40 Gbit/s Takes the Slow Lane

BALTIMORE — NFOEC — Executives from several top optical networking companies splashed cold water on 40-Gbit/s technology at an investment conference held here yesterday at the NFOEC (National Fiber Optic Engineers Conference).

A panel of executives told a packed house of investors, engineers, and fellow vendors that they have pushed back their estimates for widespread deployment of the 40-Gbit/s technology until at least 2003 or 2004.

“We’ve been aggressively developing 40 Gbit/s,” said Ira Deyhimy, vice president of product development for Vitesse Semiconductor Corp. (Nasdaq: VTSS), at the conference organized by CIBC World Markets. “We thought 40-Gbit/s sales would ramp up in late 2001. Now we’re saying it will be more like late 2003 or 2004.”

The 40-Gbit/s question seemed to dominate discussion during two panel discussions centered around optical components and optical networking systems.

Top executives from some of the leading component companies in the industry — including Fred Leonberger, CTO of JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU); Frank Levinson, CTO of Finisar Corp. (Nasdaq: FNSR); Ira Deyhimy of Vitesse; and Henry Yaffe, CTO of Yafo Networks — voiced the general consensus that the uptake for 40-Gbit/s technology has slowed considerably from what they had once predicted.

The sentiment was echoed by optical system providers during another panel discussion. Elizabeth Perry, senior vice president at Ciena Corp. (Nasdaq: CIEN), said she doesn’t expect high volume shipments of 40-Gbit/s technology in Ciena long-haul products for some time. And Chris Hamilton, chief technologist, from Williams Communications Group (NYSE: WCG), the only carrier involved in any of the panel discussions, said he doesn’t yet see a need for 40-Gbit/s link deployments in most stretches of his company’s network.

There are several factors behind the delay in deployment. For one, developing new high-speed technology is never easy. At 40 Gbit/s there are many complications associated with the packaging of components and the physics involved in such high-speed transmission.

“At 40 gig there is an inescapable dispersion problem,” said Yafo's Yaffe. “We can probably deal with it, but at what cost? The cost equation really becomes critical.”

Dispersion occurs when a light signal spreads out over distance. These signals typically must be adjusted using special components. The problem grows particularly acute at higher speeds such as 40 Gbit/s.

While vendors like to tout faster and faster speeds, the reality is that many service providers haven’t completely adopted 10 Gbit/s and are still buying huge amounts of 2.5-Gbit/s gear. For example, Nortel Networks Corp. (NYSE/Toronto: NT) was one of the first companies to come out with 10-Gbit/s solutions, but now the company’s sales of 10-Gbit/s gear are beginning to flatten, say some analysts. Meanwhile, Ciena has actually seen a ramp-up in its OC48 (2.5 Gbit/s) sales. One reason is that carriers like Sprint Corp. (NYSE: FON), for example, haven’t moved to 10 Gbit/s as quickly as some had expected. And with 2.5-Gbit/s prices continuing to fall, it makes lower-speed technology an even more attractive choice in this capital constrained market.

But that doesn’t mean that component makers are completely sidelining their 40-Gbit/s developments. Fred Leonberger, of JDSU, says that his company can’t afford to put 40 Gbit/s on the back burner, because OEM customers are already looking for samples.

“Those of us working on 40-Gbit/s technology are still feeling pressure from OEMs,” he said. “They still have a clear vision of when they want the technology for their prototypes.”

While long-haul deployments of 40 Gbit/s may be two to three years away, short-reach applications are likely to be in customer trials sometime in the second half of next year, said Elizabeth Perry of Ciena. Analysts agree.

“Absolutely, 40-Gbit/s technology will be a reality quicker in short-reach applications like terabit routing than in long-haul applications,” says Jim Jungjohann, of CIBC. The reason? As IP data grows in the network core, carriers can use 40-Gbit/s links to hook multiple core routers together.

“The interconnect piece is where we will likely see 40 Gbit/s first,” said Perry in an interview after the panel discussion. “It makes sense, because you can use a VCSEL [vertical cavity surface emitting laser] array to make a cost-effective solution — and because the distances are so close, that isn’t an issue.”

