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Free-Space Optics: Improving Service Velocity

2002 LightPointe. All rights reserved.

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Metro Access Market Opportunity

Network Congestion and Metro Opportunity
Unprecedented growth in Internet traffic in the past several years has created demand for high-bandwidth services both in metro and backbone networks. Service providers built massive long-haul infrastructure in past 3 to 4 years to meet the growing and anticipated bandwidth needs in the network backbone. As a result, the backbone portion of the network now has abundant capacity with prices dropping sharply. Similarly, each corporate computer is connected to a high-speed Fast Ethernet Local Area Network (LAN) network. But the area of networks between 100 megabit (Mbps) corporate LANs and huge carrier network backbones known as metro access still remains a major bottleneck choking the efficiency of networks (Figure 1).

Figure 1: Service Provider Access, Metro and Long-Haul Network

Why Access is a Bottleneck?

Today, fewer than 10 percent of all the metro buildings are connected with fiberusually referred to as on-net buildings. The majority of other buildings (more than 90 percent) are connected with copper plant that is not suitable for offering true high-speed connectivity to customers. These buildings are usually referred as off-net buildings. According to various estimates, an average of 4 to 5 off-net buildings are located within 1 to 2 kilometers of each on-net building. These off-net buildings usually host multiple small to medium businesses, a large enterprise or non-network based service provider. The customers in these buildings are forced to buy copper-based T1/E1s connections or wait indefinitely for expensive 45 Mbps DS-3 connections (Figure 2). Carriers have an attractive opportunity to provide true high-speed connectivity to a large section of customers in off-net buildings, most of which are connected with copper today. However, providing high-speed connectivity through the deployment of fiber poses many challenges for the carriers. Some of these challenges are described in the next section.

Figure 2: FSO Metro Market Opportunity

Carrier Challenges
Service providers are continuously building new metro networks and upgrading their legacy networks to accommodate growing bandwidth needs of data traffic. While service providers data service revenue is increasing, network costs are growing even faster than the service revenues, resulting in negative rate of return, and reduced shareholder value. Furthermore, the bursting of the dot-com bubble in 2000 and intense competition has eroded profit margins on traditional bandwidth services. Further, because of limited visibility into future needs and uncertainty over capital expenditures, many enterprise customers are opting for short-term service contracts instead of longer multi-year service contracts. Carriers must constantly find new ways to increase their service revenue while keeping network costs down. At the same time, it has become difficult to justify the business case for deploying fiber to connect to multi-tenant buildings with just a handful of customers (1 to 4) per building. Longer deployment cycles and higher costs of deploying fiber in the metro seriously limit the number of customers that can be connected per year within limited capital budgets available to carriers. In an environment of shrinking capital budgets and stagnant revenues, carriers need alternative access technologies, which will enable the addition of new customers faster but at a much lower cost per customer. The next section compares various access technologies for scalability and suitability to provide high-speed connectivity and alleviate network congestion.

Technology Options
Despite the recent shift in carrier spending from the network backbone to network access, high-capacity connections are far from universal availability. The main reasons are high trenching costs, right-of-the way issues, construction moratoriums and long periods required for deploying fiber beneath busy downtown streets. Technologies that allow carriers to bring new customers on-net faster and at a lower cost per customer are an attractive and compelling option. This section examines the suitability of various access technologies for offering high-speed connectivity to corporate users. These technologies can be divided into four groups based on transport medium used: FSO, fiber, copper and RF, or fixed wireless. Advantages and disadvantages of each of these technologies are described (Figure 3).

4 Copper-Based Connectivity