Fiber Market Set For Real Growth, Says Corning Scientist

ANAHEIM, Calif. — If past boom and bust markets are any indicator, the recovery of telecom transport following the crash could lead to 20 years of stable growth, the retired research director of Corning Inc. said in a keynote at the OFC/NFOEC conference Tuesday.

Donald Keck used the example of railroad and oil booms to point out that fiber-to-the-home rollouts are being initiated at a time when valuation sanity has returned to telecom equipment and carrier markets.

The "big booms" in new technologies almost inevitably bring investment frenzy in their wakes, making bubble cycles all but inevitable, Keck said. When stock markets crash, public anger is tangible and appropriate, Keck said. But the anger rarely is aimed at the technology involved in the boom.

By the time crashes hit, the technology has become engrained and accepted by the public at large. So the anger is directed to the government, with demands for additional regulation. It was just such a post-recession aggravation that led to Sarbanes-Oxley legislation, Keck said.

Today, there is no reason to think that resurrected interest in fiber to the home, curb, or node is a rerun of broadband hype. Keck said that government-financed fiber rollouts in Asia are based on real demand from residential customers for the bandwidth to support applications such as 3D online gaming.While North American bandwidth usage lags behind Asian nations in FTTx deployment, Keck said that bandwidth demand will be accelerated by new applications such as life-sciences and medicine information, where somewhere between 40 and 50 petabytes of information will be required to handle the medical data of only 40 percent of the global population.

Keck quoted New York Times columnist Thomas Friedman in pointing out the irony of developing nations eclipsing the US in fiber rollout: "There is no first, second, or third world any more, because everyone is feeling the pressure of joining the fast world."

In an earlier session with analysts, Eric Musser, vice president of Corning Optical Fiber, pointed out additional odd wrinkles in fiber deployment.

Although Corning continues to see access networks as a key driver for new fiber buildouts, 2004 represented a down year in access-- but this was only due to Japan's 40 percent drop in access buildout. When Japan is removed from global markets, access sectors grew 20 percent in 2004.

Indeed, Musser said, every sector of fiber telecom grew in 2004, including metro, premises, and submarine/long-haul. Although long-haul and ultra-long haul suffered three successive years of decline, that market grew 15 percent in 2004, albeit from a sharply-reduced base.What happened in the specific case of Japan in 2004? In a second OFC/NFOEC keynote, Hiromichi Shinahara of NTT said that fiber-to-the-home expansion suffered some temporary speed bumps as it competed with Asymmetric Digital Subscriber Line. Shinahara, director of the NTT Access Network Systems Labs, predicted that later this year, the incremental addition of FTTx customers in Japan will exceed that of monthly increments of ADSL customers.

As of Fall 2004, Shinahara said, ADSL users were up to 12.8 million customers in Japan, while FTTx users exceeded 2.0 million. The addition of 20 and 40 Mbit/sec ADSL2 and 2+ services allowed DSL options to realize short-term advantages, he said, but many customers in Japan want the 100-Mbit/sec services that only FTTx can provide.

"The nationwide carriers like NTT and KDDI are discovering that 100-Mbit service is not considered a luxury service, but is demanded by many consumers, and this is bringing many more regional carriers to the FTTx market," Shinahara said.

Partially as a result, NTT is shifting its passive optical network buildout from Broadband PON to Gigabit Ethernet PON, which offers faster speeds, better fanout, and the ubiquity of Ethernet framing.

By the end of March 2006, NTT anticipates 3.5 million customers switched to FTTx. This will require the expenditure of 300 billion yen on FTTH in calendar 2005, Shinahara said.0