The revised outlook for widespread 40-Gbit/s technology could affect many a startup that raised money on the premise that the market would develop sooner. Venture capitalists say that the life expectancy for most startups has been greatly reduced because of the lack of funding.

“Over the next 15 to 18 months, I see about 75 to 80 percent of these companies going away,” says Melissa Crane, a partner at VantagePoint Venture Partners. “The capital market is just so tight these days. The only hope some of these companies have is for a bigger company to buy them — because there just isn’t an IPO market right now.”

- Marguerite Reardon, Senior Editor, Light Reading

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phos 12/4/2012 | 8:06:02 PM
re: 40 Gbit/s Takes the Slow Lane fhe...no I was not one of those who said that 28.8 was overkill...because I knew that the outside potential for the existing UTP plant could handle up to 10 mps with expensive conditioning...but as the inablility for RBOCs CLEC's and others have proven, DSL has not been able to cost effectively perform!!! No matter how much money is spent after a while you need to cut bait!

40 gig is in that same category!!! Network providers will spend billions trying to make it work but, in the last analysis, they will cut bait...my question is why waste the money now? So many times we see the herd head down a path you know that one that ends at the cliff, and with inertia...the ones in the front end up at the bottom and the ones in the back, don't know any better and follow to!

eewanco 12/4/2012 | 8:06:01 PM
re: 40 Gbit/s Takes the Slow Lane Having recently experienced first-hand the limited availability of OC-48 components and equipment, and seen the immaturity of (and apparent lack of significant demand for) OC-192, I said to myself, when I saw the big LR coverstory on "Why you need 40 Gbps [now]", "You guys are nuts." I was even more convinced of this fact when I actually read the article. The hubris was astonishing (I loved the part that talked about how "as we all now know" it was that Nortel won its bet on OC-192, when in fact they are not only falling apart, but killed a major OC-192 product recently). It looked like researchers have barely figured out how to do it yet, much less make it feasible and cost effective.

Nice to see a later article somewhat justify my skepticism.

That's not to say that 40 Gbps won't eventually be needed. I'm sure it will. But I don't see the industry as a whole clamoring for it anytime soon; especially on a significant scale.

Super Mario 12/4/2012 | 8:05:59 PM
re: 40 Gbit/s Takes the Slow Lane Have a look at this...

M. Reinhold et. al., "A Fully-Integrated 40Gb/s Clock and Data Recovery / 1:4 DEMUX IC in SiGe Technology", ISSCC 2001, Digest of Technical Papers, pp. 84-85, Feb. 2001
Superman 12/4/2012 | 8:05:39 PM
re: 40 Gbit/s Takes the Slow Lane Thanks. Where can I get this info? Is it on the web?

Also, if any company designs 40G clock and data recovery in DRO technology, will there will be demand for it? I don't think PLL will work on 40G. There has to be single module for 40G clock and data recovery. Am I right?

Petabit 12/4/2012 | 8:04:36 PM
re: 40 Gbit/s Takes the Slow Lane Hey Peter, you know I've got this really great story idea. It goes like this:

First, do a story emphasising the positive nature of a new technology. Pick something that loads of people have jobs doing, like 40G. There will always be a few with the opposite view, so that should get some really good traffic on the message boards. Lots of nice readers to boost those advertising rates.

Second, and this is part I love, a few weeks later do a story with completely the opposite spin. You know, like '40G will never work'. Then you get everyone arguing again. More traffic, and higher advertising rates. Brilliant isn't it.

Oh wait. You've already done it. Shoot.

Never mind I'll think of another topic soon. How about all-optical networks? Or PMD compensation? Or modulation formats? Solitions (that's always a winner)?

flanker 12/4/2012 | 8:04:35 PM
re: 40 Gbit/s Takes the Slow Lane It's ironic that the posters who think 40G has a future are the same people who were arguing a few weeks back that Internet traffic is declining.
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