ECOC 2019 industry reflections
Gazettabyte is asking industry figures for their thoughts after attending the recent ECOC show, held in Dublin. In particular, what developments and trends they noted, what they learned and what, if anything, surprised them. Here are the first responses from Huawei, OFS Fitel and ADVA.
James Wangyin, senior product expert, access and transmission product line at Huawei
At ECOC, one technology that is becoming a hot topic is machine learning. There is much work going on to model devices and perform optimisation at the system level.
And while there was much discussion about 400-gigabit and 800-gigabit coherent optical transmissions, 200-gigabit will continue to be the mainstream speed for the coming three-to-five years.
That is because, despite the high-speed ports, most networks are not being run at the highest speed. More time is also needed for 400-gigabit interfaces to mature before massive deployment starts.
BT and China Telecom both showed excellent results running 200-gigabit transmissions in their networks for distances over 1,000km.
We are seeing this with our shipments; we are experiencing a threefold year-on-year growth in 200-gigabit ports.
Another topic confirmed at ECOC is that fibre is a must for 5G. People previously expressed concern that 5G would shrink the investment of fibre but many carriers and vendors now agree that 5G will boost the need for fibre networks.
As for surprises at the show, the main discussion seems to have shifted from high-speed optics to system-level or device-level optimisation using machine learning.
Many people are also exploring new applications based on the fibre network.
For example, at a workshop to discuss new applications beyond 5G, a speaker from Orange talked about extending fibre connections to each room, and even to desktops and other devices. Other operators and systems vendors expressed similar ideas.
Verizon discussed, in another market focus talk, its monitoring of traffic and the speed of cars using fibre deployed alongside roads. This is quite impressive.
We are also seeing the trend of using fibre and 5G to create a fully-connected world.
Such applications will likely bring new opportunities to the optical industry.
Two other items to note.
The Next Generation Optical Transport Network Forum (NGOF) presented updates on optical technologies in China. Such technologies include next-generation OTN standardisation, the transition to 200 gigabits, mobile transport and the deployment of ROADMs. The NGOF also seeks more interaction with the global community.
The 800G Pluggable MSA was also present at ECOC. The MSA is also keen for more companies to join.
Daryl Inniss, director, new business development at OFS Fitel
There were many discussions about co-packaged optics, regarding the growth trends in computing and the technology’s use in the communications market.
This is a story about high-bandwidth interfaces and not just about linking equipment but also the technology’s use for on-board optical interconnects and chip-to-chip communications such as linking graphics processing units (GPUs).
I learned that HPE has developed a memory-centric computing system that improves significantly processing speed and workload capacity. This may not be news but it was new to me. Moreover, HPE is using silicon photonics in its system including a quantum dot comb laser, a technology that will come for others.
As for surprises, there was a notable growing interest in spatial-division multiplexing (SDM). The timescale may be long term but the conversations and debate were lively. Two areas to watch are in proprietary applications such as very short interconnects in a supercomputer and for undersea networks where the hyperscalers quickly consume the capacity on any newly commission link.
Lastly, another topic of note was the use of spectrum outside the C-band and extending the C-band itself to increase the data-carrying capacity of the fibre.
Jörg-Peter Elbers, senior vice president, advanced technology, ADVA
Co-packaging optics with electronics is gaining momentum as the industry moves to higher and higher silicon throughput. The advent of 51.2 terabit-per-second (Tbps) top-of-rack switches looks like a good interception point. Microsoft and Facebook also have a co-packaged optics collaboration initiative.
As for coherent, quo vadis? Well, one direction is higher speeds and feeds. What will the next symbol rate be for coherent after 60-70 gigabaud (GBd)? A half-step or a full-step; incremental or leap-frogging? The growing consensus is a full-step: 120-140 GBd.
Another direction for coherent is new applications such as access/ aggregation networks. Yet cost, power and footprint challenges will have to be solved.
Advanced optical packaging, an example being the OIF IC-TROSA project, as well as compact silicon photonics and next-gen coherent DSPs are all critical elements here.
A further issue arising from ECOC is whether optical networks need to deliver more than just bandwidth.
Latency is becoming increasingly important to address time-sensitive applications as well as for advanced radio technologies such as 5G and beyond.
Additional applications are the delivery of precise timing information (frequency, time of day, phase synchronisation) where the existing fibre infrastructure can be used to deliver additional services.
An interesting new field is the use of the communication infrastructure for sensing, with Glenn Wellbrock giving a presentation on Verizon’s work at the Market Focus.
Other topics of note include innovation in fibres and optics for 5G.
With spatial-division multiplexing, interest in multi-core and multi-mode fibre applications have weakened. Instead, more parallel fibres operating in the linear regime appear as an energy-efficient, space-division multiplexing alternative.
Hollow-core fibres are also making progress, offering not only lower latencies but lower nonlinearity compared to standard fibres.
As for optics for 5G, what is clear is that 5G requires more bandwidth and more intelligence at the edge. How network solutions will look will depend on fibre availability and the associated cost.
With eCPRI, Ethernet is becoming the convergence protocol for 5G transport. While grey and WDM (G.metro) optics, as well as next-generation PON, are all being discussed as optical underlay options. Grey and WDM optics offer an unbundling on the fibre/virtual fibre level whereas (TDM-)PON requires bitstream access.
