ISSUE 14 | Q3 2018 |
BRINGING THE WORLD THE LATEST IN OPTICAL COMMUNICATIONS NEWS
EXTENDING FIBRE ACCESS OVER COAX: Incoax CEO Peter Carlsson explains how
THE HEALTH OF THE INDUSTRY
5G AND BEYOND HOW FIBRE WILL MAKE 5G HAPPEN p22
Smart Cities FIBRE IS THE KEY p44
THE 600G ERA THE FUTURE OF COHERENT COMMUNICATIONS p20
HiLight’s 10G PON chips ECOC 2018 preview iXblue’s doped cores
Industry News s
11 Ellen Manning The Money in the Market 14 Peter Carlsson Extending Fibre Over Coax 16 Ankit Agarwal The Road to 5G 20 Eugene Park The 600G Era 22 John Williamson Beyond 5G 26 Sarah Boen and David Akerson Datacentres 28 Antony Savvas Signal Processing 32 Evan Weinburg Full Fibre Networks 34 Matthew Peach ECOC Market Focus 37 Brian Smith ROADM Networks 40 John Williamson Optical Virtualisation 42 Roy Hagen Saving Power 44 Tom Snee Smart Cities 48 Matthew Peach ECOC Preview 52 Event Focus 54 Product Focus 14 Sam Bucci Optical N tworking 16 Ellen Manning Network Investment 18 John Williamson Fibre Optic Networks 20 Peter Dykes Fixed ireless Access 2 Antony Savvas Software Defi ed Networks 24 Rang-Chen (Ryan) Yu Molex 26 John Williamson D ta C ntre Interconnect 28 Kevin Bourg HFC Networks 31 Matthew Peach NGON Preview 32 Matthew Peach AngaCom Preview 36 vent Focus 38 Product Focus 4 Sa O e l e N t J hn l P Fi e r es S D Netw s R C n R an D r I n ct Ke u 3 An o v 3
The holiday season is over, but the fun hasn’t ended. Indeed, we’ve got some fantastic events coming up to enjoy, not the least of which is ECOC. Sold out again and bigger than ever, ECOC this year visits the historic and romantic city of Rome, bringing with it cutting-edge academic and scientific thought, combined with the optical industry’s most vibrant and successful expo. In this issue, Matt Peach previews the conference with an in-depth interview with the chair of the Technical Committee Antonella Bogoni, about the conference highlights and the future of the photonics industry. Peach also previews ECOC Market Focus, which is at the heart of the expo and covers everything from advances in disaggregated line systems for emerging data centre interconnects, to pushing the performance of 50Gbps NRZ polymer modulators, and everything in between. The onset of 5G is impossible to ignore and in this issue, we’ve got it covered. Veteran technology journalist John Williamson looks at the role of fibre in supporting the 1 billion 5G devices that are expected to be connected in the next five years. Equally important is the role that fibre will take in enabling the development of smart cities. Looking deeply into this topic is new contributor Tom Snee, who reports that much of the investment has to date gone into the development of end-use application rather than network infrastructure, which is something that has to change. Sterlite’s Ankit Agarwal, CEO of the company’s telecom products business, gives his views on the steps network operators must take to deal with the expected explosion of data that 5G will generate. On the subject of networks however, we also take a look at how interest is building in the virtualisation of fibre-optic transport networks. At the local level, the number of venture capital-funded FTTH networks is growing in the UK and we talk to the CEO of Truespeed, which is building an all-fibre network in South West England, about how funding was raised, the business model and marketing. Staying with FTTH, an interview with Peter Carlsson, CEO of InCoax reveals how the company is helping to cut the cost of taking fibre into multiple dwelling units, offices and hotels by taking advantage of the coax cabling that already exists in many buildings. On a more technical note, Lumentum’s Brian Smith explains how contentionless MxN wavelength selective switches (WSS) will provide superior optical performance and lower cost in next-generation CDC ROADM networks in the future. He argues that ROADM transport networks must be ‘future-proofed’ to support evolving coherent interfaces without constraints on bandwidth or power. There’s a lot going on in the industry for sure, but how is it translating into vendor revenues? Ellen Manning looks at the financial side of the industry to find out if revenues are rising, by how much and over what timescale. So, there’s plenty to think about and discuss when the industry meets up in Rome. See you there! An exciting time for the industry Apart from holidays and sunshine (unless you live in the UK), summer means we’re in the thick of the conference season. In this issue, we look at some of the topics that will be up for discussion at many of the shows, as well as the issues which are facing the industry as it moves into an era of expansion. Ellen Manning’s feature Sti ening the B ckbo e looks at the growing investment in n tional networks as consumer demands and he ava lab lity of new technologies drive opera ors to xpand their national backbone fibre etworks. A ross Eur pe, the US, Africa and he Middl East, b ckbones are b ing replaced by fibre on a massive scale and FTTP i becoming a reality for a rapidly growing number of households and business s. Th move from coaxial to fibre networks is not an nd in itself h wever a d K vin urg, optical netw rk a chit ct at Corning