So, which is it?
Is it a fiber optic capacity glut or is it an optical fiber shortage that we should be concerned about?
I'd like to take the pundits, journos and gurus and sit them all down some day, and ...
fiber-exchange.com
from: fiber-exchange.com
[ copied below for posterity, but you should go to the url above for the graphics and photos... fac ]
Paving the Underwater Expressway
Carriers plan to put record amounts of fiber and cable into undersea networks. But supply constraints could slow construction of these new information highways.
By STACEY YATES
The amount of fiber-optic undersea cable that carriers plan to install over the next three years will more than double all existing undersea cable installed since the mid to late 1980s, when this type of cable was introduced. Leading this infrastructure explosion, new global carriers that did not exist 10 years ago, including Global Crossing, 360networks, Level 3, Ty Com, and FLAG Telecom, are now requiring thousands of kilometers of fiber cable to build their high-bandwidth submarine networks.
By the time these five carriers have finished installing their infrastructure-or at least what they have announced to date-they will have deployed close to 340,000 km of undersea cable. To put this amount into perspective, the worldwide installed base at year-end 1999 was approximately 530,000 km. And the cabling these new carriers plan to string around the world is not quite 60% of what has been announced for all installations worldwide over the next three years.
The question that faces both new and establish carriers-and the manufacturers who hope to supply them-as they compete with each other to put their networks in place is where will they get all this cable?
The implications of this enormous demand for undersea-cable manufacturers have been tremendous. In 1999, fiber-optic undersea-cable production capacity was just under 200,000 km, up 26% from 150,000 km in 1998. The 2000 undersea-cable manufacturing plant capacity is up by 35% from 1999 to over 260,000 km. And manufacturers continue to scramble for more capacity.
Cable makers, of course, are not the only suppliers affected by this unprecedented demand. For example, the demand for fiber is up, as well. In fact, the demand for fiber is growing faster than the demand for cable. The main reason for the stronger growth is advances in technologies that are permitting cablers to install more fibers in each cable. In 1998, for example, the cabled fiber-km to route-km ratio was 6.4 to 1; in 1999, it had increased to 8.5. For systems planned between now and 2003, the ratio is up to almost 10 to 1.
To fully appreciate the scope of today's fiber and cable demand, a primer on undersea network technology may be in order. There are two main types of undersea cables-repeatered and non-repeatered. As in terrestrial systems, attenuation weakens the strength of optical signals as they pass through undersea optical fiber. In repeatered networks, amplifiers-or "repeaters"- located at various distances along the cable boost the power of the signal and allow transmission over long distances. The "repeater" nomenclature is a carryover from the electronic conversion necessary in copper and early optical systems. In recent years, the electronic-based repeaters have been replaced by units with optical amplification. Carriers use repeatered cable systems for long, transoceanic spans. Such cable represents over 85% of deployed undersea fiber-optic plant.
The total production capacity for undersea fiber-optic cable has grown impressively over the last three years. However, some question whether this growth will keep up with demand.
As is the case with their land-locked counterparts, erbium-doped fiber amplifiers (EDFAs) are the "repeaters" of choice for submarine networks. However, undersea DWDM systems and technologies do differ from terrestrial applications. While terrestrial networks may need to transmit over a maximum of 600 km between end points as part of a transcontinental network, transatlantic submarine transmissions need to travel up to 7,000 km, and transpacific routes could be as long as 12,000 km. To achieve the vast distances required for their applications, submarine-systems planners must space amplifiers more closely and transmit fewer DWDM channels than their terrestrial network counterparts. As a general rule-of-thumb, amplifiers must be spaced every 50 km to 80 km, with longer routes requiring shorter amplifier spacing. In practice, however, some systems could have amplifiers spaced as close as 45 km or as far as 100 km.
For its part, non-repeatered cable is used when the two connecting points are generally less than 400 km apart. A typical festoon system that runs down a coastline connecting multiple landing points in close proximity would use non-repeatered cable. A non-repeatered cable system does not contain underwater amplifiers. In some cases, optical amplifiers are used at the shore landing station. Non-repeater ed systems are more similar to terrestrial systems in their design than repeatered systems. Because the technologies used in the two types of cables vary significantly, the fiber count limitations are quite different. In non-repeatered cables, the counts have been increasing significantly in recent years up from 24 fibers to 144 and greater. The dramatic increase in fiber count in non-repeatered systems is a contributing factor to the heightened demand for fiber in undersea-cable systems.
On the other hand, many people familiar with terrestrial telecommunications are surprised when they learn that a typical transoceanic repeatered cable has no more than four fiber pairs in it. This limitation results from such issues as power limitations, the size of the repeater or amplifier housing, and the design of cable-laying ships.
However, the average fiber count in repeatered cables is also increasing. Last March, FLAG Telecom announced plans to deploy a transpacific network, FLAG Pacific-1. This network, supplied by Alcatel, is slated to be in service in 2002. The FLAG Pacific-1 network is significant because it is the first announced repeatered system to have eight fiber pairs (16 fibers). Because a significant majority of cable that is deployed is repeatered, the implications for fiber demand are greater when the counts increase in repeatered systems.
Not only is the Pacific Ocean slated to see the first eight-fiber-pair repeatered undersea system, it is also the body of water that will have the most undersea-cable installations over the next three years. Traditionally, the Atlantic has been the hotbed of undersea cable activity. At year-end 1999, the installed base of undersea cable in the Atlantic was 150,000 km, and 204,000 km more is planned or being installed. In the last 12 months, however, the demand for new systems in the Pacific has eclipsed that of the Atlantic.
