Don't expect miracles

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The Telecommunications Industry Association (TIA) has done the fiber-optic community a service with its two-part examination of optical bandwidth supply and demand (see "Definitions set, TIA approaches the fiber glut question," page 1). Even if the terms set forth in the first paper, "Optical Network Capacity and Utilization: Clarifying Terms and Definitions," aren't universally adopted, the TIA has provided a reference point from which discussions of network utilization can proceed rationally.Th 99451

Stephen M. Hardy
Editorial Director and Associate Publisher
stephenh@pennwell.com

Unfortunately, this first effort could prove the more useful and ultimately influential of the two. On the surface, the second part promises to be more fruitful, provided the TIA succeeds in getting service providers to reveal competition-sensitive traffic numbers. Yet, I can't say that I'm very optimistic that if the TIA were to report that some routes suffer from significant near-term bandwidth constraints, much would happen that would spur major infrastructure development this year. For while the TIA may do a masterful job of describing the need for new optical pipelines, there's one aspect of network builds that will need further definition: the ability to pay for them.

Thus, the tell-tale statistic may not be a consensus benchmark on the peak-to-average ratio of data traffic or the amount of fiber that typically never gets lit, but whether carriers will continue to add infrastructure when traffic levels hit 70% of capacity, as cited in the first paper. My guess is that service providers in general are riding their assets beyond this figure, perhaps to something closer to 90%. While some in industry have made similar statements and attributed this possibility to a desire on the part of carriers to please Wall Street, my belief is that many carriers simply can't assume the debt that network builds would require. The numbers associated with the WorldCom debacle-billions of dollars in 2001 alone-indicate the investment a major network upgrade could demand. Given declining service revenues, it makes sense that both carriers and the banks that may finance them will tread very carefully before increasing expenditures.

Obviously, this isn't good news for those looking to make money in optical communications this year. However, it's no reason to jump off a bridge, either. If I'm right, it merely confirms current expectations-that the recovery in the United States won't happen in 2002. Perhaps bandwidth demand growth has slowed; perhaps carriers are going to wring more out of their assets than in the past. Eventually-let's be optimistic and say by the middle of next year-demand will impinge so severely on capacity that carriers will either have to spend money or suffer "bandwidth brownouts." Better times are ahead-they're just not coming tomorrow, regardless of what the TIA may uncover.


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