Optical Communications discusses how hybrid coax/fibre network volution can lay the found tions for full migration to FTTH. The e is potential thre t to the ubiquity of FTTP however and in his issu , w lo k at the growing popularity of Fixed Wireless Access f r last-mile connec ivity. expansion of the fibre market and the need for more spe d and capacity is having o her ramificatio s too. Network vendors are looking for ways of making se increasingly complex networks more ecie t. In our exclusiv intervi w with Nokia’s head of IP Transp rt, Sam Bucci talks about the company’s new Phot nics Service Eng e which au matically selects the approp iate modulation scheme for any particular application a d in the process, greatly incr ases th capacity of new nd existi g networks i frastructures. Automation is also becoming a hot issue both at the device level and for network infra truc ure manag ment. John Williamson looks at the intensive component, pro uct and system developments that are currently underway, with producers and manufacturers looking to improve th logis ics, perf rmance a d economics of optical networks. Developmen s i SDN ar also impacting on the ecie cy of fibre-optic networks. With network speeds explodi g through 100G, 200G and 400G to cope with tra deman s, writes Antho y Savvas, consumers are expecting to pay the same or even less, for mor and more bandwidth and so flexible network management sys ms a e now being used to cop with this scenario. The growing tendency to connect multipl data centres is having ramifications cross th industry and Joh Williamson explores the chang ng nature of the data centre inte connect market the projected growth n equipment revenues, he automation of network managem nt and the m e away from proprietary solutions. This theme is also examined by Ryan Yu, vice president of busin ss development and GM of optoelectronic soluti ns at Oplink, who discuss s in depth the p ss bilities for nnecting hyperscale data e tres. So, there will be plenty to talk about at the upcoming indus y events a d on the subject, as th newly-app inted editor of Optical C nnections, I will be attending AngaCom and NGON in June and I look for ard o meeting wit as many of our loyal rea ers and suppor ers as time allow . It’s going to b a great summer! Summer is her ! li i l li i , ’ i i . I i i , l i i l f i i s , ll i e i h i i i i i . le M ing’ S i i bo e l ok e owi i m i io l or a um r em and h il ility n nol drive or to p d t i a i l ba bo e w . cr , U , Af i t i l , a es r being pl b r a s iv s le n is i g li i l g o i e s ld n b i s. o e ro coa ial b et r s i n a d in i s f e a in , i l n w r r i ec C nin ptical mmunica i s dis ss s w b id c n v l i l y he nd ti f u l migr io o . The e i i l h t t he ubiq i P ve and i his i , l e owing popularity ix i l c l t il c c i it . e an ion e k r e pe d i y i havi g t a i i t o. N k dor a lo ing o a of i s i c si gly ompl r e i . I o lusi e in vi i N i ’ h ad I a r , i al ab o ’ ic Ser i i ich t ic ly select t a ri ula ion s m a r i l a li a io i t , r ly in e pa i nd e is i n or i a ure . o a i is al ec in a i t t e i l l an r n i tr ur a a emen . J h i li m on l s th in i mpo , prod n s m l pm l , i f t l ki im ve t l isti , p m nce a d e n mic o i al o . ev l s i a e l o i i g o he i y fib o tic . Wi pe l o 1 G, 0G t c it r ema s, i n o v as, u r r ex ti t pa m v n l ss, f o a o e i d s flexi l r m ag nt s s m re i g us o e wit t i a i . g i d cy c n ultipl d n res is vi a i c io cr h i r J i li so x lo s h ngin u e i r t m , t j c ed in ip en u , a m i n of n t r m geme e f riet ol i . Thi me i ls i e y a , i si b i s vel an G l ct o i s l i li , h is us i e ibili i nn i g l t e s. So, t e e wi l le y o al u a u c i ind tr a d o s j , e l a int d edi r ic l nn ti , I i l i A m a in n I l ar o in i as f l l u e tim a l w . I ’ goi b eat s S m
Peter Dykes Editor, Optical Connections Peter Dykes Editor, Optical Connections Editor, Optical Connections
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ISSUE 14 | Q3 2018 3 2 I 3 | 2
“The fibre optics market is growing, but how do the financials stack up?”
NEWS & BUSINESS
EllenManning – see page 11
Global Optical Network Equipment Hits US$28 billion by 2024
usage of online gaming, chatting, video surfing, and online shopping. Similarly, companies providing these services are asking for more high-speed data, as there is a on-going increase in both residential as well as business customers. ZMR doesn’t believe existing networks will be able to meet this demand. Apart from the above, factors such as emerging Terabit networking and increase in cloud storage space by many companies will drive the growth of the market. The high demand for interconnecting datacentres and adoption and deployment of 5G infrastructure are also primary growth drivers. However, the high cost of installing optical networking equipment for operators is something of a brake on the sector, especially for smaller concerns. Interestingly, ZMR believes that that 5G-based Fixed Wireless Access will be best suited for deployment in urban areas as these areas are densely populated, and the initial installation cost of FWA technology will be lower by up to 40% compared to FTTP.
