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Overview
This report investigates the market and technologies for major items of network infrastructure. We will do this by reviewing the markets for several dominant types of telecommunications equipment: ROADMS, DWDM, Routers, and Switches. From this review, the report provides North American and World Forecasts for each type of equipment through 2017.
Today’s carriers have a pressing need to integrate networks and services. This integration is being based on elements like next-generation DWDM, IP, next-generation SONET, and optical switches — but more than anything else, it is based on ROADMs, DWDM, and IP. The integration is directed at making the total network more flexible, more reliable, and less labor-intensive. The main market driver for ROADMs is the desire of the carriers to save operating expenses. The new video thrusts by the major combined RBOCs provide a new driver for ROADM/DWDM deployment. These companies are in the process (close to complete) of deploying nationwide networks to deliver video on their fiber access local networks. ROADMs and DWDM are the perfect adaptation to enable and control these video distribution services. In addition, the forecasted increase in wavelength services is going to greatly facilitate the deployment of networks.
As these new networks have overwhelmingly become IP and/or Ethernet based, the role of routers and switches has also increased. All the new delivery networks (e.g., FiOS and U-verse) are based on IP delivery of triple-play services. These networks make extensive use of routers and switches.
It has been five years since our last network equipment market forecast. We have published several reports in the interim concerning various parts of the network (ROADMs, high-speed access, etc.), but we have not updated our view of the total telecom equipment markets in over five years. In that time, many things have occurred that dramatically influence that market. Our recent report, “North American Traffic Forecast — 2011," noted the following changes in traffic that are the fundamental driver of all equipment requirements:
- The dramatic rise in traffic from Advanced Access Architecture (AAA) lines (FTTP and FTTN);
- The startling increase in IPTV traffic;
- The increase in popularity of using mobile devices, and especially using them for data-intensive applications;
- The increase in overseas traffic, especially from the booming economies of the Far East;
- The relative decline (in the period of this forecast) of high-speed access lines and the traffic from them. This includes xDSL lines and cable modems.
In addition to the changes in traffic sources, patterns, and absolute quantity, there are many changes that have taken place in the economic infrastructure of the market. Perhaps the most important is the recession of the late 2000s and the slow recover that is now occurring in 2011. Also, the carrier industry has greatly consolidated so that now two major players (AT&T and Verizon) dominate the network in every way — much as the old AT&T did, maybe even more so.
Existing Networks
The existing IXC networks, at almost every level, are conglomerates of various generations and types of technologies. To an extent, this has always been the case, but now it is more so than ever, because of the timing of the telecom burst (1999-2000) and the relatively recent acquisitions of the major IXCs by the RBOCs. Telcos (and others) were just in the beginning stages of implementing the new optical technologies (DWDM, optical switches, M-DWDM) when the burst occurred. We still have "stacked SONET" residing alongside DWDM, and, in some cases those are alongside some version of "god boxes," and maybe enhanced SONET. Capital constraints prevented the initiation of any real replacement program for the older technologies. In addition, while we were in a deep freeze as to investment, technology and product advancements continued. Capital started loosening up in late 2004. The years since — especially from 2004 through 2007 — brought an even greater loosening of the capital strings, and this continues in 2011 with the slow recovery from the 2008 recession. However, in spite of a return to much freer capital, there is still strong pressure for profitability, demanding expense containment.
In addition to the telecom burst and the resulting capital constraint that delayed updating of the IXC networks, the early days of 2005 brought a spate of acquisitions (SBC-AT&T and Verizon-MCI) that have all but eliminated the independent IXC business. The later merger announcement of AT&T and BellSouth served to accentuate the trend. While these mergers offer many economies of scale, they also bring together existing, disparate networks. Now these two companies (AT&T/SBC and Verizon) are in the process of integrating their own long-haul assets with the newly acquired ones, and integration of their metro facilities with the long-haul to allow seamless customer access. They are seeking operational efficiencies and the elimination of duplication.
Table of Contents
Table of Contents
Table of Figures
The Lightwave Network Series of Reports
The Lightwave Network
The Lightwave Series of Reports
General Reports on the Network
General Market Reports
Specific Systems Reports
Introduction
Existing Networks
Economic Background
Traffic Forecast
Approach to Forecasting Traffic on the Internet
Total Network Traffic
Traffic Forecasts Total Network Traffic — No IPTV
Total Traffic Forecast — Including IPTV
Growth of the Internet
ROADMs
Defining ROADMs
Types of ROADMs
Summary of ROADM Features by Utilization
Summary of ROADM Types by Generation
Summary of ROADM Description
Edge ROADM Applications
Telcos
Cable Companies
ROADM Forecast
ROADM Systems — US Forecast
US Edge ROADMs
US Market Forecast
World Market Forecast
DWDM
Components of a DWDM System
Physical Components
Metro DWDM
IXC
What is Metro DWDM?
Why use Metro DWDM?