Another observation is that radio “x-haul” [‘x’ being front, mid or back] will continue to play an important role for locations where fibre is nonexistent and uneconomical.
Daryl Inniss reflects on a career in market research
Daryl Inniss
Rocky beginnings
I jumped ship in 2001 joining RHK, a market research firm, knowing nothing about the craft. I had been a technical manager and loved research and development, but work was 500 miles from my family and the weekly commute was gruelling.
Back then, the telecom market was crashing and I believed my job was at risk. Moving to a small market research firm could hardly be described as good planning, but it turned out to be a godsend.
I had no idea what I was getting into and my first months did not help. My mother passed away within a month of joining and I was absent for half of my first 40 days. But my boss was very supportive. Meanwhile, work consisted of unintelligible, endless conference calls. And while in this daze, September 11th occurred.
The first report - getting the job done
Completing my first market research report helped ground me in the art. I wrote about optical dispersion compensators. After interviewing many companies, I wrote a long and complicated piece, an exercise that I found difficult. I also struggled with who would read the report and what would be done with the data.
The report aimed to explain technical issues simply and included a market forecast. Completing it proved hard because there was always more information to include, a better explanation, and better forecast data to be gathered.
I felt unsatisfied but the report received kudos. Internally I was told that I was the second or third analyst to tackle that topic and the first to complete the work. And an optical company complimented me on the report. But I felt dissatisfied and wished I had done better. I wanted to understand the subject more, wished I could provide clearer, simpler explanations and also provide a better forecast.
Nonetheless, I learned the importance of completing assignments as they can go on forever.
A market researcher's role
An analyst tries to identify market opportunities and winning strategies. Looking at new products, for example, the goal is to explain what they are, why they are being introduced, who will use them, their value, and the competitive landscape. The issues must be explained to novices and experts alike. The technical novice may get a glimpse of what the technology means and how it works, while a technical expert may understand the ecosystem more deeply.
An analyst must strive to prepare simple messages that are steeped in facts. You need to have a story—say why something is happening and explain it in the context of the bigger picture.
Forecasts, market share, rankings, prices and volumes are all important. Everyone loves numbers. But the story underpinning the numbers is far more important and most people do not take the time to determine the causes behind the numbers.
Where is the industry going?
I have spent the last 15 years analysing the optical components market. Sustainable profitability is the biggest topic, and consolidation is viewed as providing the best approach. Notwithstanding the mergers and acquisitions, the market is fragmented, margins remain low, and there is still no evidence of true consolidation.
Independent of all the change, optical component suppliers post gross margins below 40 percent and most are below 30 percent while semiconductor companies are routinely above 50 percent. There is a force keeping the industry stuck at this level, in part because there is little product differentiation.
Forecasts, market share, rankings, prices and volumes are all important. Everyone loves numbers. But the story underpinning the numbers is far more important
Avago Technologies’ divestiture of its optical module business to Foxxconn Interconnect Technology Group points to one high-margin path. Discrete components—particularly lasers and modulators, and to a lesser extent photodiodes and receivers - command higher margins. Vendors can offer differentiated products at this level. Total revenues are lower so the challenge is to win enough business to fill the factory because these are fixed-cost, intensive businesses.
Subsystems offer another high-margin path, particularly for vertically-integrated companies. Here vendors are challenged with a long time-to-market, requiring a strong design team to support customer requests. Also business can be lumpy because solutions are customer-specific.
Acacia Communications' coherent 100 gigabit transponders is an example solution that has the basis to win broad-based business and high margins. The products offer a one-stop-shop solution including optics, electronics, and software. Acacia is developing silicon photonics so it controls most of the bill of materials, keeping down product cost. And its solution is differentiated in that it helps customers get their products to market while achieving a high level of performance.
Market research: even more important now
The communications industry is going through extensive change making market research more important than ever. The Web 2.0 companies are the new optical communication mindshare leaders, driving technology and business practices.
Simultaneously China is the biggest consumer of optical gear, both for long-haul and access networks. Optical component suppliers need to understand how to compete in this new environment. What are the new rules? How are they evolving? How can companies best position themselves to win more business?
Just like when I started, I ask how can a market researcher help component companies navigate this new world. No doubt, this is a challenge, but market researchers provide the collective market voice. They are the market mirror that shows the beauty spots and the warts. They are given license to say what everyone is thinking. They can raise market consciousness so participants may act fearlessly.
But market researchers need to understand the story from top to bottom—end customer to suppliers. They must communicate well which includes not only delivering the story but also being humble, admitting mistakes, keeping sources and information confidential, and taking corrective actions.
This is indeed a challenge and I feel honoured to have had the opportunity to participate. I could not have done the job without the help of wonderful people from all over the world. Their generosity, warmth, and kindness made all the difference. At bottom, it is these relationships that mattered as we tried to help each other navigate.
Biography
Dr. Daryl Inniss is Director, New Business Development at OFS Fitel, the designer, manufacturer and provider of optical fibre, fibre optic cable, connectivity, fibre-to-the-subscriber and specialty photonics products.
He was formerly Components Practice Leader at market research firm Ovum and RHK. Daryl was Technical Manager at JDSU and Lucent Technologies, Bell Laboratories, and started his career as a Member of the Technical Staff, AT&T Bell Labs.
