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msnbc.com
The future of
fiber optics?
New phasic technology helps meet growing demand
By Barry Brown
MSNBC CONTRIBUTOR
MONTREAL, Feb. 23 — Thirty years ago, fiber optics was just laboratory theory. Now it’s one of the fastest growing technology industries – particularly in Canada, thanks in part to industry leader Nortel. With fiber optics demand rapidly outgrowing capacity, a Canadian newcomer, Lumenon, is hoping its new technology will help double industry potential.
LUMENON’S $25 million manufacturing plant, just outside Montreal, is part of the growing photon triangle developing between Montreal, Ottawa and Quebec City.
Fiber optics utilizes light’s properties — spectrum colors, the way it disperses and re-joins — through a glass-based “wave guide” that harnesses light photons to carry information and operate electric computer chips.
The optical components market grew 145 percent in 2000, to $5 billion, said Felice Phillip Meffe, Lumenon’s vice-president of business development and marketing. By 2004, he said, the market is expected to hit $24 billion.
This phenomenal market growth stems from the explosion in communications technology and the ability of fiber optic cable to carry more information faster than traditional copper.
Tools using fiber optics are growing so fast than systems manufacturers like Nortel, Cisco and Lucent can’t meet the demand. So Lumenon, a two-year-old company, has developed a patented manufacturing process that it hopes will double industry capacity, according to Reginald Ross, Lumenon’s vice-president of corporate development and chief of strategic operations.
“The growth in demand is outstripping the growth in capacity, which is running at a 50 percent-plus annual rate,” Ross said. “As a result, Lucent and Cisco have warned of their inability to meet demand. I’ve seen studies that indicate the optical components market will be capacity constrained for another two years.”
“Our process is to provide volume,” Meffe added. “What differentiates us from other array wave guide manufacturers is our product will perform the same form, fit, function and be capable of meeting technological change.”
The company aims to produce 500 units per day, or 100,000 devices per year, in a market that’s large enough for 200,000, he said.
PATENTED ‘PHASIC PROCESS’
Using a unique, hybrid material that combined the properties of glass with the manufacturing ease of plastics, Lumenon has patented a “phasic process” to manufacture fiber optic components using technology pioneered from the semi-conductor industry. Lumenon’s technology utilizes photo imprinting to take a number of different circuits and make them more complex or simpler according to demand.
Throwing money at the shortage of components is not the answer, Meffe said. The true barrier to entry is ensuring “you don’t have to re-tool,” he said. “You have to have a technology which can migrate forward.”
Current network technologies rely on dense wavelength division multiplexing (DWDM) to increase transmission on fiber optic networks. Traditional multiplexers must be crafted one at a time, a relatively time-consuming and expensive process. DWDM is a core technology for increasing the capacity of optical fiber, allowing open-ended network expansion without the cost of having to install more fiber optic cable.
FOCUSING ON THE CORE
Making the carrier more productive and less costly is the goal of the fiber optics industry, just as it was for traditional copper wiring. While Lumenon executives say their efforts are in line with other new mediums, such as wireless technology, Ross warned the “death knell for copper isn’t around the corner because there’s over $100 billion in underappreciated copper in the books of the (phone companies). It’s going to take a significant amount of time to depreciate that.”
Currently, the fiber optics industry is “focusing on the core – the big switches linking cities,” he continued. In two years or so, he said, that will be followed by the “metro wave” when large organizations switch over. After that will come the “local access wave and then the consumer product wave.”
As expanded “bandwidth is pushed further into the home, it drives the requirements up higher and higher. . . Freeing up the bottleneck now speeds up the . . . greater demand down the road,” he said.
‘AN INTELLECTUAL EDGE’
Joseph Biernat, an analyst with Kimball & Cross Investments in Boston, said Lumenon’s process of producing photonic chips through photo lithography is much less labor intensive than methods currently in use by Lumenon competitors like JDS Uniphase.
“The only question now is whether they can pull it off. Other companies like Bookham have been trying to revolutionize the (mass-production) process but they are behind schedule. If (Lumenon) can deliver, their shares are tremendously undervalued,” he said.
The presence of two universities — McGill and Ecole Polytechnique — in Montreal, which both have “significant intellectual property,” and nearby Nortel, give area companies like Lumenon an “intellectual edge,” he added.
Internet demand, which is doubling every nine months, means the photonics industry is “moving closer to the curb,” and within the next five to 10 years will likely be the main communication pipeline in private and corporate buildings, he said.
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