Optical components

Bandwidth9 Behind Schedule?

Tunable laser startup Bandwidth9 Inc. laid off nearly half its workforce last Friday (May 10), according to a source close to the company -- raising questions over whether the company is in trouble.

Jake Weise, VP of marketing at Bandwidth9 confirmed the layoffs but claims that the company is still solid. "We didn't want to do it," he says. "But as you are well aware, the market is incredibly slow right now, and we needed to lower our burn rate."

About 60 out of 133 employees were let go, with the majority of layoffs concentrated in manufacturing and in middle management positions that were created at a time when the company anticipated much faster growth than it actually saw.

The truth of the matter, according to the source, is that Bandwidth9 anticipated that the market would be stronger and that its product would be at a more advanced stage than it is today. It suffered some technological setbacks that delayed product plans by about a year, the source contends.

The problems centered around meeting the Sonet specifications of 2dB power penalty over 80km. Vertical Cavity Surface Emitting Lasers (VCSELs), such as Bandwidth9's, deliver very low optical power, which created difficulty in meeting the power requirements. That particular issue was overcome by integrating Semiconductor Optical Amplifiers (SOAs) in the G2 product, which was announced in March (see Bandwidth9 Debuts Laser).

Dispersion penalty was a bigger problem. "We were fighting with the design to have a device that doesn't chirp too much," says a former employee. Chirp, which is a variation in wavelength as the laser beam is turned on and off, is a potential problem with directly modulated lasers.

The chirpiness of Bandwidth9's laser actually helped the company win some heavyweight backing from Corning Inc. (NYSE: GLW) last year. The chirp just happened to counterbalance negative dispersion characteristics of Corning's Metrocor fiber, enabling light to be carried for distances of more than 100 meters in tests. Bandwidth9 also got key support from Nortel Networks Corp. (NYSE/Toronto: NT), which demonstrated metro gear incorporating Bandwidth9 lasers at last year's Supercomm show (see Bandwidth9 Scores a Coup).

All the same, news of Bandwidth9's technical problems won't come as any surprise to Larry Coldren, chairman and CTO of Agility Communications Inc., a competitor. Coldren has done a lot of research into VCSELs at the Optoelectronics Technology Center of the University of California at Santa Barbara and maintains that 1550nm VCSEL developments won’t be ready for commercial use for another five years. Bandwidth9 is misleading people by pretending it has commercial products, he told Light Reading at the time Bandwidth9 was getting chummy with Corning (see Bandwidth9 Cuddles Up With Corning).

Weise acknowledges that Bandwidth9 had difficulty meeting the Sonet requirements for dispersion, but he says the problem's been solved in the last couple of weeks. In a slightly desperate-sounding bid to put a positive spin on it, he says that one of the "blessings" was that it gave the company time to refine other aspects of the laser's design, so that "we got a better product out in the end.

"There are no other technical issues outstanding," he insists.

However, the company has been unable to start Telcordia Technologies Inc. testing until the technical issues were ironed out. As a result, it will be approximately another eight months before it has qualified products, whereas other tunable laser vendors have already passed this milestone (see Nortel and Agility in Tiff Over Lasers). That could make a difference to potential customers.

But the big worry with a company like Bandwidth9 is that systems vendors are not quite as enthusiastic about tunable lasers as they once were (see Scattered Signals for Tunable Lasers). Even though the technology has appeal -- for reducing the costs of sparing and inventory, for starters -- systems vendors are more cautious because of the lack of carrier spending.

Weise says it's a waiting game. "I do not know of a single vendor that does not have tunable lasers in their product plans. Of course, that does not change the capex situation." Systems incorporating Bandwidth9's lasers are just going into trial now, he claims. While that is good news in itself, there could still be a significant delay while systems vendors qualify their products with carriers and wait for orders themselves.

Bandwidth9 still has plenty of cash in the bank, Weise contends, adding that with the burn rate it now has, it will probably need to seek new funding sometime during the next year. Its last announced funding round was in September 2000 (see Bandwidth9 Raises $80 Million).

— Pauline Rigby, Senior Editor, Light Reading

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