The fallout from the telecoms crash a decade ago continued to reverberate throughout the photonics industry for several years; companies disappeared, others were acquired, and only those that had the foresight to diversify were able to maintain healthy balance sheets. Arguably, much of the growth of the industrial laser market in the past decade may be as a direct result of the transfer of expertise from the fibre and telecoms sector.
Consequently, the phrase ‘fibre and telecoms’ became one that was associated with a struggling sector. For many photonics companies, it was considered a no-go area, as it was felt that there was no profitability to be achieved.
A decade on, though, and the landscape has changed dramatically. The industry has come full circle, and it is once again a sector that not only has potential for photonics companies, but is even one where demand is outstripping supply.
So, what happened, and why is now a good time to get involved? The telecoms boom of the late 90s attracted huge amounts of investment to the photonics industry. Network connectivity and optical fibre networks were seen as the next big thing. As a result venture capital was poured into the sector, and any company that claimed to have the technology to exploit these networks was able to attract cash.
The big network carriers helped fuel this excitement and they believed that the sector was going to grow extremely quickly. Infrastructure companies began building out network capacity, inventories and stock ahead of demand. However, the growth did not manifest itself on the scale that everyone was predicting. This led to the massive correction at the turn of the decade. Orders were cancelled and inventories were left stranded.
It took a good two or three years to work through that over-supply. Many start-ups eventually ran out of money and supplier consolidation occurred at all points in the supply chain. What was left was a smaller number of broad portfolio vendors, and ultimately the balance between supply and demand was restored. What is often lost is the fact that there was still significant growth in the market during this time – it just wasn’t at as fast a rate as was predicted.
At the moment, though, we are almost in the reverse situation. Bandwidth demand has exploded in recent years, fuelled by new broadband applications, especially internet video. New social media networking platforms such as Facebook and YouTube, as well as the iPhone, have been particularly disruptive in driving the need for high bandwidth connectivity in both the fixed line and wireless network infrastructure. All of us involved in the industry have had to change the way we design and support optical networks as a result.
Now demand is outstripping supply and industry lead times are increasing. Optical transport rates are increasingly moving from 10Gb/s up to 40Gb/s – with a plan in the near future to move even up to 100Gb/s and beyond, presenting a major business opportunity for the photonics industry.
While the fibre optic cables themselves don’t normally need to be upgraded, the optical transceiver equipment – i.e. the transmit and receive box at either end of the fibre – needs to be more sophisticated than ever before. These devices incorporate clever optics and digital signal processing techniques. Even within the heart of the optical network, novel switching matrices based on MEMS technology are being utilised to redirect optical bandwidth according to where the network needs it most. The result is a high-capacity, dynamic and flexible network, which can support the large amounts of new data traffic being generated every day.
The underlying laser technology has not changed. For smaller distances, an 850nm VCSEL laser remains the simplest and most common option. For greater distances, one would use a distributed feedback laser (DFB) at 1,550nm or even a wavelength tunable laser leveraging a distributed bragg reflector (DBR) structure.
The challenge for photonics companies today is to develop high-speed wavelength tunable lasers, utilising advanced and efficient modulation schemes capable of supporting 40Gb/s or 100Gb/s bit rates. These highperformance sources then need to be packaged together with other high-speed components, such as amplifiers and MEMS switching elements, to provide a full optical transport solution all on a single line-card.
Forward-thinking photonics businesses, with the ability to switch their expertise to the fibre and telecoms market, could find themselves on a lucrative road as supply continues to outstrip demand. Society’s increasing demand for bandwidth should be enough to guard against the crash of a decade ago repeating itself.