According to a new report by Zion Market Research (ZMR), the global optical network equipment market will reach in excess of US$28 billion by 2024. ZMR reckons that market was worth around US$16.128 billion in 2017 and will grow at a CAGR of 8.68% between 2018 and 2024. The report includes forecasts and analysis for the optical network equipment market on a global and regional level. It provides historic data covering 2015 to 2017, along with a forecast from 2017 to 2024 based on revenue. The study includes drivers and restraints for the optical network equipment market, along with the impact they have on the demand over the forecast period. To understand the competitive landscape in the market, an analysis of Porter’s Five Forces model for
the market has also been included. ZMR segments the market based on application, technology, and regions. By application type, the market is divided into FTTH and FTTB. On the basis of technology, the market is segmented into Asynchronous Transfer Mode PON, Broadband PON, Gigabit PON, and Ethernet PON. The regional segmentation includes the current and forecast demand for North America, Europe, Asia Pacific, Latin America, and the Middle East and Africa. The research company notes that, presently, major companies in the optical network equipment market are focusing on developments in emerging technologies, as there is a continuous increase in the use of mobile smartphones, laptops, and PCs. This gives rise to a tremendous increase in the
Equinix aids LATAM fibre connections with US$60m Miami data centre expansion
project is set for February 2019, where an extra 4MW of power will be delivered to the site. According to the Global
(NAP) of the Americas. The US$60m expansion follows Equinix acquiring the 750,000 facility as part of its capture of 29 Verizon data centres in 2017. A first phase of the upgrade has now been completed and the completion of the
Equinix has extended its MI1 data centre in Miami, billed as the primary US interconnection point from North America to the LATAM and Caribbean (LA&C) markets. The facility is otherwise known as the Network Access Point
the total capacity provisioned to privately and directly exchange traffic at distributed IT exchange points - was expected to grow at a rate of 62% year-over-year between 2016 and 2020. Which is the main reason the data centre is being expanded.
Interconnection Index, published annually by
Equinix, the LATAM region’s interconnection bandwidth -
Huawei has deployed an optical transport network (OTN) using DWDM for Austrian Federal Railways (ÖBB). DWDM technology enables 100Gbps performance and the ability to expand broadband network systems efficiently. Customised for ÖBB, Huawei’s DWDM OTN products are now deployed at multiple sites across Austria and Germany. ÖBB’s 10G legacy network suffered from inadequate device performance because more than 80 percent of its Austrian Federal Railways taps Huawei for DWDW OTN
up with the growing demand for rail services throughout Austria. The new network uses its Multi-Service OTN (MS-OTN) function to support OTNs, virtual circuits and packet cross- connections, thereby enabling end-to- end management for all types of services and resulting in a future-proof intelligent network. In the new coherent system, the bandwidth has been increased up to 100 Gbps per wavelength, or up to 8 Tbps over each pair of fibres. Future upgrades will expand the bandwidth from 100G to 400G, 1T, and 2T channels per wavelength. The Fiber Doctor and Optical Doctor functions apply automatic commissioning and optimisation to minimise the operations and maintenance costs that keep the network in an optimal state. Protection mechanisms at the electrical and optical layers allow fast switching and eliminate service interruption. Thanks to these inherent attributes, DWDM technologies can be used to carry crucial safety- related data.
network bandwidth was already in use. New requirements for wireless train control, centralised dispatch, and automatic operations could not be met due to a lack of adequate bandwidth. Intelligent offices and modern production systems needed to be connected to a unified high- speed backbone carrier network to allow communications and dispatch. Additionally, railway service characteristics require network communication systems to be absolutely secure and reliable. With a 10% to 15% percent annual growth rate for rail transportation, ÖBB plans to extend its rail network to reach 90% of the country, and is preparing to increase the available bandwidth resources on local and backbone networks. All current and future stations will be equipped with high-definition video surveillance systems, intelligent office systems and other digital railway information systems. A new high-speed backbone network was required to keep
| ISSUE 14 | Q3 2018
TECHNOLOGIES & PRODUCTS
THE ORIGINAL PUSH-PULL CONNECTOR
HiLight Semiconductor debuts new range of pure CMOS chipsets at CIOE 2018
UK-based HiLight Semiconductor is to debut multiple new CMOS optical PMD product lines for volume applications up to 100G at CIOE 2018 in Shenzhen. The products and reference designs will include a 10G-PON Symmetric BOSA-on-Board reference design comprising the HLC10P0 symmetric PON ‘Combo’ IC interfaced with a BOSA using HiLight’s HLR10G1 APD TIA. The complete reference design consumes a class leading 750mW due to the chipset being designed in pure CMOS. Also on display will be a complete CMOS 12G SFP+ SR reference design solution, using the HLC12V0 ‘Combo’ IC, for Datacom transceivers and AOC applications offering significant BOM cost savings and a typical total operating power of 600mW, along with a quad 25G receiver with integrated CDRs in pure CMOS.
next generation, low power, low cost 100G optical links. The company is planning to make available the HLC12L0 LR ‘Combo’ IC with 5-in1 integrated functionality alongside a complete SFP+ LR reference design with typical power consumption of 700mW, in the near future Christian Rookes, VP Marketing at HiLight, commented “HiLight’s symmetric HLC10P0 BoB reference design demonstrates market leading performance, including a low power CMOS transmitter extinction ratio to within ±1dB across temperature with negligible additional power consumption. Typical receiver sensitivity is better than -32dBm @ BER 1E-3.” 10G burst laser driver that can automatically control
More than 75’000 connector combinations The modular design of LEMO products provides more than 75’000 different combinations of connectors with a large choice of contact configurations : Fibre optic High and low voltage Coaxial and triaxial Quadrax Thermocouple Fluidic and peumatic Hybrid
The quad receiver IC forms part of a complete CMOS chipset solution for 100G QSFP28 being developed by HiLight for
New DCI book is a first Datacenter Connectivity Technologies: Principles 100 metres with multi- mode fibre links inside data centres, to long
and Practice, edited by Frank Chang, chief engineer at Source Photonics and member of the ECOC Market Focus committee, provides a comprehensive and in-depth look at the development of various optical connectivity technologies which are making an impact on the building of data centres. The technologies
distances of hundreds of kilometres with single- mode fibre links. The book is the first of its kind to address the various advanced technologies connecting data centres. It represents a collection of achievements and the latest developments from well- known industry experts and academic researchers active in this field. The book is available from most major online retailers.
