Optical-Telecommunications Gear Recovers From Dot-Com Bust

EL SEGUNDO, CAAccording to iSuppli Corp., the optical telecom-network-equipment market is finally recovering from the Internet bubble a decade ago. Worldwide optical-telecom networkequipment revenue will amount to $13.5 billion in 2010up 7.7 percent from $12.5 billion in 2009. Revenue will continue to rise during the next four years until it reaches $22.1 billion in 2014the highest total since the market peak of $24.95 billion in 2000. While revenue briefly spiked in 2006 and 2007, the rise was not sustainable. The market shrunk to depressed levels in 2008 and 2009 (see figure).

"During the final stages of the Dot-Com bubble in 2000, when everyone was sure that the boom would last forever, network operators sank billions into infrastructure equipment and fiber," states Lee Ratliff, Senior Analyst, Broadband and Digital Home, for iSuppli. "However, when the boom went bust, that fiber was left idlebecoming so called dark fiber' with much of it remaining unused for a decade. However, with the continued growth of the Internet, the industry finally has absorbed the excess capacity, lighting up the vast excess dark fiber from the bubble, and prompting companies to invest in upgraded optical equipment."

Ratcliff notes that the revival of optical networking is being fueled by Internet expansion at a compound annual growth rate (CAGR) of around 45 percent. The demand for bandwidth is prompting optics in existing fiber networks to be upgraded to higher speeds. Telcos also are increasing deployment of dense wavelength division multiplexing (DWDM), a technology that increases the speed of existing fiber. Furthermore, new fiber is being installed at a rapid rate. Major civil-engineering projects including the East Africa Submarine Cable System (EASSy) are helping to promote growth. For more information, visit www.isuppli.com/pages/market-research-search-news.aspx.

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