Optical Networking Outlook The Private Sector Then and Now The Public Sector Technology Leadership R

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Optical Networking OutlookThe Private Sector
Then and NowThe Public Sector Technology
Leadership Role

• Optical Network Testbeds Workshop
• Federal Large Scale Network Coordination Group
• August 9-11, 2004
• Franz X. Birkner
• FXB Ventures San Diego Telecom Council

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Acknowledgment and Thanks

• This presentation includes the observations and
  insights of
• RHK Analysis
• Goldman Sachs Co.
• McKinsey Co.
• DelOro Group
• Dr. Ron Reedy, CTO, Peregrine Semi
• Naser Partovi, Enterprise Partners
• Larry Smarr, Cal(IT)2
• Tom DeFanti, UIC
• Sadik Esener, UCSD
• George Papan, UCSD
• Many others!

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Optical Networking Industry Then The Year 2000
Outlook

• Optical networking would dominate telecom
  transport, now and future
• First long haul, then regional, metro last mile
  
• Install rate in 2000 was 75,000 fiber-miles/day
  (thats Mach 4)

Forecasters saw growth of huge markets for
communications carriers optical networks!
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Nov. 2000 Optical Network Sales Forecast (RHK)
Grow at 45/yr to 47 B in 2004
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Forecasts Drove Huge Investments in Essential
Optical Enabling Technologies- In 2000, 9.7B
VC investments in 866 component and systems
cos.- Additional 10B invested by Nortel,
Lucent, Alcatel, etc.
Nov. 2000 Forecast (RHK)

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Actual Quarterly Revenues of Publicly Traded
Optical Component Vendors
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Optical Networking Industry NowThe Outlook in
2004Global Components Networks Market (Actual
and Forecast)
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Breakeven Requirements For Selected Optical
Competitors
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Driver of the Optical Networking Equipment
Contraction was Collapse at Carriers

• Optimistic traffic growth forecasts
• Oversupply of investment dollars
• Huge carrier capital expenditures
• Excess capacity and price collapse
• Only carrier recovery can restart equipment
  growth and fund essential optical research
• What are the prospects?

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Total Capex (1985-2002)of Selected North
American Carriers
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Actual Forecast Bandwidth Demand Continues to
be Robust
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But Excess Capacity Could Persist Through 2006

• U.S. Long-haul
  capacity (Terabps)
• Installed Lit Capacity
  Required Capacity2

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And Service Provider Revenue Per Bit Declines are
Accelerating Historical
Projected
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Forecast Global Carrier Capex is Flat
(2002A-2006E)
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Alternative applications are sought to restart
optical revenues
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Today the public sector must lead!

• Advances in optical networking technology must be
  sustained
• Science doesnt hibernate
• Existing major initiatives must not be abandoned
• Carry forward tradition Monet, Hornet, Opera
• Drive an optical next generation in 3-5 years
• Essential to US global leadership
• International economic competition
• National security

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Public Sector Optical Networking Leadership Is
Rapidly Emerging

• Public sector optical nets are booming!
• Powerful collaborations are developing
• Why we are here today

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US Public Sector Optical Network Testbeds
Regional Nets

• NSF DRAGON
• ADTnet/BoSSNET
• NSF CHEETAH
• NSF OptIPuter
• StarLight/TransLight/GLIF
• OMNInet
• National LamdaRail
• Internet2 HOPI
• DOE UltraScience

• Pacific Wave
• WAN in Lab
• FiberCo RONs
• CENIC
• iWIRE
• MAX
• SOX
• Fla LamdaRail

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The Public Sector Optical Networking Opportunity

• Create a next generation of optical networking
  technology
• Beyond SONET, the ITU, even Cisco
• Reset the technology path
• Innovate within the photonic cloud
• A free choice of signal rate and format,
  spectrum, power, phase, polarization, network
  topology
• drive new standards!
• Pursue the true optical frontier!

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Frontier Optical Research Topics

• Optical wavelength synthesis, conversion,
  switching
• Innovative amplifiers
• Optical 3R regeneration
• Signal processing polarization and dispersion
  control
• Optical routing
• Photonic crystals nanophotonics (IC
  fabrication)

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Frontier Optical Research Topics

• Coherent modulation and bipolar coding
• Enhanced spectral and power efficiency
• Increased channel granularity
• Use wavelength, phase, polarization, delay,
  quantum properties for orthogonal coding/routing
• Research ways to monitor manage all this!

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Optical Networking Trends - Conclusion

• For 3 to 5 years, public sector - universities
  and labs - must carry the torch
• You have expertise and facilities
• You have momentum and initial funds
• Optical networking is still in infancy
• It will transform telecommunications
• The private sector will return
• a 20B global market for optical telecom beckons
• Lets work together!