Custom solutions Cable assembly
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ISSUE 14 | Q3 2018
TECHNOLOGIES & PRODUCTS
PON Industry’s First Fully Pluggable OLT
California access device start-up Tibit Communications has
addresses the CapEx, OpEx, and network simplification objectives of service providers targeting next-generation architectures through Central Office Rearchitected
announced availability of what is billed as the world’s first fully pluggable Optical Line Terminal (OLT). The Tibit MicroPlug OLT is a complete network access device for 10 Gigabit Passive Optical Networking (PON). According to Tibit, the OLT dramatically reduces the footprint, power consumption, cost, and amount of application- specific hardware needed for network deployments. The new OLT form factor is designed to revolutionise PON market dynamics by enabling switch vendors to easily extend their widely-deployed portfolio of 10G switch ports to support 10G PON. Tibit’s standards-based small-format pluggable (SFP+) solution reduces the physical footprint of today’s chassis-based and card-based solutions by 95% and lowers power consumption by 75%. “Our challenge was to do something never attempted in this industry – reduce an entire OLT, including an entirely new ASIC and 10G optics, into a standards-based pluggable form factor,” said Richard Stanfield, CEO of Tibit Communications. “The result is a product that saves an extraordinary amount of space and power, and we are encouraged by the strong market reception of this game-changing device.” Tibit’s MicroPlug OLT directly
as a Datacenter (CORD) and Network Function Virtualisation (NFV), and
replaces legacy, PON-specific hardware equipment with a single network element. The reduced power and footprint profile of the MicroPlug OLT also meets the Distributed Access Architecture (DAA) objectives of cable operators. Multiple Tibit devices can effectively operate in an MSO remote node enclosure, satisfying strict environmental and power restrictions. Mike Nielsen, VP Packet Software & Access R&D at Ciena noted: “Tibit’s MicroPlug OLT removes the costs and footprint of traditional OLTs from the carrier network while extending PON access into an array of environments. This revolutionary new device will help us advance our innovation agenda, particularly across our Packet Networking portfolio.” Tibit’s in-band-by-design architecture can deploy in PON virtualisation environments such as virtual OLT – Hardware Abstraction (vOLT-HA), DOCSIS PON over Ethernet (DPoE), and Broadband Access Abstraction (BAA). The new OLT meets both 10G EPON and 10G GPON (XGS-PON) standards in a single device – IEEE 1904.1 and ITU-T G.9807.1.
ISSUE 14 | Q3 2018
“What problems will increased bandwidth density bring in the 400G era?” closer to speeds of 400G, what sort of problems re s inging up and how are the requirements to deliver increased bandwidth density being addressed, Antony Savvas looks at how the industry is adapting. withyournetwork infrastructurewill ‘only comeback tohauntyou’.He stresses the importanceofbuildingnetworks from thegroundupwith the future inmind. Zammitacknowledges that theconcept ofachievingacompletehigh-densityfibre management infrastructuremay seem
APPLICATIONS & RESEARCH
likea ‘daunting task’ formany operators,but says theycan
Anthony Savvas – see page 28
P otentialerrors thatneed tobe tackled include opticaldispersionover
overcome problems bygetting it rightat the outset.
Also,asopticalfibredoesnothave unlimitedbandwidth,eachopticalcarrier inafibre requiresaminimumamountof bandwidth inorder toeffectivelypropagate the signal.Eachcarrier inaDWDM system usesaportionof the totalopticalpower in thefibre.This results in limiting the total numberofcarriers thatarepossible (i.e., thechannel spacing).Themodulation
Axetris Micro-Lenses and Lens Arrays for 5G Networks FUTURE PROOFING He says, “Operatorsmustevolve their network tobe smarterandmoreefficient, and this startsbybuildinga ‘Layer0’fibre infrastructure that isbothversatileand agileenough tomanage theexplosive growth inopticalportconnectiondensity, whilebeing ready to supportanynew technologiesandapplicationswhichmay emergedown the road.”Headds, “Future- proofingyourconnectivity infrastructure in this fashioncanbedone inaway that is bothpracticalandbudget-friendly,while distanceandoptical ‘noise’.ChadLamb, chief systemsarchitect atopticalnetworking products supplierXKL, says, “Asyou increasebandwidthyouhave to increase power.When increasingpower,youhave to lookat thedistancebetweenamplifier locations toensureyouarenotadding toomuchor too littlepower. Ifyouadd toomuchpower,youcan interferewith theconstellationwithin themodulation scheme.ThiscouldcreateFEC,orForward ErrorCorrection.With increasederror in thenetwork,you loseperformance,andas youamplifyacross theampchain,youalso amplifynoise.So, the signal-to-noise ratio mustbeaddressed tomaintainaquality powerbalance.” scheme,baud rateandnumberofcarriers perchanneldetermineshowmuchoverall bandwidth isavailable in thefibre. “There are limitationsonhowmuchoptical powercanbe launchedbeforeothernon- linearities in thefibreprohibit the recovery of these signals,” saysLamb, “meaning the launchpowerpercarrier,aswellasoverall launchpower, is limited.Thisalso limits theoveralldistance signalscaneffectively propagatedownfibre.” With this ismind,MichelZammit,VP andGMatfibreconnectivity solutions enhancing theability tomanagenew serviceswithoutcompromisingnetwork performanceand reliability.”
