Marconi Communications PLC (Nasdaq/London: MONI) has entered the fiercely competitive market for active optical components.

The company this week launched a brand-new division, Marconi Optical Components, dedicated to making tunable lasers and ultrafast modulators. Eventually, it will seek to integrate these active components with passive ones in optical subsystems.

To start the new company, Marconi says it's earmarked an undisclosed, "sizeable" amount of money, which will continue to flow to the subsidiary on an ongoing basis. This year, the funds will be used to expand by 50 percent Marconi's existing Caswell Technology and Applied Technologies labs, located in Northampton and Chelmsford, U.K., respectively. Marconi is hiring more than 200 engineers to fill the new digs. A brand-new manufacturing facility is also planned, but the site hasn't yet been chosen.

Marconi's strategy in creating the new company is to take advantage of what it considers a treasure trove of work in its U.K. labs -- work that up to now has been done either for specialty applications or just to meet requirements for Marconi's own communications networks business, which sells broadband telecom gear.

The launch puts Marconi in competition with other big companies with components divisions, such as ADC Telecommunications Inc. (Nasdaq: ADCT). The move also puts Marconi into the fray with a range of hot new startups, like Agility Communications Inc. and Kamelian Ltd. (see Kamelian Gets Green Light).

Like these newbies, Marconi's new division will focus on making tunable lasers. It also will eventually look to mount these parts together with passive waveguides onto a single substrate. But Marconi's playing its plans for this next step close to the vest.

"We have expertise in both gallium arsenide and indium phosphide techniques," says chief executive David Parker. But, so far, Marconi's not making public its decisions on how these materials will be used in integrating components. Indium phosphide is among the only materials that can be used to implement both active and passive optical components, but it's notoriously difficult to work with compared to gallium arsenide.

Meanwhile, Marconi Optical Components has plenty of work to do before any integration. Among the first projects: augmenting Marconi's optical add/drop multiplexer (OADM) with customized tunable lasers. But Marconi is careful to say that its division won't displace any of the other suppliers that currently contribute to that product, which was the first reconfigurable OADM on the market. "What we do will be strictly additive," Parker says. Presently, Marconi OEMs parts for its OADM from Corning Inc. (NYSE: GLW) and Kymata Ltd..

Parker is also clear that Marconi Optical Components won't be tied to the apron strings of Marconi's communications networks business. That was a big reason for starting a new company: Both parent and subsdiary hope that by avoiding any direct association with Marconi's equipment business, the new company can attract OEMs who might otherwise be leery of ordering parts from a competitor. "We are definitely not part of [Marconi's] communications networks," Parker says.

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com