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To: Kenneth E. Phillipps who wrote (5284)	4/10/2000 8:27:00 PM
From: Kenneth E. Phillipps	Read Replies (1) \| Respond to of 14638

Optical Equipment Rides Telecom Boom Posted on April 10, 2000 The telecommunications equipment industry is enjoying robust growth, and the optical networking sector is providing a particularly immense opportunity for investors. In 1999, an investment in a group of leading telecom systems suppliers returned 300 percent, while leading optical components providers posted returns of 700 percent, says Chris LeBlanc, senior telecommunications equipment and data networking analyst for San Francisco-based Banc of America Securities. "Over the next several years, communications carriers will re-build a global network that took 100 years to establish," he says. "We will eventually see public networks shift to all optical networks to provide carriers with additional capacity and flexibility." The network of the future, according to LeBlanc, will be dominated on the service level by Internet Protocol (IP) applications riding over wavelengths of light. He notes that broadband access equipment, optical transmission equipment and high-speed switch/routers are anticipated to sustain annual growth rates in excess of 30 percent over the next several years. The optical networking market is diverse, providing investment opportunities in several sectors: carriers, optical systems and other active and passive optical components, says LeBlanc, who predicts that increasing global traffic demands and new services will continue to drive investment. "An all-optical network is one in which all public network functions--access, transport, multiplexing, switching and amplification--are accomplished optically rather than electrically," he explains. "The appeal includes the scalability of fiber optics, lower cost per bandwidth, improved reliability, rapid restoration from network disruptions, service transparency and faster service provisioning." Such networks are not yet a reality, but LeBlanc believes they will begin to emerge by 2002 due to rapid advances in optical systems and components. The next generation of optical network equipment will focus on smart bandwidth deployment enabled by lower cost, tunable and increasingly integrated components, says LeBlanc. Telecom industry research firm RHK is also forecasting strong optical hardware sales. The South San Francisco-based firm predicts that the worldwide market for optical components used in long distance telecom and cable TV applications will grow from $6.6 billion in 1999 to over $23 billion by 2003. The terrestrial dense wavelength division multiplexing (DWDM) segment will expand the fastest, growing at a pace of more than 50 percent a year. According to RHK, this tremendous growth in optical components is being driven by a surging demand for transmission at speeds of at least 2.5 Gbps, significant advances in price-to-performance ratios in optical components and strong traffic growth. "All the market segments that RHK analyzed are benefiting from strong growth in traffic, which has surpassed voice traffic in volume," says Jay Liebowitz, RHK's director of optical components research. "We will continue to see service providers deploy additional capacity as rapidly as possible through 2003 in an effort to keep pace with demand and competition." Copyright ¸ 1999-2000 PricewaterhouseCoopers LLP. Terms and Conditions. The preceding article was written by John Edwards, a freelance technology writer based in Gilbert, Arizona. He can be reached by phone at +1-480-854-0011. telecomdirect.pwcglobal.com