The transition to the next generation 5G network requires the deployment of ever increasing numbers of transceivers and other high-speed data and telecom components. On the other hand, cost pressure is increasing and trickles down the supply chain to the individual parts making up the high-speed components. Axetris’ manufacturing process based on lithography
that are used in high speed components requiring very high coupling efficiency, such as WSS, Coherent - ICRs, ACOs, Modulators, µITLAs and TOSAs & ROSAs for 100G/400G/1T components and modules. Axetris operates its own 6 inch to 8 inch wafer MEMS foundry in Central Switzerland. Meet Axetris at ECOC 2018 in Rome at stand 526. www.axetris.com/en/micro- optics-and-services
capabilities allow to implement further features such as metallisation (alignment marks or solder pads), mechanical features, precise edges or DRIE structures and more. Such features can help to improve the assembly process steps, which in turn helps to reduce overall component assembly costs. Axetris AG serves customers with a wide range of micro-optics products
and etching achieves the high lens quality needed for coupling to single mode fibres or waveguides, as well as the precise lens placement required to match fibre-, waveguide- or photodiode arrays. The wafer-based manufacturing enables to scale to high volumes and low cost and therefore offers competitive alternatives to known solutions such as molded lenses etc. In addition, our processing 28 | ISSUE 13 |Q22018
iXblue and Photonics Bretagne Deliver Multicore EY Doped Fibre
After a first phase of design optimisation, an optical fibre, including twelve Erbium/Ytterbium
and Lannion Trégor Communauté, started in 2016. The new active optical fibre has been characterised and delivered to Lumibird,the enterprise in charge of developing fan-in/ fan-out technologies that will allow the integration of the advanced fibre into an amplifier prototype. Its evaluation by end-users (Ekinops and Orange), in terms of both optical performances and power consumption, is expected by the project end.
develop power efficient components based on multicore rare-earth doped fibres in order to reduce size and cost of optical amplifiers and Reconfigurable Optical
capacity needs worldwide, where multicore optical fibres have attracted a great deal of interest over several years. As well as multicore passive optical fibres, active multicore fibres are seen as a key technology that will allow the implementation of more efficient and more flexible optical amplifiers, but is also suited for other applications such as lasers or sensors. Based on end-user requirements, the collaborative EFFLAM project has been built to
co-doped cores, has been fabricated by a
partnership of iXblue and Photonics Bretagne. The duo worked together as part of the Evolution des inFrastructures de réseaux de Fibres optiques grâce à L’Amplification à fibres Multi-coeurs (EFFLAM) project. The development can be viewed in the context of fast growing transmission
Add and Drop Multiplexers (ROADMs). Partners involved in the project are Lumibird (formerly Keopsys), iXblue, Photonics Bretagne, Orange Labs, Ekinops, Telecom Paris-Tech, and Institute Mines-Telecom/Telecom Bretagne. The three year project, funded by BPI France, Région Bretagne
| ISSUE 14 | Q3 2018
ELLEN MANNING MONEY IN THE MARKET
THE FIBRE-OPTIC INDUSTRY IS ON A ROLL BUT HOW DO THE NUMBERS STACK UP?
W hen it comes to the optical network market, growth is the name of the game. According to a forecast report by Dell’Oro Group in July, the Optical Transport equipment market is projected to reach US$16 billion by 2022 while Ovum forecasts optical network spending will reach US$17.8 billion in 2022. Such growth is undoubtedly driven by the ongoing requirements that filter from individual consumers all the way through to the data centres and metro and backbone networks that underpin the industry. “The development of network infrastructure has propelled the fibre optics market growth to a large extent,” a report from Market Research Future explained, observing that growth opportunities within healthcare are boosting market growth of fibre optics. And Grand View Research predicts that telecoms will dominate the application arena when it comes to boosting growth within fibre optics, beating other areas including oil and gas, military and aerospace, medical and rail transport. ARE THE EXPERTS RIGHT? But is the industry growing in line with experts’ predictions? “There are spots where there is growth currently, like fibre,” says Don Frey, principal analyst – Transport and Routing at Ovum. “There’s very much growth because all
It is widely thought that the markets for all things fibre optic is growing rapidly as network operators look to upgrade their operations. Ellen Manning looks at the financial side of the industry to find out by how much and over what timescale.
the company said they had raised the company’s
carriers, whether they are building fibre to the home, building more fibre to the enterprise, building fibre for wireless backhaul, for future 5G services, and then cable companies who are looking to go fibre-deep as opposed to using coax; these are all the things that are pushing fibre deeper into the network. Then once these things are laid and customers move [across] that will drive additional bandwidth and additional requirements on the metro and the backhaul.” This growth is reflected in Q2 results from Ciena, named by IHS Markit within its list of top optical vendors, which posted a Q2 revenue of US$730 million - increasing 3% year on year. Announcing the results for the quarter ending on April 30, 2018, president and CEO Gary Smith said the company’s gross margin was impacted by several new international service provider deployments in their early stages, but he anticipated strong revenue growth in the second half of the 2018 financial year. When Corning released its second-quarter financials,
outlook for the full year, expecting
higher sales of US$11.3 billion and a second-half
Don Frey, principal analyst capacity and margin expansion. One of the specific contributors to the company’s raised outlook for the year was optical communications, which Corning said was expected to grow by a high-teens percentage for the year rather than previous predictions of 10%. Network security solutions firm Anixter also reported growth for the quarter ending June 29, 2018, reporting sales of US$2.1 billion - a 6.8% increase versus the previous year’s quarter and the highest quarterly sales in the company’s history. ADVA also recorded a rise in quarterly revenues for Q2 in 2018 - up 2.7% to EUR 123.8 million from EUR 120.5
ISSUE 14 | Q3 2018
ELLEN MANNING MONEY IN THE MARKET
We expect that to help improve the pricing environment and we expect over time the environment to get a little better and that will help growth in the market. But Europe and North America are probably going to still be in mid-single digits, just because they’re going to keep pressure on the price.
