Charles T. Troy
PITTSFIELD, Mass. -- A funny thing has happened on the way to the information superhighway: The road builders can't keep ahead of the drivers.
Fiber optics fueled the dream, but now a shortage of fiber threatens progress, has heightened demand for more efficient use of existing fiber, and has put the brakes on cable TV's love affair with fiber.
While the short-fall caught most by surprise and has popularly been attributed to a rash of new networks and services, some saw it coming. Richard Mack, vice president of KMI Inc., the well-respected Newport, R.I., fiber optic market research firm, told Photonics Spectra that the first signs showed up "in October of 1994, and the shortage continues unabated today."
Road signs missed
In retrospect, the signs were there for all to see. As early as last fall, market researchers were scaling back earlier predictions, and rumors of shortages, particularly in Europe, kept surfacing. Asked if an end is in sight, Mack said KMI expects the trend to last from one to two years. "US firms are quite open, regularly announcing expansion plans," he added. "With others, such as Japan's major producers, the picture is not always as clear."
US producers have been scrambling to fill the void. Corning Incorporated announced plans this summer to build a second plant scheduled for completion in 1999. SpecTran, maker of both communication and specialty fibers, also unveiled a $15 million expansion designed to boost its fiber-making capacity. Alcatel, which makes both fiber and cable, is in the process of boosting its fiber-making capacity and expanding its cable plant.
SpecTran, which manufactures fiber under Corning and Lucent patents, earlier this year agreed to supply Corning with $17 million worth of multimode fiber and just recently concluded a deal to supply Lucent with $35 million worth.
SpecTran President and CEO Glenn E. Moore told Photonics Spectra that turning to his firm for multimode fiber would, in effect, free Corning and Lucent to concentrate on single-mode fiber. While the real crunch is in single-mode fiber, Moore believes that a similar situation holds for multimode and states that SpecTran "is running at capacity" and will probably continue to do so even when its expansion is completed.
Jim Ryan, technical marketing manager at Alcatel Telecommunications Cable Inc., expects the cable plant expansion to "keep us up with the demand curve." Alcatel is in the envious position of being a cabler with a captive supply of fiber, which, for others, is either hard to get or getting more and more expensive.
At the time of the expansion announcements and supply contracts, the word "shortage" was in short supply. Corning spoke of "meeting the expanding worldwide requirements" of its customers. Chairman and CEO Roger G. Ackerman boasted that the company had "committed itself to anticipating our customers' requirements."
What was actually taking place was a runaway demand colliding with a static supply. With demand already on the rise, the entry of two new US networks with $3 billion to spend, cable's rush to adopt fiber -- and, some claim, the Internet explosion -- made a bad situation worse. Where a few years ago communications insiders were muttering about excess fiber capacity, they are now in a panic crying for more bandwidth -- and more fiber.
WDM to the rescue?
Though not directly aimed at solving the problem, wavelength division multiplexing (WDM) emerged as 1996's best hope for painlessly adding bandwidth. At KMI's annual fiber market conference this fall, the emphasis was on squeezing more bandwidth from existing fibers. Keynote speaker Kerwig Koglenik, of Lucent's Photonics Research Laboratory told attendees that WDM technology would allow cash-strapped operators to boost their networks' capacity.
However, some experts view WDM as a feel-good solution. It won't, they say, be of any help as fiber gets closer to the home. And nothing is likely to change network builders' view that more fiber is better, when weighed against the cost of installation. Only in undersea installations, which are light on fibers, is WDM seen as a contributor.
In the competition for a slice of the fiber pie, who you are dictates your odds of success, said KMI's Mack. Large companies with existing contracts tend to fare well. The new network on the block will probably either go without or go onto a waiting list for cable. Supply is further rationed because some major cablers have captive suppliers of fiber whose duty it is to supply the home team first.
Cable takes a hit
Cable TV, one of North America's largest fiber optic growth segments, (see chart) finds itself in an unusual situation. Just as major fiber builds were either planned or taking place, cable was hit by a one-two punch. First was the fiber shortage, then the bull market for small satellite dishes. Telecommunications Inc. (TCI), the largest US cable operator, abruptly cut back its plans for an upgraded fiber system offering interactive two-way service in favor of a set-top box scheme that utilizes compressed digital signals, just like satellite TV.
While reaction to the satellite invasion may provide cable TV a respite from the fiber shortage, many observers see it as short-lived. With the communications world still reeling from deregulation and everyone coveting the other fellow's market, most bets are still on fiber as the medium that will make it all work. As observers point out, cable operators view fiber-based interactive systems employing cable modems as their most potent weapon in the communication free-for-all.
Determining where it all ends and who wins and loses will have to wait until fiber makers' new capacity comes on line. Even then, SpecTran's Moore and others point out, no one is expected to build what they feel will be excess capacity.
From the beginning, fiber's journey has been one of fits and starts. And, despite the hardships and the pressures fiber's success has spawned, it still is, as Moore puts it, "An exciting time."