All In the Numbers
Still, all the DWDM investigative work could be moot if the economics don't work out. Right now, deployment is worthwhile only in a few major cities-and long carrier buying cycles mean that even in those locations there have been few takers. "I'd say only about six carriers have signed on so far," says RHK's Cooperson.
[Does this sound like an opportunity for an effective low-cost solution or what?]
Look at the cost structure. Metropolitan rings consist of short spans between nodes that average less than 20 km, while long-haul fiber systems run to thousands of kilometers in one stretch. "The key is how much it costs to lay a fiber optic cable per mile," says Sprint's Chall. He estimates that in Las Vegas, his biggest market, it can come to as little as $1,000 to roll out a truck, hire some workers, and pull fiber through an existing conduit. To roll out fiber across one segment of an average metro ring, therefore, costs a little less than $20,000; the carrier then has to tack on additional costs for buying, installing, and configuring a Sonet ADM to service the new customer.
Compare that with DWDM prices. Sycamore's system starts at $20,000 for a base chassis and $48,000 for each new OC48 wavelength. "The numbers don't add up," says Chall. "For segments under 30 km, it's cheaper by and large to roll new fiber than it is to use DWDM." [I wish we knew more about MetroFusion's cost structure]
Fortunately, there are signs that metro DWDM pricing may become more attractive. As with silicon, costs of optical components (like the lasers used to light the wavelengths) keep falling. "The pace at which this technology is changing is just amazing," says Jeff Kiel, Sycamore's director of marketing. "The lasers just keep getting cheaper and cheaper." And don't forget about those cities where the technology probably does make economic sense. "In New York, carriers are allowed to dig only at night," explains Weingarten. Such regulations boost labor costs, and, coupled with the fact that many conduits are already full, makes new fiber rollouts a lot more expensive-up to $20,000 per km, according to analysts. And then there are always the difficult routes. "I've been doing telecom in New York for 15 years and there are places considered the Bosnias of the industry," says Optical's Tierney. "Staten Island, N.Y., is one of them." There are only six fibers linking Manhattan to Staten Island, and that forces carriers to deploy DWDM there.
Finally, net architects should consider the long-term implications of managing wavelengths, rather than time-slots. Although products won't be shipping until later this year, several startup vendors-including Monterey Networks Inc. (Richardson, Texas)-are developing so-called optical switches that move wavelengths on the fly from one fiber ring to another. Instead of taking six months to provision an OC48 circuit, carriers will be able to turn it up in seconds. [We are working on this too]
And it's that just-in-time provisioning of high-bandwidth services that has the industry excited. "Trust me, I'm not one of those missionary-type guys," Tierney says. "But I just got off the phone with the CEO of an Internet service provider who said he'd love to buy bandwidth at off-peak rates. Right now, I have to tell him this is not the airline industry." To make the most of his DWDM investment, he'll sell high-return OC48s to other carriers, allowing them to interconnect their central offices. And as the economics allow, he'll start selling bandwidth to high-rolling corporate customers, possibly in real time. "There's a very profitable business in providing high-bandwidth services in a local area," he says.
Andrew Cray is WAN equiptment editor for Data Communications. He can be reached via e-mail at acray@data.com.
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