equipment and carriers unable to go elsewhere. While he has not seen growth to offset that problem for the quarter, the situation could lead to an upswing in Q3, says Frey, with any longer-term effect yet to be seen. In Q3, a similar situation arose in Australia, where the government effectively banned Huawei and ZTE from participating in that country’s 5G roll-out plan. In a joint statement, acting home affairs minister Scott Morrison and communications minister Mitch Fifield said suppliers would be ruled out unless they can “adequately protect a 5G network from unauthorised access or interference”. Again, this could mean growth for other vendors at the expense of the Chinese companies. Given that the ramifications of such event take time to filter through to the market however, it could be some time before the full implications are clear. UNSTABLE GROWTH The surprising part of the latest results is that the market hasn’t stabilised sooner, says Frey. “We expected it to stabilise last year and it didn’t. Our port counts were about right but the price or revenue was lower than we expected in Europe and in North America”, giving one reason for the pricing pressures applied by buyers and cloud data centres that is impacting the market. “Some of the buyers, like the cloud data centres, they apply a lot of pricing pressure, so that also seems to be impacting the market. They are buying a lot of ports and they don’t want to pay a lot for their optics.” Consolidation within the industry may help improve the pricing environment, says Frey. So far, the sector has seen Lumentum’s acquisition of Oclaro for US$1.8 billion, announced in March 2018, and Infinera announced its plans to buy Coriant at the same time as announcing its ‘strong’ Q2 results. There could be more mergers and acquisitions, says Frey, adding, “We expect that to help improve the pricing environment and we expect over time the environment to get a little better and that will help growth in the market. But Europe and North America
are probably going to still be in mid- single digits, just because they’re going to keep pressure on the price.”
million in Q1. That figure was down 14.2% from 144.2 million in the same period in 2017 but net profit for the quarter was EUR 4.6 million compared with EUR 4.5 million in the same period the previous year. CEO Brian Protiva said they expect continued positive business development in the second half of the year and the company predicted revenues of EUR 123-133 million for Q3. REGIONAL GROWTH But while fibre has prompted growth within the industry, that growth has been driven by certain regions, says Frey. While growth hasn’t been particularly strong in the last year in North America and Europe, China and India have demonstrated double-digit growth. In its report, Pune, India-based Market Research Future noted that while Europe will continue to grow, it is markets like China, Japan and India that show the highest growth. “The fibre optic market in Europe region is expected to witness rapid growth in the forthcoming period,” it says. “Whereas, countries such as China, Japan, and India are emerging markets for fibre optics [and are] expected to show the highest CAGR in the coming years.” Similarly, US-based Grand View Research says, “In 2015, the North American region dominated the global fibre optics market with a market share of 31.1%. Moreover, the increasing application of fibre optics in the medical sector is also catapulting growth across countries such as China, Japan, and India, thus propelling the overall fibre optics market to grow at a significant rate.” While there has been some investment in North America, competition and price erosion have kept a lid on revenue growth, says Frey. “So, the bandwidth’s growing, it’s driving new ports or more high-speed optics which is helping component companies. For the system companies in the middle however, unless they’re growing share, the market is fairly flat.” One issue specific to Q2 in 2018 was the US government’s ban on ZTE which saw the company unable to supply
5G: THE BIG DRIVER A main driver of growth when it
comes to the future of the industry is, unsurprisingly, 5G. Work carried out by Frey suggests that 5G could take growth from the 2.7% forecasted up to 2022 up to around 6%. “When we looked at what 5G’s impact would be we believe it should be around 6%, so 5G’s impact on metro and backbone will move the needle about three points in growth which is significant - it’s a couple of billion. If you think about carriers’ investment, fibre is the clear investment they need to make now for 5G. How these technologies evolve and which work best for 5G they can delay a little bit longer. That’s why I say in 2019 they probably can’t delay too much longer, they have to start making some investment, but in 2020 it starts to really ramp up.” Stabilisation and the arrival of 5G driving higher bandwidth are both likely to bring positive growth for the industry, but these won’t necessarily become clear until 2020 or 2021, says Frey. But it will be then that we see a “bigger life in the forecast”. Equally, Grand View Research anticipates that the global fibre optics market will see “substantial growth” over its forecast period up to 2025. “The global fibre optics market is anticipated to witness a substantial growth over the forecast period,” the report says. “The high demand for optical communication and sensing applications for diverse purposes provides avenues for industry growth. Furthermore, the growing demand for cost-effective, power- efficient and high-level integration of IT infrastructure is expected to impel market demand in the next few years.” But it clearly won’t all be plain sailing, the
report seems to suggest, adding, “However, factors such as capital
investment, used in the development of the new fabrication technologies, may pose a challenge to the market demand over the forecast period.”
