Wednesday July 9 6:02 AM EDT
Company Press Release
North American WDM Equipment Sales to Soar to $4.4 Billion by 2001
New Study Shows WDM Proves in for Local Exchange Carriers as Well as Long Distance Companies
SAN FRANCISCO--(BUSINESS WIRE)--July 9, 1997--The growth rate for Wavelength Division Multiplex (WDM) transmission equipment shipments will soar from today's market sales of $1.6 billion to $4.4 billion by the year 2001, according to a new report by ryan-hankin-kent, inc.
The report, ``Photonic Networks,'' predicts that the market for WDM equipment will triple in the next four years as local exchange carriers (LECs) join long distance companies in adopting WDM. Wavelength division multiplexing enables carriers to increase the speed and capacity of transmission, utilizing their existing fiber optic communications networks.
According to the new rhk report, strong economic incentives will drive local exchange carriers (LECs) to install WDM equipment. "WDM will
offer carriers important new service features that will both entice customers and dramatically change the way they design their networks. This will prompt LECs to join the long distance carriers as major customers for WDM transmission equipment,'' said John Ryan, principal. Previously, economic incentives were thought to apply only to long distance carriers with transmission speeds generally higher than LEC links in
metropolitan areas and with limited capacity upgrade options, he added.
rhk's "Photonic Networks" report details three major forces driving the projected uptick in WDM equipment sales. First and most obvious, the growth in demand for telecom capacity. Second, the operational flexibility to mix services that WDM provides carriers. Third, the evolution of both the long distance and LEC carriers' networks to the all-optical network of the future.
In the ``bottoms-up'' approach that led to the forecast, rhk analysts evaluated each carrier's system architecture and rate of conversion to WDM systems. rhk analysts assumed conversion to WDM would take place only when the carrier had an economic incentive to do so. Previously
industry-wide WDM equipment sales forecasts excluded local exchange carrier data on the assumption that LECs lacked compelling reasons to
widely deploy WDM equipment. rhk's report reveals strong economic and service feature incentives sufficient to drive LECs to invest in WDM
equipment for their metropolitan markets.
"Despite a very conservative approach to forecasting, our primary research results -- combined with our detailed architectural analysis of each carriers' network -- were strong enough to allow us to forecast an explosive market with a high degree of confidence," said John Ryan.
"We see, as contributing factors, not only the long distance carriers' continuing appetite for WDM systems but also notably the LECs adoption rates. These are fueled both by the need to add transmission capacity and by the service and operational advantages that WDM systems offer."
ryan-hankin-kent, inc. is a market research firm that specializes in analysis of communications technology and service markets and has achieved a reputation for unparalleled accuracy in the telecommunications industry. The ``Photonic Networks'' report is a volume of the rhk's ``STAR'' program (Systems for Telecommunications: Analysis and Research), a forecast of technologies advancing the future of telecommunications in North Americas public networks. The company is based in South San Francisco, California. For more information, call 415/737-9600, 415/737-9766 fax or visit its website at rhk.com
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