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Industry Imperatives
September 2000

Mary Bradshaw Digital Content: Driving The Economy Of Light

BY MARY BRADSHAW


Optical networking heralds a new economic era, in which bandwidth is abundant and inexpensive. The numerous mergers and acquisitions, like the recent SDL Inc./JDS Uniphase deal, provide the latest sign that the drive to propel greater flows of data through the Internet continues to escalate. Recently, Sycamore Networks announced one of the largest contracts ever for optical networking switches, touching off a buying frenzy in stocks related to fiber-optic voice and data transmission.

Why all the investment frenzy? Optical networking companies offer products to rapidly scale up the capacity of the Internet. With traffic on the Internet growing at breakneck speed, products that promise to expand the network infrastructure are hot. And with the latest optical networking developments, companies can deliver more bandwidth at much reduced costs.

Breakthroughs in optical networking, such as DWDM transmission systems that extend the distance that light can travel without requiring electrical regeneration, boost the carrying capacity of fiber and provide end-to-end connections while slashing costs.

For fiber, as it is for DSL, cable, and other broadband media, the challenge now is how to link and ultimately merge the best of voice, video, and data in the last mile in a way that makes everything operate at or above the quality of today's circuit-switched voice network, regardless of the traffic it has to handle. As industry meets this challenge, network service providers are focusing on how deploying optics beyond the core to the very edge of the network can support a new generation of services and applications.

ENABLING NEW SERVICES
It is the explosion in rich content applications that will drive new optical capacity requirements, according to Robert Hess, Global Marketing Director for New Media with Lucent Technologies. And the new optical capacity can provide reliable end-to-end connectivity, permitting vast amounts of information to be transmitted in real-time.

But what are the applications that will drive the market? How can service providers ensure that they are set to take advantage of the emerging opportunities? And what is the expected rate of adoption (from an end-user perspective) that shapes how service providers will bring these new applications to their enterprise and residential customers?

THE SHIFTING VALUE OF COMMUNICATION SERVICES
"Yesterday's 'Legacy Economy' was based on the telecommunications model that measured its value in terms of time, distance, and bandwidth," says Robert Hess. "With the tremendous growth of the Internet in recent years, a new 'Internet Economy' has emerged and created new services and applications by building communities of interest based on communications, commerce, and content for targeted users. Today's 'Internet Economy' is based on the number of routers that carry Internet traffic through the network. In the very near future, a new 'Economy of Light' will displace the 'Internet Economy', driving new, rich content applications and services requiring secure, high-bandwidth optical networks to manage the challenges of delivering voice, data, and video content. Tomorrow's 'Economy of Light' will be based on the amount of lit fiber carrying Internet traffic.

"While the Internet and the 'Internet Economy' will still experience significant growth for several years," adds Hess, "the advancements in application and network technologies will drive new, end-user demands and expectations utilizing "always-on" broadband connections to any device from anywhere in the world."

Spending in the fiber optics market has more than tripled from $4.1 billion in 1990 to $14.6 billion in 1999, reports the 2000 MultiMedia Telecommunications Market Review and Forecast, a joint publication produced by the Telecommunications Industry Association (TIA) and the MultiMedia Telecommunications Association (MMTA). Spending on fiber optics equipment is projected to rise from $12.2 billion in 1999 to $28 billion in 2003, a compound annual growth rate of 23.1 percent.

The shift to optical networks offers tremendous opportunities to customers, vendors, and service providers. And it's the content applications that will drive the industry forward. Applications such as video-on-demand. Ten years ago, video-on-demand was considered futuristic, because the network was not ready for it. The technology that enables applications to break down the time of bringing such products to the market is here today. It's lowering costs for industries and providing value-added services for end users. Video content distribution, video conferencing and collaboration, digital downloads, telemedicine, digital radio Webcast, video-on-demand, d-cinema, distance learning, online entertainment, digital dailies... and the list goes on.

The vertical industries -- entertainment, film, music, books, broadcast, radio, finance -- are looking for end-to-end solutions. They are facing the challenges of managing digital content through the network. And the consumption of that content is exploding. Forrester Research predicts that 22 percent of all online media products will be digitally downloaded by 2004. The digital download market is projected to reach $8.6 billion by 2005, according to the same source. The digital content revolution is here.

Mary Bradshaw is president of the MultiMedia Telecommunications Association (MMTA). The MMTA, a subsidiary of the Telecommunications Industry Association (TIA), is driving the convergence of communications and computing business applications that has opened up a wealth of new opportunities for distributors, resellers, manufacturers, developers, carriers and corporate users.

[ Return To The September 2000 Table Of Contents ]







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