| ISSUE 14 | Q3 2018
XXXX XXXX PETER CARLSSON EXTENDING FIBRE WITHCOAX
FTTH is rapidly becoming the next-generation of internet access across the world, but taking it inside individual dwellings, particularly multiple dwelling units, can add significant cost to the rollout, writes Peter Dykes . Optical Connections talked with Peter Carlsson , CEO of InCoax, about the company’s approach to the issue. OC: How did InCoax come into being? PC: The company’s roots go back to 2009 when our CTO, Tomas Svensson, founded the company with a few other people who had worked for the Swedish telco, Telia and who were responsible for building the operator’s infrastructure. The team was a pioneer in the development and buildout of the internet in Sweden. They also developed the first generation of ADSL broadband. Some of the team went on to set up the cloud company GetItSafe and subsequently went on to form InCoax in order to focus on broadband over coax. There is a lot of internet and telco experience and knowledge within InCoax. OC: How did the idea of using existing in-building infrastructure come about? PC: The idea to use existing infrastructure has been there from the very start. When the team was still at Telia, they were using the existing twisted pair as the in-building wiring for internet access. They soon realised, however, that copper is a poor choice as a high-speed broadband medium. Coaxial cabling, which also exists in buildings, is a much better choice and has much higher capacity as it was originally designed for video and multimedia. Our first product generations have targeted the hospitality market and leveraged the in-building coax. But they were all
FIBRE ACCESS EXTENSION A COMPETITIVE SOLUTION WITH MOCA ACCESS
FOR FIBRE ACCESS INTO MDUS
| ISSUE 14 | Q3 2018
XXX XXXXX PETER CARLSSON EXTENDING FIBRE WITHCOAX
based on a proprietary technology and some large customers were concerned about future roadmaps and lack of vendors from which to choose. This was the background for InCoax joining MoCA (Multimedia over Coax Alliance) and then leading the development of the MoCA Access 2.5 standard which was released last year. This is the first standard developed by MoCA for an access use case, supporting point to multipoint, i.e. suitable for MDUs. In:xtnd, which we launched at ANGA this year, is based on the MoCA Access technology standard and is targeting all operators that wish to use the existing coax. With In:xtnd we have a product generation meeting the bandwidth requirements of operators at a very competitive cost. In addition, customers can rest assured of technology development as MoCA is continuously building next generation technology standards. OC: How would you characterise the business case for InCoax’s product line? PC: Traditional cable companies are rapidly migrating to become broadband operators as a consequence to the rapid conversion from analogue TV to Over-the-Top TV. In:xtnd can coexist with existing Cable TV and Satellite TV installations. This means that an operator can keep their current Cable TV offering and upgrade their broadband capabilities and offerings with our solution in a very cost efficient and easy way. We have a lot of customer interest for this use case. The other main use case is operators who want to access MDUs for fibre access extension, to avoid the costs and difficulties of providing FTTH to each single apartment. In:xtnd is just 20 percent of the cost of FTTH and 40 percent of the cost of a DOCSIS 3.1 upgrade, which is very compelling and very attractive to our customers because we can dramatically reduce their CAPEX without sacrificing performance or reliability. In addition to purchase price, it is the ease and costs of installation, configuration and management of In:xtnd which provides operational cost (OPEX) benefits as there is no need to enter an apartment or probe the wires. And of course, there is the performance at 2.5 Gbps download and 2 Gbps upload, with very low latency. We also have our roadmap based on the future development of MoCA Access that will deliver 10 Gbps actual data rates per coaxial port. Plus, In:xtnd is a point to multipoint solution which allows for the connection of up to 31 Access modems per channel, expanding reach and distribution without having to reconfigure topologies. Our In:xtnd Control, the central unit of our system, has 4 coaxial ports, each with a performance of 2.5 Gbps, providing a total of 10 Gbps. Basically we reduce cost and enhance performance and
Many telcos are going FTTH to maintain performance parity with their cable counterparts and DOCSIS.
