x
DWDM

Long-Haul Lag Lingers

It may come as no surprise, but let’s make it official: the long-haul market lag is here to stay.

A Probe Research Inc. report released late last week states that revenues for long-haul optical equipment in 2002 have dropped more than 50 percent compared to last year (see A Long Haul for Long Haul).

And Probe says the decline is here for the -- well, let's say it --the long haul. The sector won’t pick up at all until 2004, says Maria Zeppetella, the vice president of optical infrastructure at Probe and the author of the report. She sees revenues in the sector reaching $6.1 billion in that year. Sadly, she doesn’t expect revenues to surpass their 2001 level in the foreseeable future: even in 2007, revenues will total only about $9.2 billion.

Long-haul optical equipment, which allowed carriers to build high-capacity global fiber optic networks, was a focus of the telecom boom in 1999-2001. In 2001, the long-haul sector cashed in $10.3 billion, representing 51 percent of total revenues in the optical market, the report states. In comparison, revenues in the long-haul market will barely reach $5 billion in 2002, accounting for about 45 percent of all optical revenues, says the report.

The report, based on interviews with many service providers, points out several factors contributing to the freefall. Topping the list is the enormous glut of capacity already in the ground.

"The most important reason was over-capacity," Zeppetella says. "If you don’t need any more optical equipment in your network, you’re not going to buy any more. All the long-haul networks are already built."

Unrealistic traffic growth projections from the likes of UUNet receive much of the blame for setting the ball in motion in the first place. These aggressive projections led service providers to overbuild their networks, which in turn led equipment vendors to create large inventories (see Did WorldCom Puff Up the Internet Too?).

Service providers have been forced to come to terms with more realistic average growth rates of about 100 percent annually (compared to the 1,000 percent annual growth rate UUNet was claiming in the late 90s), Zeppetella writes in the report. In addition, she says, service providers have far less cash than they did during the boom years. [Ed. note: Don't we all!]

Other factors that have contributed to the lack of confidence in the sector include questionable accounting practices, investor skepticism, and an inability to offer profitable new data services, the report states. Offering some hope, Zeppetella says that some service providers have at least been indicating that they’re getting more of a handle on how to make data services more profitable.

Another tiny bright spot shining through in the report is that the WDM market outside the U.S. and Europe grew from 2001 to 2002, jumping from $332 million to $403 million. In North America, the WDM long-haul market was the hardest hit.

Looking to the future, Zeppetella observes that the new market reality has changed the focus of R&D, as well. Instead of focusing purely on creating the fastest and coolest technologies, labs are now concentrating on developing products that will cut operating expenses.

— Eugénie Larson, Reporter, Light Reading
www.lightreading.com
Page 1 / 4   >   >>
lightmaster 12/4/2012 | 9:18:58 PM
re: Long-Haul Lag Lingers Yes, RBOCs will adopt new technology, but not disruptive technology (i.e. disruptive to their networks). A rule of thumb I like to follow is this:

An architectural change internal to the product, or at least confined to the part of the network being "improved" is OK. Don't make anything else in the network change.

Example: You want to give me a SONET ADM that is cheaper, faster, and easier to install? Do you use the latest and greatest switching technology inside? Great, but don't tell me to manage it with SNMP and provision it with MPLS because I'll have to change my whole network management system. And don't tell me that it has to run on a packet ring instead of SONET because that will mean replacing a lot of stuff around it, including test sets, etc.

achorale 12/4/2012 | 9:19:01 PM
re: Long-Haul Lag Lingers "Get real! If this were true, our POTS lines would still be handled by mechanical stepper switches and long distance calls sould still be carried over DS3's!"

Sigh ...
Prizm 12/4/2012 | 9:19:02 PM
re: Long-Haul Lag Lingers "Existing carriers have no choice but to continue building on what they have. Once a piece of equipment is integrated in the network and carrying traffic they will not, never, take it out to migrate to a new cool technology, no matter how big the operational savings. They will never touch traffic carrying equipment and they will never throw anything away"

Get real! If this were true, our POTS lines would still be handled by mechanical stepper switches and long distance calls sould still be carried over DS3's!
achorale 12/4/2012 | 9:19:06 PM
re: Long-Haul Lag Lingers achorale wrote:

> Existing carriers have no choice but
> to continue building on what they have.
> Once a piece of equipment is integrated
> in the network and carrying traffic they
> will not, never, take it out to migrate
> to a new cool technology, no matter how
> big the operational savings. They will
> never touch traffic carrying equipment
> and they will never throw anything away

of course, even my evil twin would agree that
carriers do End-Of-Life legacy gear ...
particularly that which is found to have
reliability issues. depending on the
severity of the issues presented by the
legacy equipment, the provider might either
outright replace the gear or take a more
incremental cap-and-grow approach.

