SONET and WDM markets being spurred by increasing data

Feb. 1, 1999

SONET and WDM markets being spurred by increasing data

Spurred largely by Internet usage, telecommunications companies are feeling the pressure of global traffic demands on their backbone networks. According to the Insight Research Corp., a Parsippany, NJ, telecommunications market research and analysis company, the increased demand, coupled with dramatic transmission cost reductions, is driving carriers to increase capacity of their networks to remain competitive.

A 250% annual growth clip predicted for data demand through 2002 will provide significant opportunities for Synchronous Optical Network/Synchronous Digital Hierarchy (sonet/sdh) and wavelength-division multiplexing (WDM) manufacturers.

Insight`s new report, High-Speed International Fiber-Optic Communications: sonet/sdh or WDM 1998-2003, provides an overview of fiber-optic backbone network deployment around the world, including transoceanic submarine systems. The report includes economic snapshots, current and expected fiber-optic deployment, and market forecasts for DWDM and sonet/sdh products for major countries and regions.

Insight analysts point out that services using fiber-optic transmission facilities are provided not only by carriers with long track records in the industry, but also by new startup companies. The established carriers have significant fiber cable already in place and want to expand its capacity as inexpensively as possible. Newer carriers seek to build network offerings that are significantly less expensive than those installed by long-time carriers, allowing startups to enter the market with a sufficiently attractive cost per bit to entice users to their service offerings.

Just as SONET and SDH were the hot new technology topics in the late 1980s, WDM is the rising star as carriers increase the capacity of existing installed fiber up to and beyond 100 Gbits/sec. Although high-speed time-division multiplexing (TDM) can operate at levels up to OC-192 (10 Gbits/sec), greater speeds present problems. TDM transport carried over SONET or SDH still needs electronic transmission and switching, and the conversion may be too difficult and expensive over the higher rates.

With WDM having found itself a home in the long-haul networks, companies such as CIENA and Cambrian have discovered that dense WDM (DWDM) can also work in the metropolitan networks as well, says the report. These DWDM ring systems can be connected with Asynchronous Transfer Mode (ATM) switches and Internet protocol (IP) routers.

Most ATM networks, says Insight, are expected to use sonet/sdh physical-layer interfaces with OC-12 (622-Mbit/sec) add/drop multiplexers. ATM can carry voice, video, and data communications in the same transport and switching equipment.

Other significant data compiled by Insight`s report support the following predictions:

WDM will generally be the most cost-effective option for providing increased bandwidth without installation of more fiber-optic cable.

The fact that WDM effectively provides fiber capacity at a much lower cost will likely stimulate the sonet/sdh market.

The use of optical amplifiers rather than electronic signal regeneration may reduce the use of sonet/sdh in some points of the network. But Insight believes the reduction will be minimized by the increase in demand for terminal equipment where multi- plexing and management functions are needed.

Future advancements include the first optical crossconnects able to route a particular wavelength from one fiber route to another without reducing it to electronic form and the ability to move a particular bit stream optically from one wavelength to another for more effective packing of fiber links.

The percentage of fiber installed will decrease in comparison to transmitters, receivers, WDM systems, connectors, and other equipment.

The sonet/sdh market will grow from $6.3 billion in 1998 to $14.9 billion in 2003, with the largest markets in the United States, China, Germany, India, Mexico, the United Kingdom, and Canada.

The DWDM market will grow from $980 million in 1998 to $5.2 billion in 2003.

For more information or to receive Insight`s full 250-page report, call Tara Mahon at (973) 605-1400, fax (973) 605-1440, or e-mail: [email protected]. u

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