our solutions based on a reliable global standard, MoCA Access 2.5, which is generally what operators and integrators prefer. OC: Are there any bandwidth issues with using coax? PC: We hear from the major chipset vendors that coax could have future bandwidth capabilities of 100 Gbps, so in the near future there are effectively no limitations. Our current generation product is capable of 2.5 Gbps and MoCA 3.0 for access will be capable of 10Gbps and MoCA 3.0 for home networking at 10 Gbps has been finalised. I think it is essential that MoCA has a roadmap going forward, some of the larger operators work with a 10 to 15-year technology strategy and to be relevant, we need to show that we will be relevant, not just today but also many years from now. Operators are seeing a growing demand for bandwidth with the ongoing and increased adoption of over the top video services. The demand for bandwidth is really insatiable and with that comes the need for greater reliability. Coax has those inherent advantages native to the medium. OC: Which geographies are showing the most demand? PC: InCoax is primarily focussed on Europe for now, but we are generating operator interest in the U.S., Canada and many countries in Asia and Africa. We are also receiving a lot of interest from resorts and hotels around the world. We have a program in place to establish partnerships with resellers, integrators and OEMs to better serve those different geographies and opportunities. OC: Why do you think some regional greenfield FTTH operators are choosing to rewire premises instead of using existing in-building infrastructure and how do you think you might convince them that the InCoax approach is the way to go? PC: First of all, In:xtnd is a brand new solution, not yet known. So we need to make operators aware of our solution and that it has a future proof roadmap. Many telcos are going FTTH to maintain performance parity with their cable counterparts who are using DOCSIS, but fibre by definition is an overbuild deployment, with ROI somewhat uncertain despite the best and most extensive analysis. Thus, in a greenfield scenario, the motivation
for FFTH becomes “keeping up with the competition while offering 1 Gbps bandwidth or better in order to sell more services. This is not unreasonable, but it is expensive. For an FTTH provider aiming to connect say 25,000 subscribers, the cost delta for FTTH will be around €400 per subscriber, which comes to €10 million in total. If you have 100,000 subscribers, you save €40 million. On the other hand, large fibre operators, unlike their telco counterparts, don’t have the legacy wiring or mindset and are free to implement fibre. FTTH is an expensive proposition no matter how you look at it, so we can cost-effectively help implement fibre in MDUs for instance where fibre to each unit is cost prohibitive. However, cable companies enjoy both a cost and a performance advantage. DOCSIS and the use of coax, or even “fibre deep” is not an overbuild scenario and the performance can be ramped without touching the coaxial cabling. That said, DOCSIS 3.1 may prove prohibitively expensive for middle and smaller tier cable MSOs. It is not cost- effective for smaller MDU environments and there is no performance advantage over MoCA Access. This is also a market segment for us. Basically, we are helping to keep costs under control without sacrificing performance. OC: What is InCoax’s product roadmap going forward? PC: During ANGA, we launched In:xtnd Control and the In:xtnd Access, which is a two-port ethernet modem. We have more products based on MoCA Access 2.5 in our development road- map. We are very active inside MoCA and are developing the next generation of standard supporting 10 Gbps, MoCA Access 3.0, available in about a year, so operators have assurance of a technology roadmap with products supporting 10 Gbps in a few years. OC: How would you sum up the key points of InCoax’ offering? PC: Broadband providers get a solution that is very easy to deploy for MDU’s, there’s no need for new cables and no need to enter apartments. They get easy installation, configuration and management which enables operators the ability to offer subscribers the same level of gigabit services as FTTH. Plus, they can do this at only 20 percent of the cost of FTTH and in the case of a cable operator, just 40 percent of the cost of upgrading to DOCSIS 3.1.
ISSUE 14 | Q3 2018
XXXX XXXX ANKIT AGARWAL THE ROADTO5G
THE BILLION DOLLAR ROAD TO 5G IS BUILT ON FIBRE
5G is set to change the way we live our lives, bringing unprecedented services and an unparalleled user experience which will filter into every aspect of society. Operators will also benefit, with the technology presenting possibilities to launch new bandwidth-hungry services to generate additional revenue and satisfy consumers’ cravings for the latest and greatest broadband- enabled innovations. But with these great promises comes challenges as operators look at how to deliver up to 1,000 times more bandwidth and latency of less than 1ms, writes Ankit Agarwal , CEO of Telecom Products Business, Sterlite Tech.
T o do this, networks must be brought closer to the end-user. With many mobile operators turning to small cell networks to do so, demand for backhaul is greater than ever, pushing fixed networks to their limit. As the industry works to overcome these challenges and continues towards the 5G era, the route ahead is unclear in places, but strong foundations are already being built – and they’re made of fibre. AN EXPLOSION OF DATA From driverless cars to virtual reality, a whole host of unique applications with individual latency requirements and needs for significantly higher bandwidth rates are quickly exploding onto the scene. Real-time gaming, the wireless cloud office, smart cities and connected homes are also playing a part as we become increasingly connected in an age of more, more, more. There are more users, more devices, more content per device and more gigabits per user – and data transmission is at the core of the transformation.
government is one example, announcing in early 2018 plans to inject £25 million into 5G projects and pave the way for 5G cities as part of its Digital Strategy. UK operators are also beginning 5G trials this year: o2 plans to test 5G technologies in south London, EE will test the technology with five home and five business customers in East London and Vodafone has said it will test 5G in Birmingham, Bristol, Cardiff, Glasgow and Liverpool. Technology giants including Huawei, Intel and China Mobile are also making leaps and bounds as they set their sights on speeding up the commercialisation of 5G systems. It was announced in July that the three industry leaders completed 5G interoperability and development testing to do just that, showcasing how 5G networks and 5G terminals from different vendors can integrate to support enhanced mobile broadband services. One of the latest reports from Ericsson also predicts that there will be more than a billion 5G subscriptions by the end of 2023, highlighting the need for the industry to unify sooner rather than later as we face rapid global adoption.
By 2020, it’s predicted that more than half of the world’s population will be connected, and data will move beyond mobile to a world of connected devices. The revenue 5G is expected to generate is also vast. According to bcc Research, the global 5G technology market – which includes hardware, software and services – is expected to reach approximately US$105.4 billion by 2023, with a 26.6% CAGR between 2018 and 2023. Currently, North America accounts for the largest market share, with the market reaching US$9.7 billion this year. The Asia-Pacific region has also grown exponentially as the consumer base grows and initiatives and developments on 5G technology surge, resulting in a healthy-looking market value of US$10 billion in 2018. In order to prepare for the 5G future, operators must look to upgrade their networks to handle the imminent explosion in demand, particularly as the IoT begins to make an impact. Most leading telecoms operators are committed to investing in fibre while governments are leading the way through policy and regulation as 5G activity continues to grow. The UK
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