> Unfortunately for us "high-tech innovative
> and operationally advanced equipment" vendors,
> solving the operational efficiencies can only
> be done by throwing the existing network away
> and putting our stuff in.

certainly greenfield buildouts are rare,
prompting carriers to typically require an
elegant migration strategy to be in place
before any new element will be given any
serious consideration for deployment. at
any rate, any startup that either breaks
the existing operational models (whether
field operations or OSS usage) or fails
to provide a NSA approach to device
migration is a smoking crater waiting
to happen.

achorale

- a schizophrenic is never alone ...

optigirl 12/4/2012 | 9:19:10 PM
re: Long-Haul Lag Lingers You are welcome....

However, now that the "right" controls the executive and legistlative branches,

ROLL OUT THE TAX CUTS!!!!!!

Which means

No subsidy for you!!!!!
rjmcmahon 12/4/2012 | 9:19:11 PM
re: Long-Haul Lag Lingers RJMcmahon is a bit too left wing for my tastes but at least he/she thinks about a future beyond the stuff we have to put up with today.
_____________

Well thanks optigirl. That's a nice compliment.

PS. The he/she thing didn't work out. A daughter needed a father and four sisters liked their brother as he is -- not to mention that insurance wouldn't cover the operation and the convenience of a single pair of shoes. ;-)
TheChief 12/4/2012 | 9:19:17 PM
re: Long-Haul Lag Lingers When you then ask them what interfaces they require, they will tell you TL-1. At that point you can throw away/cancel all your development of advanced interface because they'll stick to TL-1 ad vitam eternam!
==================================================

All too true! Worked on a box developed by data guys that reported alarms via SNMP traps. Guess what, we added a TL-1 interface.
achorale 12/4/2012 | 9:19:18 PM
re: Long-Haul Lag Lingers Firstmiler
Existing carriers have no choice but to continue building on what they have. Once a piece of equipment is integrated in the network and carrying traffic they will not, never, take it out to migrate to a new cool technology, no matter how big the operational savings. They will never touch traffic carrying equipment and they will never throw anything away

Unfortunately for us "high-tech innovative and operationally advanced equipment" vendors, solving the operational efficiencies can only be done by throwing the existing network away and putting our stuff in.

And you know what's really funny, even the new "innovative" CLECs are using the same opex-inefficient equipment and procedures. Why? Because it works and because it's the only thing they know (remember almost all of the employees of the CLECs come from the incumbents)

I always love it when a carrier customer, incumbent or not, asks you to explain management interfaces, automated provisioing features and the likes. When you then ask them what interfaces they require, they will tell you TL-1. At that point you can throw away/cancel all your development of advanced interface because they'll stick to TL-1 ad vitam eternam!

Guess is the high-tech networking anachronism
lightmaster 12/4/2012 | 9:19:30 PM
re: Long-Haul Lag Lingers Firstmiler,

A lot of what you say is true. The RBOCs still suffer from a legacy inefficiencies driven by cost-plus pricing, and now all IXCs and RBOCs seem to be driven by a somewhat mindless cost cutting strategy, sometimes at the expense of service quality.

However, I cut the incumbent carriers a certain amount of slack. It's easy to be innovative when you are a CLEC building a network from scratch, or only have a few hundred or thousand customers to work around. Try introducing new "improved" technology to a network that is already supporting millions of users and requires constant availability. How would you feel about loosing your phone service for few days because your RBOC was making their network more efficient with new technology? This requires a pretty restrictive process and control to ensure that the existing network is not broken.

It's easy to talk about making exceptions to the process "just this once" (hey, I've asked the question too) to get a big improvement. But once becomes twice, and three times, etc. Pretty soon the network is a conglomeration of exceptions and is unmanageable.

Now, I'm an equipment guy for decades, and people who get get excited about management software scare me. However, I have to say that the key to getting new hardware technology into the system quickly is to fix the management/provisioning software issues, and to do it in a way that doesn't impact the existing network. That's the holy grail, but an extremely hard task to accomplish.

Meanwhile, equipment vendors can't just expect the RBOCs to ignore their own issues so we can sell equipment.
whyiswhy 12/4/2012 | 9:19:37 PM
re: Long-Haul Lag Lingers So the beauty of 802 (wireless) is it does not depend on a service provider. The truth is it can work peer to peer quite happily. It can be made to be self provisioning and self organized: like AppleTalk was or FireWire is. It is broadband, very broadband. It will start in the home or the office, peer to peer, and eventually out into the neighborhoods.

I am not holding my breath for RBOCs to upgrade to broadband 802 wireless. Even if they go broadband, they will just choke it down like they do VDSL, and try to charge big money for it. Screw 'em. Broadband peer to peer relayed networks will go a long ways at high speed at near zero cost.

All we need is an occasional fiber node for the long haul stuff. Long haul access is dirt cheap.

JMHO

-Why
Page 1 / 4   >   >>
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE