Even with a slowing economy and several recent “gloom-n-doom” reports in the optical-networking industry, a new study claims that first-mile fiber connections to multi-tenant office buildings remain a strong growth area.
Research firm Communications Industry Researchers Inc. (CIR), in a new report, says that “optical buildings” will spur the domestic optical access systems market to surpass $2 billion by 2005–not including enterprise systems. In 2001, the market is expected to reach $859.6 million.
In terms of sales, Optical-Ethernet systems revenues are expected to top $447.2 million in 2005, up from $66.4 million in 2001, CIR said. SONET systems revenues, meantime, are expected to be at $851.1 million in 2005, up from $668.4 million in 2001. WDM access-systems revenues are anticipated to reach $168.9 million in 2005 ($53.6 million in 2001), PON systems revenues are predicted to reach $396.3 million in 2005 ($48.9 million in 2001), and Free-Space optics systems revenue are expected to hit $289.5 million in 2005 ($22.3 million in 2001).
While CIR ultimately sees the incumbent local-exchange carriers (ILECs) continuing to dominate the business landscape, the new fiber-based competitive local-exchange carriers (CLECs) and building local-exchange carriers (BLECs) are providing the impetus for growth in next generation optical access technology and services.
The report also finds that the number of fiber-connected buildings will grow from 21,000 in 2001 to over 43,000 in 2005. CIR also believes that services such as Optical Ethernet will enjoy rapid growth over the next few years reaching almost $900 million in 2005.
Additional findings from the study:
* ILECs will remain the predominant players in the access space, which will prove to be good news for SONET vendors such as Cisco (Cerent), Fujitsu, Nortel and potentially Ocular or Redback.
* Free Space Optics will develop a solid niche as an optical access solution and CIR projects the overall segment to grow to $330 million by 2005. However, vendors focusing on the 500-meter segment will grab the bulk of this market.
* Fiber-to-the-Home is growing, but primarily where it is least expected: rural America. Rural independent telcos within the Qwest/U S West region are cashing in on government subsidies for fiber strands. CIR sees PON vendor Optical Solutions, as dominating sales to this sector with World Wide Packets coming in second.
While the Fiber-to-the-Home market is led by service providers that do not have to make a profit (given their co-operative status), Fiber-to-the-Building providers such as Yipes, Cogent and FiberNet have yet to show one. Optical Ethernet promises to offer a route to profitability for the aforementioned carriers, CIR said.
While “carrier-class” remains a familiar catch phrase, service providers are happily buying enterprise-class Ethernet systems from companies like Extreme, Foundry and Cisco.
CIR’s report, “Optical Access: Next Generation Technology and Services in the First Mile,” analyzes the competitive positions of 21 leading systems vendors and presents the opinions of 15 local service providers across ILEC, CLEC and BLEC segments, officials said. The report includes forecasts for access systems by technology, ports and systems by dollars and shipments, forecasts for FTTX and Optical Ethernet services. The report also reviews the applications and business cases for technologies, such as SONET, WDM, and PON.
The new report is available a cost of $4,500 for hard copy, and may also be purchased in electronic formats.