Mobility, the cloud, proliferating applications and above all, radically growing video volumes to end-user mobile smart devices, are straining carrier bandwidth capacity worldwide. Service providers are pressed increasingly to both expand their capacity and improve transmission efficiency.

100G has become the default internal carrier transport standard. The next fundamental step in capacity and performance will be 400G. But the shift to that level on an efficient, single-carrier basis remains years away, limited by the economics of silicon photonics.

These factors have created interest in an intermediate bandwidth level that can improve the economics of capacity creation and transport efficiency: 200G.

Where very long distances aren't required, denser, "16-QAM" modulation can effectively map two 100G services onto a single wavelength, rapidly doubling bandwidth capacity without major new capital investment. 16 QAM's big drawback is limited reach. While this limitation will be solved, timing is uncertain. There are claims, difficult to verify, that improvements may be in the works in the near future, though their potential "side effects" in terms of other disadvantages are also uncertain.

The new Heavy Reading Insider report, "200G Transport: A Market Reality Check," examines this incipient market as at least 30 customers worldwide -- primarily medium to small carriers -- deploy 200G-capable products. Fewer than these may actually be using the line cards -- flexible between 100G and 200G -- for the new speed. Some carriers, prominently including Verizon, are however using the new speed on US regional and metro routes. At the same time, most potential customers continue to "kick the tires" in this segment.

Three major vendors introduced 16 QAM products in 2014 and report paying customers, though only Ciena had publicly announced ones as of 2Q 2015. Further adoption of 200G will be significant but not overwhelming over the next couple of years.

Although most buyers until now have been carriers, growth will be faster in the Web 2.0/data center segment, for which Cyan recently introduced the first targeted 200G product. The strength of the data center segment comes from its superior capex outlook, relative fiber "poverty," focus on short-distance, metro connections -- for which 16 QAM's reach weaknesses matter less -- and generally greater ability to quickly implement new technologies.

— Steve Koppman, Contributing Analyst, Heavy Reading Insider

200G Transport: A Market Reality Check, a 13-page report, is available as part of an annual subscription (12 monthly issues) to Heavy Reading Insider, priced at $1,995. This report is available for $900. To subscribe, please visit: www.heavyreading.com/insider.