Reasons for Metro DWDM Implementation
“Plant Extension” Reasons
Fiber/Duct Exhaust
Obsolete Electronics
New Wire Center Development
Comparative Economics of OC-48 + DWDM vs. OC-192
Competitive Reasons
Types of DWDM — 40 and 100 Gbps Channels
DWDM Forecast
North American Forecast
World DWDM Forecast
Switches
Switch Types
TDM Switches
ATM
DACS
Drivers to DACS Deployment
OXCs
The Parallel Universe of OXCs
IP Switches
Switch Forecast
North American Switch Forecast
World Switch Forecast
Routers
Routers’ History
Why Use Routers?
Traditional Router Technology
Traditional Router Applications
Router Forecast
North American Forecast
World Router Forecast
Technologies
Underlying Technologies
General Technologies
MEMS
Grating Light Valve (GLV)
Planar Lightwave Circuits
Liquid Crystal
Fiber Bragg Grating
Review of Basic Technologies
OEO
MEMS
Two Approaches to MEMS
Digital Approach
Analog Approach
LCD
Bubbles (Inkjet) — Planer Lightwave Circuits
1 D Technology
Summary of Characteristics of Each Technology
Comparison of Transparent and Opaque Switches
Protocols
Router Software
Basic Transmission Protocols: SONET, ATM, IP
SONET
ATM
IP
Why Are the Differences Among these Protocols Important?
Type of Transmission
Cell Tax
Class of Transmission
Summary of Protocol Characteristics
Routers’ Protocols
Dynamic Routing Protocols
Quality of Service (QoS) Protocols
Quality of Service (QoS) Protocols
Diffserv
MPLS
Vendors
Vendors
System Vendor Listing
Adva Optical Networking
Alcatel-Lucent
Avvio Networks
Ciena
Cisco
ECI
Ericsson
Fujitsu
Infinera
Huawei Technologies
Mahi Networks (formerly Photuris) — Meriton – Now Xtera
Marconi Corporation plc (Ericsson)
Meriton Networks
Movaz Networks (ADVA)
NEC America Inc.
Nistica
Nokia Siemens (NSN)
Nortel
OpVista Inc.
Tellabs
Tropic Networks (Alcatel-Lucent)
Table of Figures
Figure 1: Lightwave Network
Figure 2: Premise for Forecasting Traffic on the Internet
Figure 3: Internet Traffic Formula
Figure 4: Total Traffic Forecast (No IPTV)
Figure 5: Growth Rate — All Traffic — No IPTV
Figure 6: Total Traffic Forecast — Including IPTV
Figure 7: Backbone Growth Rates (Includes IPTV)
Figure 8: All Traffic Components with IPTV
Figure 9: Total Traffic Forecast and Growth Rate with IPTV
Figure 10: Internet Components Forecast
Figure 11: ROADM General Configuration
Figure 12: Summary of ROADM Types by Utilization
Figure 13: Four Generations of ROADMs
Figure 14: ROADMs across the Network
Figure 15: Example of Edge ROADM Application — Telco
Figure 16: Example of Edge ROADM used by Cable Company
Figure 17: ROADM System Unit Forecast — US
Figure 18: US Market — Change in Predominant Type of ROADM over Time
Figure 19: US Edge ROADMs Systems
Figure 20: Price Forecast for ROADMs
Figure 21: ROADMs Market Forecast — US
Figure 22: ROADM Market — US — By Technology
Figure 23: World ROADM Systems by Type
Figure 24: World ROADM Market
Figure 25: World ROADM Market by Types
Figure 26: Typical DWDM Layout
Figure 27: Metro DWDM Typical Layout
Figure 28: Metro DWDM System Characteristics
Figure 29: North American DWM System Ends
Figure 30: North American DWDM Market
Figure 31: US DWDM Forecast by Channel Speed
Figure 32: DWDM — World Forecast — System Ends
Figure 33: DWDM World Market Forecast
Figure 34: DWDM World Forecast by Speed
Figure 35: North American Switch Market Forecast
Figure 36: North American Switches — Units Forecast
Figure 37: World Switch Market
Figure 38: World Switches — Units
Figure 39: Router Layout
Figure 40: Router Applications
Figure 41: North American Routers — Total — Units
Figure 42: North American Routers Total Market
Figure 43: North American Router Market — By Types
Figure 44: World Router Forecast — Units
Figure 45: World Router Market — Total
Figure 46: World Router Market — By Types
Figure 47: MEMS Layout
Figure 48: Sketch of Two Dimensional MEMS
Figure 49: Sketch of Multi-Dimensional MEMS
Figure 50: Sketch of Liquid Crystal Technology
Figure 51: Sketch of Bubble Technology
Figure 52: Characteristics of Each Technology
Figure 53: OSI Model
Figure 54: SONET, ATM, IP
Figure 55: SONET Frame
Figure 56: ATM Cell Structure
Figure 57: IP Frame Structure
Figure 58: Summary of Protocol Characteristics
Figure 59: Router Protocols
Figure 60: MPLS Routing
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