Suite 205, Mountain View, CA 94040. He can be reached at firstname.lastname@example.org.
The paradox of spare line cards
Tunable lasers can seem to be their own worst enemy. For example, as lasers can be tuned over a wider range, their utility as a universal spare becomes more compelling—more spare cards can be eliminated. But, fewer spare cards means fewer laser sales.
The figure illustrates this paradox. The dots at the left represent the primary transmitter cards for each of 11 wavelengths. The center group represents the spare line cards; in this case, two spares for every ten cards of each wavelength. The universal spares using tunable lasers are at right, replacing the spare cards for a large number of wavelengths.
Even so, the use of tunable lasers in universal spare line cards promises immediate rewards for carriers and equipment makers, unlike some applications that will take years to materialize. It is an application the market needs before new miniaturized tunable lasers can get off the ground.
New Applications open New Markets
Equipment vendors are considering all of the following emerging applications for tunable lasers. Some vendors have already introduced products with tunable elements.
- Spare line cards. This widely touted application aims to use a tunable laser in a universal spare card to reduce the number of expensive line cards needed to back up failed cards.
- Shared channel protection. Tunable lasers and filters can be used as "hot" spare channels in case of a failed transmitter or receiver card.
- Channel monitoring. Tunable filters are used in optical spectrum analyzers to remotely monitor the state of complex and automated systems.
- Dynamic provisioning in optical add/drop multiplexers. This exciting opportunity would allow carriers to reprovision their networks remotely and rapidly, making networks more responsive to customer needs, saving on operating costs, and bringing customer revenue sooner to carriers.
- Wavelength conversion in optical crossconnects. New transparent networks will need tunable lasers and wavelength converters to make photonic crossconnects more effective against wavelength-blocking situations.
- Optical packet switching. Tunable lasers may replace multiple sources in passive optical networks (PONs), and perhaps in yet more speculative applications as packet routers in very high-data-rate systems.
- Inventory control of in-process components. This is the most ambitious application, aiming to replace all fixed-wavelength lasers with a universal tunable element, to save on the cost and risk of maintaining numerous versions of products.
- Dynamic channel or band equalization. Tunable filters can be used in optical amplifiers to equalize channels or bands to balance the network.