Can FSO Go the Distance?
Mobile carriers looking at ways to build out next-generation broadband networks have another option in the backhaul leg of the network, if the claims of free-space optics (FSO) firm Holoplex Technologies stand up to scrutiny.
FSO uses infrared laser beams to transmit large amounts of data through the air at high speeds. Regular FSO links can reach about 1.5 kilometers, though most connections are across shorter distances, with data rates of up to 155 Mbit/s. These specs make it useful mostly to enterprises needing to connect various buildings and niche last-mile access providers (see Free Spacey CLEC?) but do not allow the technology to compete with the microwave links used by telecom carriers over longer distances (see Free-Space Optics).
Now, privately-held Holoplex claims it has enhanced the transmission technology to enable secure, bidirectional point-to-point connections offering 622-Mbit/s data rates without signal degradation at distances "of between 2 kilometers and 3 kilometers, and even 4 kilometers could be possible," the vendor's VP, marketing and business development, Anthony Bladon tells Unstrung. And he believes Europe is the place to win business, especially from the wireless operators that will need to handle increasing amounts of data traffic in the coming years (see Holoplex Debuts FSO System).
"You need range to play in backhaul, and that's what we now have. We can make an impact in the cellular market," he believes. The wireless backhaul market globally is worth about $1.75 billion, states Bladon, citing Deutsche Bank AG as a reference for the figure. Holoplex reckons about $750 million of that is in short-haul links where its enhanced FSO (EFSO) would not be economic to deploy, leaving a $1 billion market to aim for. The European portion of that is worth anywhere between $400 million and $500 million, predicts Bladon. "It's a good size of market to address."
Terry Edwards, executive director of consultancy Engalco, believes Holoplex can deliver on its promises. "It has truly up-to-the-minute technology. Holoplex decided to focus on the optics, which most of the other companies in the sector have not. It can certainly achieve 2.4 kilometer connections at 622 Mbit/s with 99.99 percent availability," giving its much greater capacity over longer distances. "The tradeoff is that the physical unit is much bigger. But I know Holoplex is already selling its kit, and they're looking at 1 Gbit/s and 2.4 Gbit/s technology, too. I can see good growth ahead for this company."
To achieve that growth, Holoplex will need some help, admits Bladon, and it is in trials with Nokia Corp. (NYSE: NOK). "It makes sense to partner with a major equipment manufacturer," says Bladon. His former employer, Ericsson AB (Nasdaq: ERICD), has also tested the traditional FSO technology but found the short range too limiting. Bladon is at pains to point out that he wasn't involved in those trials at the Swedish vendor and that Holoplex's technology is not in Ericsson's labs just now. "It is focusing on its core areas just now," he observes.
So what makes Holoplex different from regular FSO players, such as AirFiber Inc., LightPointe Communications Inc., and Terabeam Corp.? Bladon says traditional free-space optics suffers from divergent beams, resulting in decibel loss at the receiver end. Issues such as fog (water droplets deflect the beams) and "wobbling buildings" all contribute to the problem. Holoplex has developed what it calls "collimated beam propagation," which has achieved zero decibel loss over distances up to 4 km, he claims. "It's a powerful signal, and the two devices, the transmitter and receiver, need to track each other very carefully to capture as much of the signal as possible. Our IP [intellectual property] is in the way we have developed our tracking. It's all about accurately tracking a narrow beam."
Holoplex has already taken its EFSO product to Europe's carriers, both fixed and wireless, and has had meetings with 14 mobile operators, about half of which have expressed an interest. "The main interest is in southern Europe, as there is less fog there. Fog is the main atmospheric problem for wireless optical signals. And in countries such as Italy, there are a lack of microwave licenses to be had. They have nearly all been awarded."
Engalco's Edwards says fog is still an issue, but that Holoplex's narrow beam has such high-power density that "the power is a magnitude higher than its nearest competitors."
Key to attracting the interest of the carriers is cost. "We are interested in the operators that are already using microwave links in urban and suburban areas [see Marconi Bags Wireless Deal]. Microwave offers 10 Mbit/s at distances of 600 meters to 800 meters at between $10,000 and $20,000 per link. That's cost-effective, and we are not competing in this short-haul area. We are aiming for the next level -- longer distances with end-user prices of $18,000 to $30,000 per link."
An additional advantage of deploying FSO is that it is not subject to regulation or licensing (other than regulations covering eye safety -- you don't want these beams making contact with your retina!). There is also no beam interference.
With the company's core competency sitting in one area, licensing its IP is an option, but not one it is pursuing at present. "We have had requests to license the technology, and we are debating whether or not to do it. But we want to be a product company, building around our developed technology with standard elements such as off-the-shelf lasers that keep the overall costs down."
Bladon says the company already has revenue and an order backlog from a partnership in Germany "that I can't say anything about." But it's going to be at least "nine to 12 months before you see this technology deployed in mobile networks."
Until more revenue arrives, the company is surviving on its VC funding. "We recently raised some money that should take us to profitability. It was a small number in the single millions, and we are not planning any more rounds." Investors include Samsung Venture Investment Corp., Samsung Corp., and GRP Partners.
— Ray Le Maistre, European Editor, Unstrung