Optical MAN's Hope

Growth will emerge in the metropolitan area network (MAN). That is, unless it doesn't.

That appears to be the take of In-Stat/MDR, which published a report earlier this week stating that the optical MAN service market is still growing by leaps and bounds (see In-Stat: MANs Still Strong).

Despite a decline in overall telecom service revenues, the report predicts that between 2001 and 2006, revenues from optical services like Ethernet, DWDM, and Sonet in the MAN will grow more than 360 percent, rising from $1.9 billion to $6.9 billion.

“This area will certainly continue to have strong growth,” says Daryl Schoolar, the analyst who authored the report, pointing out that both consumers and business users are continuing to move to faster Internet connections. From the fourth quarter of 2001 to the first quarter of 2002, he says, the Internet consumer market grew about 1 percent. At the same time, however, the broadband share of that market grew from 15.4 percent to 21 percent.

According to Schoolar, the broadband growth isn’t due to that notorious “killer app” that everyone’s waiting for, but to regular consumers and smaller offices migrating slowly from dialup to broadband. “People are increasing broadband five- to ten-fold.”

DWDM is, according to the report, the technology that is expected to experience the most growth in the five-year timeframe. This is mainly due to its flexibility in handling multiple data protocols, as well as the low cost of dark fiber. While Sonet is expected to account for the majority of revenues for optical MAN services over the next couple of years, the report forecasts that by 2006, DWDM will have taken the lead in the U.S. (the report deals exclusively with the U.S. market).

The incumbent local exchange carriers (ILECs), such as BellSouth Corp. (NYSE: BLS), SBC Communications Inc., Qwest Communications International Inc. (NYSE: Q), and Verizon Communications Inc. (NYSE: VZ), own the majority of the MAN fiber routes and are therefore benefiting the most from the growth in the optical MAN market, the report says. “For the foreseeable future, this will continue,” Schoolar says.

But the report isn't all rosy. In fact, the analyst appears conflicted by his own observations of the obvious. As the entire telecom industry struggles with bankruptcies, restructuring, and possible network shutdowns, the MAN market also faces major challenges, he says. “The major challenge is the financial health of this market."

“When one company has problems, people attribute it," he says, to the entire market. He doesn’t see an upturn coming in the economy before next year at the earliest.

Another major challenge facing the market is limited fiber deployment: “There are a limited number of buildings on fiber, or that will ever be on fiber.

Still, Schoolar finds reason for optimism. Consumer broadband might not be growing as fast as some would like, but it is still growing. “I think the good news is that when you dig down into these companies’ balance sheets, they’re still posting strong numbers in metro.”

— Eugénie Larson, Reporter, Light Reading
rjmcmahon 12/4/2012 | 10:15:32 PM
re: Optical MAN's Hope RBOCs seem to be spending their money influencing our so-called "free press" and our so called "representatives and regulators".

SBCs immediate interest seems to be to remonopolize the phone network and the next step is the long distance markets. Metro ethernet doesn't do much for that.

Now I don't know Cynthia Marshall and for all I know she is a good person but this skeptic wonders why the SBC propaganda machine is kicking in and getting "SBC life stories" on the front pages of major media business press. Public beware is what comes to my mind.


"Cynthia Marshall, senior vice president in charge of regulatory affairs for Pacific Bell, spends her days dealing with local loops and network-sharing rules.

It is a world away from Richmond's Easter Hill housing project, where she grew up. But Marshall, one of the highest-ranking African-American woman at Pac Bell, believes her humble beginnings have made her who she is today.

``Growing up in the projects gives you the character and the survival skills to get by,'' Marshall said.

Today, Marshall is more than just a survivor. She is at the helm of Pac Bell's high-profile push to win regulatory approval to enter California's $15-billion-a-year long distance market -- a top priority for both Pac Bell and and its corporate parent, SBC Communications of San Antonio.

``Cynthia is in charge of my future,'' said Chuck Smith, Pac Bell's new chief executive. ``This is the No. 1 important endeavor for SBC.''

As Pac Bell's senior vice president of regulatory and constituency relations, Marshall helps the company navigate the thicket of state telecom regulations and serves as a bridge to constituency groups like the NAACP.

It is Marshall's mission to convince California regulators that Pac Bell has opened its monopoly local phone networks to competition -- a condition that the company must meet before it can win approval to sell long distance. Four years after Pac Bell first applied to enter the long distance market, Marshall expects that the company may finally get a decision out of the Public Utilities Commission this summer.
BobbyMax 12/4/2012 | 10:15:34 PM
re: Optical MAN's Hope After RBOCs start to recover and capital expenditure goes up, there will some activity in the optical man arena. But one may have to wait for three years and beyond before the telecom sector recovers. There are two many suppliers in both in the area of optical ethernet and SONET. RBOCs certainly would not ethernet based solutions from start-ups, so they should not keep their hopes high.

To save additional expenses, RBOCs would mainly buy the next generation of SONET equipment.

The optical component vectors (there are too many of them)would be severely impacted.
boozoo 12/4/2012 | 10:15:34 PM
re: Optical MAN's Hope And what do you base your optimism on (I mean short-term here)? Or is it just "a feeling" you have?

lastmile 12/4/2012 | 10:15:48 PM
re: Optical MAN's Hope Light Reading always feels pessimistic whenever there is hope for this sector.
It seems to me that they enjoy this pessimism.
The fact is that there is hope!
Ther is hope in optical MAN and widespread FTTH is just a few steps away from being a reality. I am an optimist. There is hope!
lilgatsby 12/4/2012 | 10:15:57 PM
re: Optical MAN's Hope Has anyone worked with a viable free space optics product that interfaces to a transport solution and doesn't degrade the capacity dramatically?

Just curious, I've heard of some solutions and seen some vapor-ware. The concept is pretty cool and could enable MAN markets to grow at a faster rate by enabling competition among other carriers rather than the majority-MAN-fiber-owning Bells.

Comments? Real world applications?
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