Dell'Oro: Transport Market Down 23%

Spending on DWDM and Sonet/SDH equipment isn’t going to pick up at all until 2003 and won’t return to the levels experienced last year for the foreseeable future, according to a market forecast published yesterday by the Dell'Oro Group.

The forecast, for the worldwide optical transport market, says overall revenues for this type of equipment will total $17.7 billion this year, down roughly 23 percent from last year's total of $22.9 billion.

Additionally, the firm doesn't predict the market will start growing again until 2003. And even then, it forecasts only a small increase of about 3 percent from the preceding year.

The figures are no surprise. Late in May, Dell’Oro predicted that the dwindling fortunes of key players in the optical networking market, such as Nortel Networks Corp. (NYSE/Toronto: NT), would have a negative impact on overall revenues this year (see Nortel Drags Down Market).

It’s a trend that won’t be easy to budge. According to Shin Umeda, principal analyst at Dell’Oro, the lack of spending by service providers represents more than a mere cutback. It’s the result of many carriers turning a corner in network development.

”Many emerging [service providers] embarked on constructing new large North American and global fiber optic networks,” the report states. “In late 2000, many of these [service providers] completed the main construction phase of their optical networks and began transitioning their purchasing patterns from high volume infrastructure build-outs to more modest incremental bandwidth acquisitions.”

Not to mention the carriers who’ve gone bust during the recent downturn.

Dell’Oro’s figures seem to tally with other firms’ findings about the displacement of Sonet/SDH with DWDM gear. Another research firm, Frost & Sullivan, has reported that by next year, traditional Sonet/SDH gear will start to decline in proportion to a burgeoning market for next-generation equipment, including DWDM gear with Sonet interfaces (see Report: Next-Gen Gear Replacing Sonet).

- Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com Want to know more? The big cheeses of the optical networking industry will be discussing this very topic in a session at Opticon 2001, Light Reading’s annual conference, being held in San Jose, California, August 13-16. Check it out at Opticon2001.

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optical_survivor 12/4/2012 | 8:00:18 PM
re: Dell'Oro: Transport Market Down 23% Does anyone know what is the range for 2.5G and 10G transport services per month??? For instance, what would UUNET or any other service provider pay for the 2.5G and 10G per month to the transport bandwidth provider??? How about tariff for protected vs. unprotected connectons??? Can one go to Enron and get 2.5G or 10G ??? Is Enron selling this bandwidth much cheaper than other transport bandwidth providers?

Thanks in advance
Optical Survivor
[email protected] 12/4/2012 | 8:00:17 PM
re: Dell'Oro: Transport Market Down 23% Lighten up for pete's sake....

Noticed that you are still ragging on Bill. He's gone....it's okay to find someone else on the left to target.
flanker 12/4/2012 | 8:00:17 PM
re: Dell'Oro: Transport Market Down 23% "I guess that once we shoot all the analysts and burn all of the PR people at the stake, we will then all be able to get busy on doing what it takes to have this industry work out."


Attila the Hun, Joseph Stalin, Adolf Hitler, Mao Zedong and Bill Clinton all thought like that.
ownstock 12/4/2012 | 8:00:15 PM
re: Dell'Oro: Transport Market Down 23% Attila the Hun, Joseph Stalin, Adolf Hitler, Mao Zedong and Bill Clinton all thought like that.

What?!!? Go smoke a fatty, dude! All those guys survived on PR people...and putting an American President (even BC) in that that league is a way, way over the top.

Did you take your pills today? Has that Richard Nixon voice in your head come back? Or is it the satellite mind control bug the CIA planted?


cfaller 12/4/2012 | 8:00:11 PM
re: Dell'Oro: Transport Market Down 23% Pat Mudge wrote:

"Do you happen to have world-wide transport figures from 1999? It would be interesting to see what the difference would be without the '00 blip."

FYI, A couple months ago, Fat Pipe (www.fatpipeonline) looked back at forecasts from 1998-1999, before the dot-com hype. The result? The industry is about 10% above the predictions for 2001. Not bad, huh?

And no, I don't work for Fat Pipe Online, I just really pay attention to whatever Gary Kim has to say.
gardner 12/4/2012 | 8:00:10 PM
re: Dell'Oro: Transport Market Down 23% Attila the Hun, Joseph Stalin, Adolf Hitler, Mao Zedong and Bill Clinton all thought like that.

