Forty years ago I attended a training session given by Oliver Wight, the IBM employee who invented MRP systems. (materials requirement planning). The first thing he covered was forecasting, and he reminded us of the one thing one must never forget about forecasting: “All forecasts, from the moment they are made, are wrong!” Having never forgotten this, I am reluctant to make forecasts or, when forced to do so, repeat Ollie’s warning! So consider yourself warned….
That said, I do want to share with you some thoughts on what we hear and see for the coming year. First, the economy is not likely to improve in the short term. It may get worse, even much worse. After the last telecom bubble burst in 2001, some companies failed quickly, others struggled until acquired and some have never recovered.
But the telecom market recovered over the last seven years slowly based on real applications and revenue, not the hollow promises of the “Dot Bomb Era.” The dramatic reduction in the fiber optic market – and prices of fiber optic components – has been a major reason the focus of telco fiber has moved to FTTH (fiber to the home).
The other reason was the high cost of maintenance of aging copper cable plants that could not support newer services that generate good revenue like DSL for Internet or TV. Verizon, which probably has the oldest cable plants, justified their FiOS FTTH program in part on maintenance savings which would offset about 20% of the cost in only the first 4 years.
Now FTTH technology is proven, the major obstacle to its expansion is capital for installation and overcoming some regulation. For the last eight years, telcom oversight appears to have been more based on poitical ideology and lobbying than technology, but the new administration looks ready to change all that.We look for the new administration to be full of technical whizzes not political wonks and the proposed government spending on infrastructure to pump up the economy to specifically target expanding broadband access:
Obama said his administration would seek to implement the “single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s” via use-it-or-lose it grants to states—and made clear that this would include digital infrastructure no less than roads and bridges. “As we renew our schools and highways, we’ll also renew our information superhighway,” said Obama. “It is unacceptable that the United States ranks 15th in the world in broadband adoption. Here, in the country that invented the internet, every child should have the chance to get online, and they’ll get that chance when I’m President—because that’s how we’ll strengthen America’s competitiveness in the world.” See http://arstechnica.com/ and below.
Not only will fiber benefit from the expansion of broadband connectivity, fiber will be installed alongside highways, within towns as part of security and traffic management systems as part of metropolitan networks funded by economic recovery funds. Job retraining for broadband is also likely to be a focus of this new administration also, as their focus also includes jobless benefits.
What about fiber in corporate (premises IT and industrial) networks? As corporate backbones move toward 10G Ethernet, fiber has major advantages in speed, latency and power consumption, all three important issues for IT networks. But the cabling to the desktop is being dropped in favor of newer wireless technology, allowing workers the mobility they desire. Copper wiring is still suffering from volatile prices for copper and plastics used in cable construction also. Industrial networks will lag as production drops. But the biggest unknown factor in corporate networks is where will the money come from. Credit remains hard to get and corporate profits are dropping. Upgrades in corporate networks look less likely today.
During one recession, I worked for a company whose President was adamant that recessions were opportunities for growth. Rather than cut back R&D or promotion, he continued developing new products and selling as hard as he could. While competitors hid in their shell, the company gained market share and grew like crazy when the economy started to improve. That’s what I advise if you can do it.
Jim Hayes, President Fiber Optic Association