IBD-Internet & Technology Monday, April 23, 2001
Fiber Companies Face Quandary:
Raman Or Soliton?
By Mike Angell
Investor's Business Daily
To understand the treacherous shifting
sands of technology investing, look no
further than how a start-up wants to bury
one of last year’s hottest optical
telecommunications investments.
Last year, telecom-gear makers pitched a
technology called Raman amplification as
the perfect product for fiber-optic telecom
networks. It sends light signals farther than
previous equipment, and does it more
cheaply.
Raman’s promise led investors to bid up
optical network gear maker Corvis Corp. to
a $35 billion valuation in August. And in
1999, Nortel Networks Corp. paid more
than $3 billion for Qtera, a start-up that also
used Raman amplification. At the time of
the purchase, Qtera had yet to make a sale.
However, Corvis hasn’t had a profitable
quarter since it went public last year. And
analysts aren’t forecasting earnings that
come earlier than next year’s third quarter.
But if last year’s race was for Raman, this
year’s appears to be for a technology called
soliton. Raman and soliton gear both
promise to halve the cost of owning and
operating optical telecom.
Image: Laser Blast
The savings come from using fewer
electrical regenerators. These sit about
every 300 miles along the length of a
network. They boost incoming light pulses,
which weaken over those distances.
The soliton was first observed in 1834. A
Scottish engineer saw a canal boat create a
wave that travelled almost indefinitely
without changing shape. Since it was a
solitary wave, the effect was dubbed a
soliton.
First Tried Years Ago
About 25 years ago, AT&T Corp.’s Bell
Labs applied soliton theory to optical
telecommunications.
One start-up, OptiMight Communications
Inc., received $32 million in venture
funding. One key investor was Wu-Fu
Chen, who’s now the company’s chief
executive. He’d previously sold other
start-ups to Lucent Technologies Inc.,
Cisco Systems Inc. and Nortel.
OptiMight says its soliton technology
eliminates the need for Raman. If
successful, the company plans to relegate
Raman, if not to the dustbin of history, at
least to "niche" markets.
CIBC WorldMarkets analyst Rick Schafer
said OptiMight’s soliton products
"potentially have a role to play in carrier
networks. I’m a big believer in Raman
amplification, but not all networks will
incorporate it."
OptiMight’s soliton gear targets the
long-distance optical equipment which,
according to industry researcher Dell’Oro
Group, should reach $9.6 billion this year.
But won’t current cutbacks in telecom gear
spending threaten that amount?
John Walecka, an OptiMight board member
and partner at venture capital firm Redpoint
Ventures, admits it has "gotten more
challenging.
"But these carriers still have huge
capital-expenditure budgets, and there’s
lots of fiber in the ground that hasn’t been
lit yet," Walecka said. "I can’t think of a
better place to be in."
Besides Chen, OptiMight’s management
team includes company president Ilya
Fishman. A former physics researcher at
Stanford University, he also worked at
Sprint Corp., where he researched new
telecom technology.
"They’ve hired good people," Walecka
said. "Not only are there technical
innovators, but also very good operations
and management people."
OptiMight wants to raise another $50
million by summer. That sum, Walecka
says, will let the company build products on
a larger scale.
‘Blue Sky’ Technology
Meanwhile, Corvis is pursuing both a
Raman and a soliton strategy.
But Corvis and OptiMight aren’t alone in
announcing plans for soliton products.
Nortel and U.K. gearmaker Marconi PLC
are also interested in soliton technology.
It’s too early to declare any company the
winner in soliton. Corvis says its soliton
equipment is being tested by Qwest
Communications Int’l, and OptiMight says
WorldCom Corp. is testing its gear.
Raman amplification is named for the Indian
physicist who first described the
phenomenon. Shyam Jha, Corvis vice
president of marketing, says it’s the same
effect that makes the sky appear to be blue.
"When the sun hits the air molecules, they
throw off energy," Jha said.
Raman amplification uses a particular type
of laser light to excite the glass molecules
inside an optical fiber. Those molecules
then give off extra energy, or photons.
Jha compared the effect to trying to throw a
ball to the end of a field. "I can only throw
about halfway or so," he said. "But there’s
somebody there to pick up the ball and
throw it further."
Raman amplifiers usually sit at intervals of
60 miles along networks. Jha says Corvis
would sell a Raman network, soliton
network or a combination of both. Jha says
Corvis’ gear is ideal for distances of 1,700
miles.
"They are complementary, not
contradictory," Jha said. "It’s like an army
added to an air force. The solitons work
with or without the Raman."
But OptiMight’s director of marketing,
Clarel Thevenot, says the Raman amplifiers
drain too much power, are hard to install
and aren’t readily available.
"Carriers mention two big practical
problems in the field: limited power and
limited space," Thevenot said. "A Raman
amplifier can consume several watts of
power, compared to (other amplifiers)
which use less than half that."
Thevenot sees OptiMight’s product being
primarily marketed toward distances of 950
miles. He says most network fiber-optic
cables span that distance or less.
"Only 15% to 20% of traffic is between
connections of more than 1,800 miles,"
Thevenot said. Raman systems are
"cost-effective in niche applications, like
very long distances."
In the end, analyst Schafer says, several
technologies, including Raman and soliton,
will be used in long-distance fiber-optic
networks.
"There are a number of technologies people
are pushing," Schafer said. "Raman amps
are just beginning to move."
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