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Technology Stocks : JDS Uniphase (JDSU)

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To: Glenn McDougall who wrote (1022)9/22/1999 11:17:00 PM
From: Kent Rattey  Read Replies (3) of 24042
 
Metro DWDM is here!!! GG says this is the next step towards the edge..the LAN. Once it hits the enterprise; gigantic market(We'll be rich!).

Local-Loop Products Are
Good For The Long Haul

New fiber-optic products should free
up bottlenecks, letting carriers roll out
high-bandwidth services

By PAUL KORZENIOWSKI

Technical breakthroughs like wave
division multiplexing sometimes prove a
mixed blessing.

On the upside, they wring additional
capacity from existing fiber-optic lines
without a huge expense. Unfortunately,
given the segmented nature of networks,
such breakthroughs often displace the
bandwidth bottleneck to elsewhere in the
network.

During the past few years, long distance
carriers have laid lots of long-haul fiber
optic lines, and vendors have delivered
dense wave division multiplexing (DWDM)
products. If these networks were once
bandwidth-constrained, they are now
loaded with gigabits and even terabits of
bandwidth.

As a result, bottlenecks are starting to
emerge in the local loop where there is not
as much fiber and little DWDM. Since the
equipment used for long distance
connections does not necessarily
translate well for local-loop applications,
suppliers are moving to deliver products
geared to pushing high-capacity fiber
connections into the local loop.

Such developments represent good news
for enterprise customers. Carriers will be
able to upgrade network connections
more easily and may end up with excess
capacity on their networks. To entice
corporate enterprises to use that capacity,
carriers are expected to reduce prices or
develop novel value-added services.

While the benefits of fiber optic technology
have been very clear for 20 years or more,
the medium has been 20 percent to 40
percent more expensive than coaxial
cable connections. Fiber's complexity was
one reason, but a lack of reliable
standards also contributed to the sharp
price differential.

In the past few years, the International
Telecommunication Union (ITU) stepped
in and outlined how DWDM transmissions
should travel over networks.

"Once the ITU standards were
established, third parties were able to
deliver standard filters and amplifiers, and
that has driven fiber pricing down," said
Cindana Cornwell, a senior marketing
manager at Nortel Networks Inc.'s
Optoelectronics Division.

These systems were first implemented in
long-haul connections, where the higher
cost for fiber connections could be more
easily justified than in the local loop.

"A few years ago, long distance carriers
were operating at 60 percent to 75
percent of capacity," said Curt Weinstein,
a product line manager for single-mode
fiber at Corning Inc. "A number of new
players emerged to take advantage of the
Internet boom, and their aggressive
deployment schedules, along with those
from established carriers, have started to
alleviate that congestion."

DWDM has been key to easing
congestion problems. It enables carriers
to squeeze more bandwidth out of fiber
lines by increasing the number of
wavelengths that travel down a single fiber
optic connection as well as the top speed
of each wavelength. Vendors have been
working to increase the maximum number
of wavelengths from eight to 190 and the
top speed from 622 Mbps to 40 Gbps.

So, DWDM simplifies network upgrades.
Traditionally, carriers had been digging
ditches and putting in more fiber to boost
bandwidth levels.

Now, the upgrade process involves
installing new signaling equipment or
making changes to a signaling device's
software.

Currently, the densest products carriers
are tinkering with support 40 wavelengths
and a top speed of 2.5 Gbps--although
products are emerging in the market that
promise 10 Gbps connections.

To increase capacity, vendors must
overcome a series of problems.
Dispersion is their most significant
challenge.

"As wavelengths travel along a fiber optic
line, they can splinter, bump into one
another and disrupt connections,"
explained Yochay Danziger, chief
technology officer at LaserComm Inc. The
higher the wavelength density, the greater
that potential.

To solve the problem, suppliers have
delivered amplifiers, which regenerate
wavelengths as they travel along a line.
However, amplifiers can be expensive,
costing $50,000 to $100,000 per unit. So
equipment vendors have been developing
new technologies, such as LaserComm's
Spatial Mode Transformation, that boost
the maximum distance between
amplifiers.

The type of fiber carriers have in place
also determines how much amplification
is needed. Carriers have largely deployed
single-mode fiber, while multimode fiber
has found a home in enterprise networks.
Most single-mode fiber was not designed
to carry such dense transmissions.

Corning's LEAF single-mode fiber, which
was introduced in February 1998, does
not need as much regeneration or
consume as much power as traditional
single-mode fiber lines.

Consequently, it can support
transmissions traveling more than 50
kilometers (31 miles) while most fiber was
optimized to 10-kilometer (6.2 miles)
connections.

Corning's Weinstein said the company
sold 1 million kilometers of LEAF fiber last
year, which accounted for about 10
percent to 15 percent of all its fiber sales
and expects that number increased to the
20 percent to 25 percent range this year.

Equipment vendors face another
challenge in taking advantage of these
new high-bandwidth options. "Carriers
want systems that are compact, do not
consume additional power and do not
generate more heat," said Victor Mizrahi,
chief scientist at Ciena Corp.

Suppliers think microprocessor
improvements can solve these problems
and lead to delivery of higher-speed
DWDM systems. By the end of the year,
products supporting 160 separate
10-Gbps wavelengths (1.6 Tbps of
bandwidth) are expected to make their
way out of vendor test labs and into carrier
networks for trials.

Most of this bandwidth will be deployed in
long-haul connections.

"The dynamics of building high-speed
networks is changing so soon there will be
a glut of long distance capacity and
limitations will be in the local loop," said
George Peabody, managing director of
telecommunications research at the
Aberdeen Group, a market research firm.

Solving the problem will not be simple
because DWDS multiplexers and
amplifiers have been fine-tuned for long
distance networks.

"With local connections, there are more
access points, so distance isn't as big a
factor as it is with long-haul DWDM," said
Scott Clavenna, an analyst at Pioneer
Consulting LLC, a market research firm.

Aware of the local-loop problem,
equipment vendors have been designing
products for local carriers. Clavenna said
the new products cut local loop DWDM
deployment costs by 25 percent to 40
percent.

Carrier interest in the new wares is high.
ISPs see the products as a way to
differentiate their services by offering
customers higher-speed Internet
connections. Competitive local exchange
carriers need the bandwidth to compete
with incumbent local carriers.

Cable & Wireless USA Inc. plans to install
during the next two years DWDM
multiplexers in 60 metropolitan areas
across the country.

Because of such rapid deployments,
Pioneer Consulting expects North
American carrier purchases of local
DWDM equipment to increase from $115
million this year to $923 million in 2003.

As this rampup on the local loop occurs,
the source of network bottlenecks could
very well shift once again.

"Once local fiber is in place, carriers can
roll out digital subscriber line services and
run more fiber to the curb," said Aberdeen
Group's Peabody.

"Corporations and their employees can fill
up that bandwidth with various multimedia
applications, such as videoconferencing,''
Peabody said.

"Those services may quickly use the extra
capacity in the long haul network, and
suppliers will be looking for ways to push
DWDM capacity even higher."

Paul Korzeniowski is a freelance
technology writer based in Sudbury,
Mass., who specializes in bandwidth and
networking issues. He can be reached at
paulkorzen@aol.com.



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