Anyone who could put any American president in the same list with Attila, Stalin, Hitler and Mao is either ignorant of history, flippant to the point of callousness, or an idiot. Which is it flanker?
duffeck 12/4/2012 | 8:00:08 PM
re: Dell'Oro: Transport Market Down 23% the Worldwide Optical Transport Market will grow by 49% per year reaching $57.3 Billion in 2005 up from $23.5 Billion in 2000 according to the same Shin Umeda.


Oh yeah that was way back in January.

Give me a break!

[email protected] 12/4/2012 | 8:00:07 PM
re: Dell'Oro: Transport Market Down 23% Note to editors:

Please stop writing stories about these people. The reaction on these boards should tell you something about how seriously the market takes them.
Naquada 12/4/2012 | 8:00:07 PM
re: Dell'Oro: Transport Market Down 23% The following article deserves some attention:

NTT launches 100-Mbit/s fiber-optic service
By Yoshiko Hara
EE Times
(07/31/01, 5:55 p.m. EST)

TOKYO GÇö Nippon Telegraph and Telephone Corp. will launch a fiber-optic service in Japan on Wednesday (Aug. 1) capable of supporting 100-Mbit/second transmissions, opening the way for full-scale fiber to the home.

The service will depend on the readiness of Internet service providers to connect to NTT's fiber-optic network, which will be offered at a basic rate of $73 per month.

NTT's pricing is almost a quarter as much as it had originally planned to charge for the service, but the company lowered its rates after a small company named Usen Corp. initiated a 100-Mbit/s fiber-optic service in a limited area of Tokyo this past March. Known as a cable music distributor, Usen shocked the Japanese communications industry by beating NTT to the punch with a 100-Mbit/s service priced at $40 per month.

Usen has already signed up 3,400 subscribers and is now expanding its fiber-optic service area to include greater metropolitan Tokyo and other cities with populations of 1 million or more, which it plans to support starting in October.

Usen acts as the information provider for its 100-Mbit service, and does not allow other ISPs to connect to its network.

In a trial service that began last December, NTT offered a best-case service of 10 Mbits/s and set a monthly rate of about $258 at that time.

"Usen's business surely had some impact on NTT's [pricing] strategy," said Atsuo Takahashi, senior analyst at ABN Amro Securities (Japan) Ltd. "But at present Usen is skimming the cream off. Sooner or later, the company will reach the point where it cannot keep the low rate. NTT should not take Usen's service a big threat."

What can you get?

To demonstrate the capabilities of a broadband network, NTT recently launched a joint experiment with Dai Nippon Printing and Sharp Corp. The program is to last six months. .

"This experiment targets market creation. We are going to show images and videos that are not available through current networks and that will make consumers realize [the service is] worth paying for," said Shigehiko Suzuki, senior vice president of NTT.

A Japanese government project, dubbed e-Japan, intends to connect 10 million households to 100-Mbit/s networks and 30 million households to 10-Mbit/s networks by 2005. That level of penetration would involve more than 90 percent of Japanese households. "To realize 10 million households connected to broadband networks, it is really necessary to involve consumers widely," Suzuki said. "To demonstrate what the broadband networks can do will practically expand the market."

In the three-company experiment, DNP will serve as contents provider, Sharp will work on in-home terminals, and NTT will provide the network infrastructure.

[email protected] 12/4/2012 | 8:00:05 PM
re: Dell'Oro: Transport Market Down 23% http://www.teledotcom.com/arti...

This is an interesting story. I have a few contacts in some SPs who say that they have seen some cutbacks but not as bad as everyone claims. Nortel, Lucent, Fujitsu (who is really screwing the pooch in their biggest accounts product and service wise....I hear that Cisco kicked their ass in 2 RBOC accounts) etc are victims of having produced shitty equipment and are being lead by morons.

CIR just kicked a report that claims that Sprint and Worldcom are not as bad off as everyone else claims: www.cir-inc.com

Perhaps the problems that we are experiencing in this industry are a function of poor technology choices and not the horror that everyone claims...

360 Networks was doomed to fail, Level 3 close to follow and Williams bringing up the rear because they have bad busines models.

Reality check after all?
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