Special Report: Next Generation Internet Applications
Readily available DWDM products multiply the capacity of established fiber by as much as 16 times on 10-year-old, single-mode fiber. A Bellcore study showed that DWDM is 30 percent cheaper than SONET for implementing interoffice trunking mesh. Studies funded by the Defense Advanced Research Projects Agency (DARPA) for the National Transparent Optical Network (NTON) predict that local and interexchange carrier costs will fall by 80 to 90 percent over an eight to fifteen year period starting in 1996. Widespread use of DWDM could reduce current fiber utilization levels from 80% to as low as 2%. Large-scale introduction of DWDM may eventually trickle down to the customer in the form of reduced bandwidth costs.
New, more advanced DWDM technology multiplies the bandwidth capacity of installed fiber by 100 or even 1000 times. It creates large capacity increases and avoids investments in new fiber construction. The economics and capacity advances brought about by DWDM will create growing demand for DWDM equipment at the expense of SONET.
Ryan Hankin Kent (RHK) (South San Francisco, CA) predicts that DWDM sales will grow from $480 million in 1996 to $4.4 billion in 2001.[43] Forecasting is difficult and it is easy to double-count forecasted DWDM requirements. There is always the possibility that carriers are overreacting to the current shortage of fiber and Internet growth. If so, they could be holding massive quantities of excess fiber capacity. For now, all of the participants are betting that traffic demand will grow to match their new fiber and DWDM investments.
DWDM promises many advantages for future networks. Consequently, there is another technology transition ahead for network operators. Technological and economic constraints will moderate the rate of transition.
Network operators began their conversion from PDH to SONET during the 1980s. The communications industry required a decade and $4.5 billion to convert from PDH to SONET. Network operators will require time to amortize their SONET investments. Existing SONET networks will remain in service for a period of time. New high capacity network investments will favor DWDM over SONET.
The rate of SONET replacement by DWDM will be constrained in part by delays in commercially available optical cross connects (OXCs). OXC constraints will subside with time. In the meantime, SONET equipment will act as an electronic add and drop multiplexer between adjoining DWDM networks. Not withstanding the lack of OXC equipment, DWDM is displacing SONET as the primary means for multiplexing subscriber services onto fiber optic cables.
Dell'Oro Group projects that the market for SONET will peak in 2003 and begin a gradual decline afterwards as service providers begin supplanting SONET with DWDM.[45] The DWDM market will increase from $7.4 billion in 2000 to $36.5 billion in 2005. The total optical market for optically based multiplexing (SONET and WDM) will grow from $23.5 billion in 2000 to $57.3 billion in 2005. WAN router sales will outpace DWDM, growing from $3 billion in 2000 to $26 billion in 2005. Rapid growth in electronic router sales will depend upon the absence of viable photonic packet technology for the next five years.
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