All-optical network technology helps drive DWDM component market upward

The market for dense wavelength-division multiplexing (dwdm) systems is the hottest topic in business today. A 65% annual growth in the market is expected over the next three years, according to dwdm System Components, a new market research report by Information Gatekeepers Inc. (IGI), a Boston-based consulting and analyst firm.

Trends

There are a number of trends influencing dwdm technology and painting a bright future for the dwdm network components market:

New products are being developed using new technologies and combined into new devices.

New technologies, including fiber Bragg gratings, plasma coatings, special lenses, lasers, arrayed wave guides, planar waveguides, and other devices, are being manufactured in dozens of ways.

Connectors and components are being manufactured with size, shape, and cost in mind. The cost of components is expected to drop anywhere from 10% to 50% annually, depending on demand, quality, and competition.

The all-optical network will include optical crossconnects for wavelength management and restoration, optical add/drop multiplexers (ADMs), and other devices to increase wavelength capacity expansion. With optical ADMs having already been deployed, optical crossconnects are expected by 1999 or 2000.

The continued standardization of products should allow dwdm devices to be easily deployed in all Synchronous Optical Network/Synchronous Digital Hierarchy networks, or as stand-alone equipment. This will include test-and- measurement standards.

Companies are migrating toward providing total product lines rather than one product for systems vendors.

Larger players are expected to continue acquisitions and mergers of technologically innovative companies. A mass proliferation of new players is also expected.

Systems and components manufacturers will produce products for different markets, such as long haul, local- exchange carriers, metropolitan, cable television, and other applications.

Component manufacturers will be affected by the technical challenges of deploying dwdm in a network. Network considerations include fiber type, optical-channel selection, optical-span length, uni- or bidirectional WDM, ADMs, and optical-layer protection.

The use of dwdm in telecommunications networks is challenging component manufacturers to design a variety of new devices that can be integrated into dwdm systems. The most promising advances for this are optical amplifiers and ADMs, optical crossconnects, and integrated optical components produced on a single substrate. Components for these systems include couplers, WDM multiplexers/demulti plexers, filters, fiber Bragg gratings, lasers, modulators, fiber, isolators, attenuators, and circulators. These components and devices can all be combined to make hybrid devices to perform similar functions.

Two other key ingredients in a dwdm system are optical monitoring such as measuring the power level of individual wavelengths and wavelength identification for the add/drop function, and test and measurement of the system. dwdm system prices are still very high, but as more economical optical components are mass-produced and more companies enter the competition, prices should begin to decrease. Although most dwdm systems are being installed in North America, IGI expects orders to grow in Europe and Asia as well.

The market for dwdm components is forecast by IGI to grow at a breathtaking rate of 65% until 2000, then taper off to about 33%. This market will grow from $557 million in 1996 to $4.3 billion in 2000.

As various technologies battle for market share in the coming years, optical-networking technology can grow along with them because of its format transparency. The management and control systems operating optical networks do not care what kinds of signals are being transmitted, so they can accommodate the rapid changes in the market more easily. But manufacturers need to develop the devices that can meet the demands for capacity.

Beyond 100 wavelenghts

Challenges such as these will keep researchers hard at work to expand bandwidth beyond the 100 wavelengths now undergoing experimentation. The challenge is for flexibility, cost-effectiveness, compatibility with installed fiber and systems, and the highest quality products. Component vendors that provide solutions with the highest levels of integration via mass production will be able to guarantee performance and price over their competitors.

IGI`s complete report on dwdm system components and other technological assessment studies are available by calling 800-323-1088 or e-mail: igiboston@ aol.com. u