Which components hold the key to next-generation DWDM systems, ones that will pack hundreds of wavelengths into a single fiber, and will be sold in huge volumes?

Until recently, arrayed wave guides (AWGs) seemed to offer the best prospects for splitting light into large numbers of wavelengths. But now vendors are pouring money into an alternative technology –- fiber Bragg gratings (FBGs).

"We increased FBG manufacturing capacity fourfold last year and will increase it another fourfold in the coming year," says Ken Walker, VP of specialty fiber for Lucent Technologies Inc. (NYSE: LU). The gratings are included in Lucent's products and also are sold in subassemblies shipped by Lucent's Microelectronics group to other companies.

“FBGs will be a $1.3-billion market within three years," says Philippe Bregi, COO of Alcatel Optronics, the optical components division of Alcatel SA. Alcatel already makes FBGs for submarine systems and is now jump-starting terrestrial FBG developments by acquiring Innovative Fibers Inc. for $175 million (see Alcatel Buys Fiber Filters). "We won 18 months to two years of development time by purchasing Innovative Fibers," Bregi says.

Ciena Corp. (Nasdaq: CIEN) makes its own FBGs -- a decision that chief scientist Victor Mizrahi says the company made early on out of sheer necessity. "There's no reason to change now. FBGs are moving up," he adds.

Nortel Networks Corp. (NYSE, TSE: NT) reportedly has FBG developments underway, via its purchase of Qtera Corp. for $3.25 billion. But at press time, Nortel chose not to answer requests for information, saying that its "use of fiber Bragg gratings is confidential, for competitive reasons."

Cisco Systems Inc. (Nasdaq: CSCO) doesn’t make its own FBGs but says it’s secured supplies via a 10 percent stake in the components division of Pirelli Cables and Systems.

Independent sources of FBGs include JDSU Inc. (Nasdaq: JDSU) and startups such as Southampton Photonics Inc. (see Fiber Components Excite VCs).

Why so much interest in FBGs?

In order to answer that question, it’s important to understand what FBGs are and what they do. They’re made from lengths of specially treated fiber, unlike AWGs, which are made from wafers using semiconductor technology.

FBGs work like selective mirrors, reflecting back a specific wavelength while allowing other wavelengths to continue on their journey. This effect is created by masking the fiber and blasting it with ultraviolet light to make a “grating” –- a series of stripes of glass of different refractive index running across the fiber. The longer the grating, the more accurate the wavelength selection process.

Right now, the jury’s still out on whether FBGs or AWGs will dominate future DWDM systems. Japan’s NTT Corp. has demonstrated AWG developments that can support 256 wavelengths, according to John Midgley, president and CEO of Lightwave Microsystems Corp. a startup making AWGs.

Midgley also points out that in a DWDM system each wavelength requires an FBG, while multiple wavelengths can be handled by a single AWG. The bottom line, he says, is that FBGs currently cost three or four times as much per channel as AWGs.

-- Mary Jander, senior editor, and Peter Heywood, international editor, Light Reading http://www.lightreading.com