“The market for optical fiber cable has shifted dramatically in the past five years to local deployments, away from long haul and regional.” The market for optical fiber and cable is a critical piece of the broader optical components pie. Its installation is also the most labor-intensive part of the network, particularly for underground and undersea connections. The optical fiber and cable cost for a fiber optic system represents less than 10 percent of the total system installation cost if labor is included. Although price reductions have affected all types of optical components, they have been most unkind in some ways to optical fiber and cable. Until recently, price erosion had been 10 to 15 percent annually. However, the damage to the Sumitomo Electric Industries plant in northern Japan has shifted that trend – at least for now. To understand today’s market for optical fiber and cable, one must go back to its origins. Scientists at Corning Inc. developed the first commercial optical fiber in 1970. In 1976, Corning and the then AT&T signed a cross-licensing agreement to share the basic discoveries that surrounded the technology. AT&T has since sold its fiber business to Furukawa Electric Co. Ltd., which operates it under the name OFS. Corning and OFS remain the No. 1 and No. 2 optical fiber makers in the world, respectively, although other vendors, such as Prysmian SpA and Draka Holding NV – which have since become one company – are very competitive. Corning and OFS control every aspect of the optical fiber-making process, including extruding the glass from draw towers, doping it, cooling it, stringing it, testing it, marking it, and then either cabling it or shipping it to other cablers. Although Corning, OFS and some other vendors have cabling facilities near their fiber-producing plants, each also sells a substantial amount of its fiber to outside cablers, including Superior Essex and General Cable. There are many reasons for this. For one, carriers often like to have multiple cablers submit competitive bids. For another, outside cablers might deal in markets that the in-house cabler may not. The market at one time was fairly evenly divided between optical fiber on the one hand and cable and accessories on the other. For years, Corning has held a fun internal competition between Corning Optical Fiber and Corning Cable Systems to see which one would generate more revenue in a year. However, because of the density of access installations, the balance has shifted to as high as 70 percent accessories and 30 percent fiber. Besides cable, Corning Cable Systems provides connectors, splicing, housing, jumpers, cabinets and strength members to go into the cable. The global drive to implement FTTX into more new venues is good news for makers of optical fiber and related components. In fact, a dominant theme is that the market for optical fiber cable has shifted dramatically in the past five years to local deployments, away from long-haul and regional. This is the impact of FTTX, which calls for far more dense applications in neighborhoods, cities and other highly focused areas. Savvy optical components vendors are making the changes necessary for optical fiber to succeed in these markets, including preterminated cables and ultrabend fiber. Optical fiber cable is being caught up in the global move to broadband. There will be a generally firm growth trajectory for it over the life of this report. In fact, optical fiber production should increase from 147 million kilometers of fiber in 2011 to 204 million in 2017. Active optical cables Active optical cables (AOCs), a fast-growing market that started up in the past five years, have a built-in transmitter and receiver, so there is no need for connectors. Last year, the AOC market was in the neighborhood of $50 million, with sales in the range of 160,000 units. The market will triple during the life of this report. The market continues to be driven by high-performance computers or supercomputers using the Infiniband protocol and, in fact, one potential area for enormous market growth is data centers. Table 1. The seven-year forecast for optical fiber production. The last three rows are in billions of dollars. AOC vendors include Emcore Corp., Finisar Corp., TE Connectivity Ltd., AFL Telecommunications, Molex Inc. (which acquired Luxtera’s active optical components division) and Zarlink Semiconductor Inc., which was acquired by Microsemi. Emcore says that it has shipped more than 100,000 Emcore Connects Cables, a feat that it says makes it the market leader in active optical cables. Emcore Connects Cables are used in interconnect applications, including high-performance computing, storage-area network systems, distributed-grid networks, cloud computing systems and telecom data centers. The company says it was the first to bring optical interconnects to the high-performance computing market and has led the industry in shipments of 20-Gb/s and now 40-Gb/s AOCs. Ultrabend fiber and cable The rise of fiber to the premises (FTTP) led to the need to toughen optical fiber and cable as they got closer to the residence. Because optical fiber cable is sometimes stapled to drywall in new construction sites and treated by laborers as any other type of wire, it has been critically important to make the product durable enough to withstand the strain of such applications. That need became particularly critical as carriers began to install optical fiber cable in multiple dwelling units, or MDUs, such as in Verizon’s deal to bring FTTP to the entire city of New York. It also has signed deals to install FTTP in other major cities. OFS and Corning have shown leadership in this area, although all of the major fiber producers have now come to market with some form of ultrabend product. Corning’s innovations are usually well thought out, and this one was no exception. The company recognized that the fiber market generally was moving to the premises. As a qualified vendor for the Verizon FiOS