100 Gig: Is market expectation in need of a reality check?

Recent market research suggests that the 100 Gigabit-per-second (Gbps) era is fast-approaching and that 100Gbps promises to leave the 40Gbps market opportunity in its wake.

“It could easily be ten to 15 years before we see 100Gbps in a big way on the public network side”

Mark Lutkowitz, Telecom Pragmatics

Infonetics Research, in a published White Paper, says that 100Gbps technology will be adopted at a faster rate than 40Gbps was in its first years, and that the 100Gbps market will begin in earnest from 2013. Indeed this could even be sooner if China, which accounts for half of all 40Gbps ports being shipped, moves to 100Gbps faster than expected.

LightCounting, in its research, describes 100 Gbps optical transmission as a transformational networking technology for carriers, and forecasts that sales of 100Gbps dense wavelength division multiplexing (DWDM) line cards will grow to US $2.3 billion by 2015.

But one research firm, Telecom Pragmatics, is sounding a note of caution. It reports that the 40Gbps market is growing nicely and believes that it could be at least a decade before there is a substantial 100Gbps market.

“100G is not going to kill 40G and, if anything, we are bullish about 40G,” says Mark Lutkowitz, principal at Telecom Pragmatics. “I’m not talking about large volume ramp-up of 40G but there is arguably a ramp-up.”

100G Paradox

One reason, not often mentioned, why 40Gbps is being adopted is that it does not require as many networking changes as when 100Gbps technology is deployed. “There is additional compensation [needed] and it is not clear that all the fibres will work with 100G,” says Lutkowitz.

There is also what he calls the ‘100G Paradox’.

The 100Gbps technology will most likely be considered at pinch-points in the operators’ networks. Yet these are the same network pinch-points that were first upgraded to 10Gbps. As a result they are likely to have legacy DWDM systems such that upgrading to 100Gbps is a considerable undertaking. “It is questionable whether these systems can even work with 100G,” he says.

"We really think that 40G should be getting a lot more respect than it is getting” 

”When you look at service providers they are willing to put up with a whole amount of pain before they buy something, and they will certainly not forklift electronics or fibre - they will only do that as a last resort.” Another attraction of 40Gbps for the operators is its growing maturity - it is a technology that has been available for several years.

Costs

Telecom Pragmatics also dismisses the argument made by  component vendors that the market will move to 100Gbps especially if the cost-per-bit of 100G technology declines faster than expected.

“The first cost [point] is ten times 10G and really you need to get to something like six or seven times [the cost of] 10G before you consider 100G,” says Lutkowitz.  But that is not the sole cost. Network protection is needed which means a second system and there are additional networking and operational costs associated with 100Gbps.

Moreover, to whatever extent 40G is deployed, it will put further pressure on 100Gbps as 40Gbps prices decline. “In the 10G market, prices continued to decline and that precluded 40G, now you have 40G - to whatever extent there is deployment - precluding 100G,” says Lutkowitz.

“It could easily be 10 to 15 years before we see 100G in a big way on the public network side,” says Lutkowitz. But he stresses that in the datacenter and for the enterprise, demand for 100Gbps technology will be a different story.

Meanwhile Telecom Pragmatics expects further operator trials at 100Gbps as well as new system announcements from vendors. “But we really think that 40G should be getting a lot more respect than it is getting,” says Lutkowitz.