Corvis mentioned in IBD monday 4/23/2001 -->
Internet & Technology
Monday, April 23, 2001
Fiber Companies Face Quandary: Raman Or Soliton?
By Mike Angell
Investor's Business Daily
To understand the treacherous shifting sands of technology
investing, look no further than how a start-up wants to bury
one of last year’s hottest optical telecommunications
investments.
Last year, telecom-gear makers pitched a technology called
Raman amplification as the perfect product for fiber-optic
telecom networks. It sends light signals farther than previous
equipment, and does it more cheaply.
Raman’s promise led investors to bid up optical network gear
maker Corvis Corp. to a $35 billion valuation in August. And in
1999, Nortel Networks Corp. paid more than $3 billion for
Qtera, a start-up that also used Raman amplification. At the
time of the purchase, Qtera had yet to make a sale.
However, Corvis hasn’t had a profitable quarter since it went
public last year. And analysts aren’t forecasting earnings that
come earlier than next year’s third quarter.
But if last year’s race was for Raman, this year’s appears to
be for a technology called soliton. Raman and soliton gear
both promise to halve the cost of owning and operating
optical telecom.
Image: Laser Blast
The savings come from using fewer electrical regenerators.
These sit about every 300 miles along the length of a
network. They boost incoming light pulses, which weaken over
those distances.
The soliton was first observed in 1834. A Scottish engineer
saw a canal boat create a wave that travelled almost
indefinitely without changing shape. Since it was a solitary
wave, the effect was dubbed a soliton.
First Tried Years Ago
About 25 years ago, AT&T Corp.’s Bell Labs applied soliton
theory to optical telecommunications.
One start-up, OptiMight Communications Inc., received $32
million in venture funding. One key investor was Wu-Fu Chen,
who’s now the company’s chief executive. He’d previously sold
other start-ups to Lucent Technologies Inc., Cisco Systems
Inc. and Nortel.
OptiMight says its soliton technology eliminates the need for
Raman. If successful, the company plans to relegate Raman, if
not to the dustbin of history, at least to "niche" markets.
CIBC WorldMarkets analyst Rick Schafer said OptiMight’s
soliton products "potentially have a role to play in carrier
networks. I’m a big believer in Raman amplification, but not all
networks will incorporate it."
OptiMight’s soliton gear targets the long-distance optical
equipment which, according to industry researcher Dell’Oro
Group, should reach $9.6 billion this year.
But won’t current cutbacks in telecom gear spending threaten
that amount?
John Walecka, an OptiMight board member and partner at
venture capital firm Redpoint Ventures, admits it has "gotten
more challenging.
"But these carriers still have huge capital-expenditure
budgets, and there’s lots of fiber in the ground that hasn’t
been lit yet," Walecka said. "I can’t think of a better place to
be in."
Besides Chen, OptiMight’s management team includes
company president Ilya Fishman. A former physics researcher
at Stanford University, he also worked at Sprint Corp., where
he researched new telecom technology.
"They’ve hired good people," Walecka said. "Not only are there
technical innovators, but also very good operations and
management people."
OptiMight wants to raise another $50 million by summer. That
sum, Walecka says, will let the company build products on a
larger scale.
‘Blue Sky’ Technology
Meanwhile, Corvis is pursuing both a Raman and a soliton
strategy.
But Corvis and OptiMight aren’t alone in announcing plans for
soliton products. Nortel and U.K. gearmaker Marconi PLC are
also interested in soliton technology.
It’s too early to declare any company the winner in soliton.
Corvis says its soliton equipment is being tested by Qwest
Communications Int’l, and OptiMight says WorldCom Corp. is
testing its gear.
Raman amplification is named for the Indian physicist who first
described the phenomenon. Shyam Jha, Corvis vice president
of marketing, says it’s the same effect that makes the sky
appear to be blue.
"When the sun hits the air molecules, they throw off energy,"
Jha said.
Raman amplification uses a particular type of laser light to
excite the glass molecules inside an optical fiber. Those
molecules then give off extra energy, or photons.
Jha compared the effect to trying to throw a ball to the end
of a field. "I can only throw about halfway or so," he said.
"But there’s somebody there to pick up the ball and throw it
further."
Raman amplifiers usually sit at intervals of 60 miles along
networks. Jha says Corvis would sell a Raman network, soliton
network or a combination of both. Jha says Corvis’ gear is
ideal for distances of 1,700 miles.
"They are complementary, not contradictory," Jha said. "It’s
like an army added to an air force. The solitons work with or
without the Raman."
But OptiMight’s director of marketing, Clarel Thevenot, says
the Raman amplifiers drain too much power, are hard to install
and aren’t readily available.
"Carriers mention two big practical problems in the field:
limited power and limited space," Thevenot said. "A Raman
amplifier can consume several watts of power, compared to
(other amplifiers) which use less than half that."
Thevenot sees OptiMight’s product being primarily marketed
toward distances of 950 miles. He says most network
fiber-optic cables span that distance or less.
"Only 15% to 20% of traffic is between connections of more
than 1,800 miles," Thevenot said. Raman systems are
"cost-effective in niche applications, like very long distances."
In the end, analyst Schafer says, several technologies,
including Raman and soliton, will be used in long-distance
fiber-optic networks.
"There are a number of technologies people are pushing,"
Schafer said. "Raman amps are just beginning to move." |
