Market Insight

RESEARCH NOTE - Operators on the Fence About Optical Open Line Systems, Study Shows

January 12, 2017

Heidi Adams Heidi Adams Executive Director, Network Infrastructure Research, IHS Markit
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Following is information and insight from IHS Markit about our 2016 100G+ & ROADM Strategies Global Service Provider Survey.

Our Analysis

With optical industry debates on non-coherent versus coherent and 40G versus 100G technologies now largely resolved, discussions on optical networking are moving into new areas.

The path to 400G and beyond for metro and core applications is becoming increasingly important for efficient network operation as bandwidth demands continue to grow unabated. The adoption of flexible coherent technology and higher-speed wavelengths is driving change into optical line systems. Data center interconnect (DCI) is emerging both as a growth market for optical equipment and as an application that is powering innovation in optical transmission equipment and operations. Optical disaggregation and open line systems (OLS) have also sparked many debates over the course of the past year.

In our latest 100G+ and ROADM service provider survey, we structured our questions to explore the continuing evolution of metro and core optical network technologies and to gain insights into some of the newer areas such as DCI and optical OLS. Highlights from the study follow below.

Select Key Findings for Metro and Core Optical Network Evolution

  • Most survey respondents indicated that pricing for 100G metro-access reaches under 100km should be no more than five times that of 10G; price point expectations were more flexible for longer-reach applications and routes with low fiber availability
  • On average, 51 percent of coherent wavelengths installed by respondents during 2016 were in the metro
  • The service provider market is clear in its preference for 100G coherent in metro access; 89 percent of those surveyed expect to deploy metro-access wavelengths using coherent technology in 2019
  • Soft decision forward error correction (SD-FEC) for improved reach is the top technology for core spans, rated very important by 75 percent of operators surveyed

Select Key Findings for DCI and OLS

  • 84 percent of operators surveyed said they will deploy either traditional optical equipment or a mix of traditional and purpose-built equipment for DCI applications; of this group, well over half will rely only on traditional optical transmission equipment
  • Respondent operators plan to devote around a quarter of their optical system capex budget to DCI applications in 2019
  • One-third of survey respondents indicated that they are considering the use of OLS in their networks, but half said they are undecided or not familiar with the technology
  • None of the respondents that are considering or undecided about the use of OLS in their networks are planning to deploy the approach in 2016 or 2017; close to 60 percent will not deploy until 2018 or later, and over a third do not know when—or if—they will deploy OLS

100G+ and ROADM Survey Synopsis

For its 22-page 2016 100G+ and ROADM study, IHS Markit interviewed service providers that have detailed knowledge of and purchase influence for optical transmission and switch equipment. The study covers 100G pricing; 100G+ coherent in core/long haul, metro regional and metro access; coherent versus non-coherent 100G metro access; key technologies; data center interconnect; and open line systems. 

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