Contributed by C. David Chaffee of fibertoday.com
San Diego—The OFC Executive Forum here presented a mixed picture of industry prospects—noting there are growing broadband requirements, yet flat carrier cap ex funding and an optical components industry still in need of some consolidation. The Forum was well attended.
Verizon Vice President of Network Architecture Stuart Elby said the company has plans to build fiber plant for its LH routes. The goal is to have networking operating at no lower than 40 Gbps or 100 Gbps. Packet switching will be used to interconnect the backbone routers. Elby hopes the network will be built by 2011 or 2012.
Overall, cap ex funding for FiOS and other projects will be flat in coming months, Elby said. “It hasn’t decreased dramatically this year,” he observed. Besides, Elby continued, a lot of FiOS is based on construction cost. The most expensive thing we do and pay for is IP routing, said Elby.
Despite the fact that it controls 73.4 percent of FTTH business in Japan, NTT has yet to gain a profit and will not reach break on FTTH until 2011, according to NTT’s Kou Miyake. “We spent a huge amount of money to build FTTH,” said Miyake. “It was very expensive.” However, NTT is making some progress. For example, five years ago it took an average of four hours to do an FTTH install. Today, it takes about one hour.
NTT has served more FTTH customers than DSL clients since 2006 and now is second behind Softbank in its total DSL clients, with a 36.3 percent share. NTT now has more than 20 million FTTH customers, Miyake said.
“We would buy 100 gig equipment if it were available today,” said Comcast’s Vic Saxena. Saxena said the company anticipates 100 Gbps equipment will be available by the end of next year after the standard has been developed. “Most of our deployment is now 40 Gbps,” said Saxena.
Elby said 40 Gbps equipment is in its third generation now and therefore prices are now “realistic.”
Miyake said NTT is “anxious” about the cost of 100 Gbps as it is first rolled out.
It is difficult for ECI Telecom to do business in Muslim nations because the ECI name must be eliminated in all product mentions, according to Laura Howard, ECI’s chief marketing officer.
The ROADM has redefined the transport layer, according to Cisco’s Surya Panditi. “We are defining the dynamic network, the converged NGN IP network.” This includes a WDM interface inside the router.
“We were in DSL,” said Panditi, “however it was very challenging for us to be profitable.” Cisco currently is looking for ways to be profitable. One product it has developed helps cable operators to use DOCSIS over fiber instead of just copper.
While several speakers identified video as the next killer app, Fujitsu Networks’ Steve Carlton noted that “video is not going to be 95 percent of business” and carriers that overbuild in that direction will have to bear the consequences.
Avanex Chairman and CEO Giovanni Barbarossa said the company will save $7 million per quarter after its consolidation with Bookham. “We were in discussions with six companies,” said Barbarossa, before deciding on Bookham. “We are creating a good working relationship between the two companies, which have two different cultures,” he noted. “It will be quite painless to the customer.”
“We are starting to see fiber go into slots where we always thought copper would be,” said Fariba Danesh of Avago Technologies. One includes high-speed computing but there are others. “It is a different dynamic, but fiber can start to tackle traditional copper slots.”
In this environment, Danesh said the company is reassessing its prospects but to this point has decided not to change its strategy. “Optical components is not a simple business and not for the faint of heart,” she noted.
To compound the challenging financial environment, Barbarossa said Avanex is carefully studying what customers it does business with. Avanex has lost about $600,000 since Nortel declared bankruptcy, Bookham has lost about $5 million and JDSU is down some $10 million. Barbarossa told us he still has hopes the money or at least a portion of the money will be paid back if Nortel stays in existence.