The Pacific has become the hottest applications area for undersea networks, ending the long dominance of the Atlantic. But as this chart illustrates, the demand for undersea cable remains strong around the world.
Not surprisingly, much of this demand is coming from the five carriers mentioned. In fact, over one-third of the combined builds of Global Crossing, 360networks, Level 3, TyCom, and FLAG Telecom will be in the Pacific. It should be noted that Level 3 has announced a planned build in Southeast Asia but not across the Pacific. Level 3 will have capacity in the Pacific through its ownership in the Japan-U.S. network. For the purposes of tallying undersea-cable deployments, Level 3 did not contribute to the Pacific total. In other words, approximately 120,000 km of new fiber-optic infrastructure, a total that almost matches the current installed base in the region, will be installed in the Pacific by only four carriers over the next three years.
While a tremendous amount of undersea cable will be deployed in the Pacific Ocean in the next three years, other regions will experience significant growth, as well. Both the Indian Ocean and the Caribbean will have more cable installed in the next three years than their installed base at year-end 1999. The Indian Ocean, which has an installed base of only 23,000 km, will see more than 24,000 km installed. The Caribbean, which has an installed base of just over 30,000 km, will have 34,000 km installed.
Even though this market is growing rapidly in many regions and on a global level, there are regions where the growth will be less than impressive. The region with the least planned undersea-cable deployments is Northern Europe. In terms of sheer volume, that is not surprising because Northern Europe is one of the smallest regions in the world. The undersea-cable installed base in Northern Europe is 23,000 km. The amount planned over the next three years is about one-third of the installed base, 8,200 km.
Despite the fact that undersea cables in Northern Europe are not being deployed at rates similar to other regions does not mean Northern Europe is lacking in the telecommunications game, however. With a significant amount of cable already deployed, relative to its size, this market is merely more mature than many other markets.
For as long as telecommunications still garners the resources of the investment community, undersea cables will continue to be installed throughout the world. More companies will enter the market, consolidations will occur, new technologies will emerge, new applications will drive the demand for more infrastructure, and regulations governing telecommunications will continue to change.
With this continued desire for more infrastructure showing no signs of abating, the question of whether fiber and cable supply will keep pace with demand only promises to become thornier. Taken in the context of an overall shortage in fiber supply (see "Fiber caught short?" on page 12), suppliers will have to continue to make changes to meet the latest demands of different regions of the world, some of which will surpass others to become the latest hotbeds of undersea-cable activity. Only an ongoing ramp-up of supply will allow construction of undersea optical highways to occur without delays.
Stacey Yates is director of market research at KMI Corp. (Newport, RI).
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Fiber caught short?
The potential shortage of fiber for undersea applications is part of a larger picture. In the July 2000 issue of Lightwave, KMI analyst Patrick Fay addressed the issue, excerpted here.
In 1999, worldwide demand for cabled fiber grew 38% and demand for nonzero dispersion-shifted fiber (NZDSF) grew 159%. Bandwidth requirements for the Internet are driving these fiber deployments, as new operators build more efficient networks to compete with the legacy networks of incumbent carriers.
This unprecedented demand created a fiber shortage in 1999 that will continue through 2000. Fiber supply will continue to be tight in 2001. The announced investment targeted toward capacity expansion in 2000, however, will bring on enough capacity in 2002 to relieve the shortage.
The worldwide market in 1997 and 1998 was characterized by over-capacity and falling fiber prices due to soft demand and regional economic hardships. Since 1998, fiber demand has increased and far surpassed even the most optimistic forecast. The major producers had slowed their expansion plans during the period of excess capacity just when 1999 would show unprecedented growth.
The result has been a worldwide fiber shortage, although certain regions such as North America and Europe initially were hit harder than other regions.
The shortage has caused major producers thus far in 2000 to invest more than $2.5 billion in capacity expansions; this investment will increase worldwide capacity from 77 million fiber-km in 1999 to 131 million fiber-km in 2001, an increase of 70%.
Deployment of fiber-optic cable increased 38% in 1999 to 63.3 million km of cabled optical fiber, from 45.9 million km of fiber in 1998. By 2004, annual deployment will reach 181.5 million km.
Singlemode cable (59 million fiber-km in 1999) accounts for more than 93% of the volume of cable installed worldwide and is 75% of the market value of all cable installed. In 1999, the terrestrial singlemode-cable market was $6.5 billion; KMI expects this segment to represent $13.7 billion in 2004, or 78% of the market.
Multimode cable was 4% of the volume in 1999 and 9% of the market value ($816 million). The proportion of multimode volume decreases to 3% in 2004 (5.3 million fiber-km), while the market value increases to 8% ($1.4 billion).
International submarine cable accounts for 1%-2% of cable volume installed from 1998 through 2004. But because of the extreme environmental requirements, the cable is costly, so the market value of the cable is disproportionately high-from 10% in 1998 to 15% in 1999. KMI forecasts this segment to remain at least 12% of the market for total cabled fiber demand through the forecast period. The international submarine-cable market will grow from $1.3 billion last year to $2.3 billion in 2004.
Domestic submarine cable, which includes domestic festoon systems, is less costly than international, transoceanic cable. This cable accounts for less than 1% of cable volume. |
