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Optical Access Startups: Roll Call

Light Reading
6/27/2002
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The broadband access market – also known as "the last mile," "the first mile," or "the local loop" – has taken the spotlight as one of the hottest, if not the hottest, segments of the telecom equipment market.

Simply put, access is where the action is. It's where carriers hope to get their fastest return on investment. And it's where they have their biggest chance to turn network-based services into revenues – and pull themselves out of the current economic mire.

Access also is where startup companies are in a key position when it comes to launching a sector revival. Leading suppliers of DSL and cable modem gear are seeing a decline in demand, but their lengthy product development cycles and the challenges of juggling multiple market segments are stalling their solutions. Meantime, carriers are clamoring for faster, more efficient access techniques that promise to help drive up carrier subscriber volumes.

Enter access startups, which are gathering momentum in several key areas, including passive optical networking (PON), wireless, optical Ethernet, and multiservice access platforms.

In this report we focus on startup activity in each of these segments, describing what's happening and where, and who's involved. We've drawn much information from the April 2002 report titled "Broadband Access: Last Mile, Last Chance," from Optical Oracle, Light Reading's subscription research service.

Read the report sequentially, or click on the page below that interests you most:

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com

Editor's Note: Light Reading is not affiliated with Oracle Corporation.
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Stagecoach
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Stagecoach,
User Rank: Light Beer
12/4/2012 | 10:11:54 PM
re: Optical Access Startups: Roll Call
I think LR hit the nail on the head with the assessment that FSO is a niche technology. However, with the telecom market as bad as it is, it is hard to say what the eventual outcome of the FSO market will be. Also, LR, your list of FSO vendors is off. You should classify Airfiber, Lightpointe, Terabeam, fSona, Dominion, as FSO (or whatever term fits best) as they are all the same with minor differences (e.g., protocol, bandwidth, tracking capabilities). And you are missing key players such as Optical Access, Optical Crossing, PAV and others. Why are Aperto and Ensemble in there? They are RF players.
Stagecoach
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Stagecoach,
User Rank: Light Beer
12/4/2012 | 10:11:53 PM
re: Optical Access Startups: Roll Call
It is bizarre to me that investors are still dropping money on startups in this space. With all the cash put into Airfiber, Lightpointe, Terabeam and fSona, all the while with a number of established "traditional enterprise" players out there. I admit, shooting lasers through the air is a cool concept, but facts are facts, fog is real.
metroshark
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metroshark,
User Rank: Light Beer
12/4/2012 | 10:11:50 PM
re: Optical Access Startups: Roll Call
Investing in some of these last mile start-ups is still a better idea in investing in a late stage round of a core router or MSPP start-up. Last mile high bandwidth is a problem for which there is no good solution today. If some company can deliver a techically sound and economically efficient solution, this could result in a drastic change in the telecommunications market. Funding "disruptive" technology is the dream of every VC. VCs are in the business of taking risks in return for very high return potential, and the decline in valuations of start-ups over the last two years makes investment in to high-risk areas feasible again. The expectation on how long it takes to achieve return on investment has also been scaled down. Note that getting one good result out of 10-20 investments is considered an OK track record for an early stage VC, so it is not surprising to see somany start-ups in targeting an area where there is no clear solution.
Stagecoach
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Stagecoach,
User Rank: Light Beer
12/4/2012 | 10:11:36 PM
re: Optical Access Startups: Roll Call
Thanks for the good points metroshark.

I guess I'm trying to dig at how VCs believe that the one FSO startup they are financing will be able to differentiate itself in light of so many players chasing after a relatively limited market. I say limited in the specific FSO niche market sense, not the access market itself. I understand the grand scale of the access problem, but the clear limitations that exist for the application of FSO is a real problem that makes the odds of a VC getting a good result less likely.

After some more thought though, if VCs use the 1 in 10-20 rule then perhaps these investments really do make some sense. The VCs will just have to count on the fact that the current top players of Airfiber, Terabeam, Optical Access, fSona, and PAV will falter and make room for for the VC's startup. Otherwise they'll be shooting for a small (i.e., >10%) piece of the FSO pie.
Pearl
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Pearl,
User Rank: Light Beer
12/4/2012 | 10:11:22 PM
re: Optical Access Startups: Roll Call
Appian layed off 30% of its staff this week. Appears that announced and unnounced customers are merely announcements...
Confucius
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Confucius,
User Rank: Light Beer
12/4/2012 | 10:11:22 PM
re: Optical Access Startups: Roll Call
empty
Confucius
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Confucius,
User Rank: Light Beer
12/4/2012 | 10:11:22 PM
re: Optical Access Startups: Roll Call
Funny how Appian didn't make table 4, despite being on the (vaunted?) top 10 list. And they even have a customer, FWTW. Not that they are exactly immune from the ubiquitous "market conditions" from what I hear. But at least they still answer the phones.
Horkus
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Horkus,
User Rank: Light Beer
12/4/2012 | 10:10:35 PM
re: Optical Access Startups: Roll Call
Stagecoach Wrote--
"I say limited in the specific FSO niche market sense, not the access market itself. I understand the grand scale of the access problem, but the clear limitations that exist for the application of FSO is a real problem that makes the odds of a VC getting a good result less likely.

What are those limitations?
Is fog the only problem like you said earlier or are there other issues?
Don't tell me line of sight is a problem - because digging in streets is a bigger problem than that.
Stagecoach
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Stagecoach,
User Rank: Light Beer
12/4/2012 | 10:10:27 PM
re: Optical Access Startups: Roll Call
In addition to fog I would say that acquisition of roof rights, and yes (apologies in advance), line of sight. While line of sight surely is an easier problem to solve then trenching in a major metro area, it does undercut the speed with which FSO units can be deployed. Acquisition of roof rights (for roof mounted units) is a difficult proposition. Imagine deploying 50 FSO units in a metro area and having to deal with 50 different landlords. They are greedy and difficult to negotiate with. It just slows down the process and adds cost. The alternative is window mounted units, which exacerbates the line of sight issue given limitations of adequate locations you can "see" from that office. So, yes, all in all, FSO is still a much less expensive alternative to laying fiber. But there is a specific window within which FSO is more economical.

So, if you figure the variable (per meter) trenching costs you'll find that for very short distances fiber is economical (when you also account for longer term maintenance costs which are lower for fiber). Therefore, buildings that are already passed by fiber may be a lost cause for FSO.

On the other end of the spectrum, fog is a real inhibitor and caps the range where FSO is effective. You're looking at a 150-200 foot all-weather link. Maybe you can get longer links using high wavelengths, but not a huge improvement by any means. you'll still be under 500 ft. You'll have to start adding RF backups to get to 1 km and then you're adding cost and complexity with lengths the distance to the building where fiber is economical.

So, you can see the niche forming for FSo pretty clearly. It's good for certain distances in certain fog-areas for certain bandwidths.

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