Not too long ago an analyst asked me if I thought the telecom industry was building bandwidth to meet demands or if it was a "field of dreams" -- in this case, "if you build it, they will devise a use for it." Truthfully, I just can't see companies spending millions of dollars to lay fiber all over the place in the expectation that it will be used. I suppose you could say this is possible given the millions of dollars spent on dot-com companies in the last year, not to mention the billions Motorola spent on a worldwide wireless communications network that failed to gain popularity. But I don't believe this is the case with the data industry. Given the growth of the data networking needs of most companies over the past two years, I believe that providers are just trying to keep up.
Second, I've noticed all the companies that are coming into play at the metropolitan IP level. These companies -- including Broadwing, Cogent, Telseon and Yipes -- are part of a new breed of service provider. They offer long-distance IP networks with huge amounts of bandwidth at incredible prices. And they get this bandwidth by laying what? You guessed it: huge amounts of fiber. And we're talking about tens of thousands of miles worth from each vendor. Most of this fiber carries data at a minimum of 2 Gbps, with large sections running at almost 10 Gbps.
Today these companies are focused solely on the data needs of enterprise companies, but I'm sure they won't stop there. The only thing separating the metro data providers and carriers has been the lack of voice services, and this wall is about to be torn down. Metro carriers aren't going to invest in a network of Class 5 phone switches, but they probably will invest in "voice over" technologies, as well as SIP and MGCP gear. When these companies start offering voice services to their customers, guess what they're going to need? You got it, more fiber.
We can't leave out the residential customers. The "trickle down" theory may not have worked for Ronald Reagan, but it's alive and well in the technology sector. Enterprise customers frequently see new technologies before residential customers. Residential customers haven't really needed advanced telephony services yet, but they're clamoring for inexpensive broadband Internet access. This need is being filled by DSL services, which are copper-based not fiber. So why are they important? In order to fill the desire of bringing broadband services to customers, the need actually has been to bring the CO (central office) closer to the customer. This is done by placing the DSLAMs in neighborhoods and then running (guess what?) fiber back to the CO and the rest of the network. The next step of course will be to run fiber directly to the houses, combining voice, video and data over one fiber.
These events are well under way here in the United States, and our friends in Europe and especially in the Asian-Pacific market are not far behind. So the next time you want to see the largest ball of fiber, look down. You're standing on it, and it's only getting bigger.
Send your comments on this article to Darrin Woods at dwoods@nwc.com.