Hurdles block recovery path for optical networking
By Mike Clendenin
EE Times
November 20, 2002 (4:17 p.m. EST)
TAIPEI, Taiwan — A handful of industry insiders debated the catalysts for renewed growth in the optical networking industry Wednesday (Nov. 20), hoping to navigate through current doldrums and indefinite delays in bringing fiber to the home.
A panel of experts, gathered here for IEEE's GlobeCom 2002, cited a host of obstacles blocking the path to recovery, ranging from copyright paranoia among Hollywood executives to regulatory restrictions in the United States. Diminishing returns for network infrastructure operators were also cited as a concern, as revenues stagnate and costs creep upward.
Botaro Hirosaki, the senior general manager of NEC's Optical Networks Operations, said studies conducted by NEC show that as Internet traffic increases by more than 50 percent annually, costs will rise by 20 percent and revenues only 12 percent. Such a scenario will put more pressure on operators to find ways to cut costs, perhaps through technical innovations, or to add services that will bring in more revenue.
"We have to solve this discrepancy between . . . the real traffic and the real economy," Hirosaki said, suggesting that "disruptive technical innovation" is needed to bring down operating costs.
Others suggested that the industry faces a much bigger non-technical battle, focused on intellectual property and fair-competition issues. Stephen Weinstein, a 35-year veteran of the communications industry and principal analyst at Communication Theory and Technology Consultants (Summit, N.J.), said the suppressed exchange of copyrighted material — specifically, the death of Napster — is a perfect example of how demand for fiber capacity is being retarded.
"By now, if Napster hadn't died, people would probably be exchanging full-length movies and there would be a lot of demand for access capacity," Weinstein said. For film studios, Weinstein said he understood that some protections should be afforded their copyrighted material. "What society has to do is find an appropriate balance between what's called fair use — individuals making some use of intellectual property that they buy — and the interests of these studios and other owners of intellectual property," he said.
Another show-stopper keeping fibers dark is the unresolved question in the United States about so-called bundling — whether an access carrier has to sell capacity to a competitor. In many cases, that makes carriers reluctant to lay out the huge sums for last-mile fiber. "At least in America, there is this regulatory ghost haunting the incumbent carrier," said Alan Weissberger, a consultant at Data Communication Technology (Santa Clara, Calif.). "If he builds it, then he has to sell it at a wholesale price to a competitor carrier who will offer more cost-competitive services over that same build-out."
Ultimately, Weissberger said, a robust optical industry will need fiber to the home, which has only become a reality in a few places, such as Japan, where it is offered for about $40 a month. "We need higher speed on-ramps and off-ramps to the optical core network to really get the optical network industry back on its feet," he said. "A lot of startup companies in the U.S. have failed because they assumed these build-outs would come. But it turns out that only 6 percent to 7 percent of buildings in the U.S. have fiber connectivity and the fiber build is growing at only 2 percent a year." |