program, it also saw ultrabend fiber as giving it an opportunity to lead when Verizon started the stage of its program where it was bringing fiber to MDUs. From an economic point of view, Clearcurve also costs more than more common types of fiber, increasing the margins for this product. OFS, a Furukawa subsidiary and the second-largest maker of optical fiber behind Corning, also has been an innovator through its EZ bend product line. OFS said that the fiber has zero water dispersion. Prysmian introduced CasaLight Xtreme, its “ultrabend-insensitive fiber,” in 2008. It has a bending radius down to 5 mm, far exceeding the requirements of the toughest specifications currently used in the telecom industry. It has been designed specifically for fiber-to-the-home applications where cables must withstand sharp 90° bends, rough handling and severe installation techniques, such as the use of staple guns, according to the company. Draka Communications Americas, now a subsidiary of Prysmian, reintroduced its BendBright Elite ultrabend product in early 2009. The fiber can tolerate bends as small as 5 mm, while achieving attenuation values of There are four types of ultrabend fiber made by Corning, OFS, Prysmian and Draka. Table 2 sums up the characteristics of each. Table 2. The four types of ultrabend optical fiber. Multimode fiber/specialized fiber Multimode fiber has a much larger diameter core than single-mode fiber. The internal diameter can range from 50 µm up to hundreds of microns, while the core of a single-mode fiber is 8 or 9 µm. Although single-mode fiber is by far the predominant fiber for telecommunications, multimode is used in short-reach applications, including for data centers and some other local area networking deployments, as well as for numerous specialized applications not for telecom, such as medical uses, imaging and some illumination. Multimode fiber represents between 3 and 5 percent of the total 2011 optical fiber market, with single mode accounting for the balance. The amount of multimode fiber deployed in the 2011 to 2017 time frame of this report will range up to 5 percent, primarily as the result of its use in data centers. Multimode is not cheaper than single-mode fiber. However, the inexpensive LEDs or vertical-cavity surface-emitting lasers (VCSELs) and detectors used to power it are generally less expensive than its single-mode fiber counterparts. Multimode fiber has a number of uses, including in military transport to provide internal communications in planes and ships, sending telemetry, data and telecommunications. Multimode fiber also may be used in tactical military applications and for imaging in doctors’ and dentists’ offices. Major optical fiber makers generally separate the single-mode fiber operations from multimode fiber production. For example, OFS makes single-mode fiber in Atlanta as part of the former AT&T works, and manufactures some specialty fiber in Connecticut. Standard product types for multimode fiber include 50 x 125, 62.5 x 125 and 100 x 140 µm. There are other, much larger sizes as well, but these are the standard sizes listed in most catalogs. The 50- and 62.5-µm multimode fiber is generally used for short-distance telecom and datacom applications – such as for data centers – as patch cords and for local area networks. Although there are some datacom and telecom uses, larger-area diameters are used for more general purposes, such as optical pumping and beam delivery, closed-circuit TV and medical imaging, and for sending a fiber down an oil refinery. Specialty fibers with higher diameters may be used to make fiber lasers. The ratio of multimode fiber to single-mode fiber is higher in more industrialized nations. In countries such as China, where large amounts of single-mode fiber are being installed for telecom and datacom, the amount of multimode fiber used is lower. The amounts are still significant, however. In 2011, about 147 million kilometers of fiber were being installed. That means that some 6 million kilometers of multimode fiber were being installed. This is a significant market share. Remember, multimode fiber sells at a higher price than single-mode fiber. Specialized applications remain generally stable from year to year. The amount of multimode fiber going for illumination, for military uses and for sensing does not vary much. Although fiber optic sensing has been growing recently, along with the amount of fiber that often enables it, this is still a relatively small market. The real growth potential is in data centers using VCSELs with multimode fiber. Optical component vendors that can use VCSELs to carry signals in duplex or multistrand multimode fibers may find a market in local area networks or the growing number of data centers throughout the world. There is a real need for transmitting data short distances in data centers; e.g., large enterprise customers and data from governmental agencies often are located in proximity to carrier vendors in data centers. These short-range links would appear to be perfect for multimode fibers. The data center owner, already strapped by cooling and power expenses, will welcome the price breaks that multimode fiber systems afford. The Market for Fiber Optic Components: A Seven-Year Forecast is available in print and as a digital download (pdf) at www.photonics.com/fiberreport. Editor’s note: The ever-increasing demand for broadband data access on a global scale – driven largely by mobile backhaul and fiber to the X (known as FTTX and representative of fiber to the premise or business or terminating close to them) – continues to push fiber optic component manufacturers to record production and deployment. Last year saw the production of millions more kilometers of fiber than ever, but does that necessarily mean continued success is assured? In this passage, adapted from the July 2011 report, The Market for Fiber Optic Components: A Seven-Year Forecast, from Laurin Publishing, the author explores this key question.