Telecom Equipment 2011: Market Forecasts and Technologies for ROADMs, DWDM, Switches and Routers



Market Studies

1394 Market and Technology Study

Telecom Equipment 2011:
Market Forecasts and Technologies for ROADMs, DWDM, Switches and Routers

Published: July 4, 2011

Overview
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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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