April 05, 2001, 12:42 PM — Optical networking has gained an incredible following among investors, as one start-up after another has been bought for billions of dollars or has staged an IPO that catapults its market value to breathtaking heights.
The big idea driving this speculative buzz is that optical networking won't simply revolutionize telecom services but will turn the world economy on its head. It'll blow away bandwidth bottlenecks and almost eliminate Internet delays and, consequently, usher in huge changes in how companies are run and how they conduct IS functions. Big companies will outsource everything from manufacturing to marketing, so the buzz goes. As a result, they'll "hollow out" -- revenue will be big, but employee numbers small. A myriad of specialized service providers will emerge, offering applications that target business processes. The telecom networks they run over will be taken for granted.
Simultaneously, the software industry is expected to undergo a shake-up as users start renting applications hosted on remote servers. That could hurt the PC market because many users will employ inexpensive information appliances to access these applications.
It's a fantastic vision. If realized, you could be in for a turbulent time. One day, you could find yourself working for one of these new service providers rather than for a traditional user enterprise.
The great light hope
But for now, you face the tricky task of determining the best way to exploit current optical networking developments. You need a realistic view of when these technologies will start delivering the goods -- drastic bandwidth price cuts, much faster installation times and serious performance guarantees.
Your best hopes hinge on a new breed of start-up carrier that introduces services based on optical networking technologies. In some instances, this means focusing on carriers using cost-cutting dense wave division multiplexing (DWDM) and Gigabit Ethernet. In other instances, it means identifying carriers using new types of equipment so they can offer a complete range of services within buildings, at the drop of a hat.
In either case, coverage is spotty and is likely to be limited to major cities for the next few years. Even so, it's more than you'll get from an incumbent carrier, says Deb Mielke, principal analyst at Treillage Network Strategies, a research firm in McKinney, Texas. "The regional Bell operating companies will wait until they see people eating their lunch before they finally make a move [in optical networking]."
Overlooking these early carrier opportunities could be downright dangerous, says Roger Gullqvist, chief information officer and executive vice president of Swedbank in Stockholm, Sweden.