Summary Bullets:
- The impact of 5G will start showing in optical transport revenues in earnest in 2021, and the ensuing capacity increases will translate into accelerated upgrade cycles in the metro packet-optical domain.
- Vendors competing in coherent solutions will put more emphasis on overall fiber capacity and spectral efficiency and present their capabilities across several dimensions, reducing focus on maximum wavelength capacity as the industry currency.
5G Transport Needs Will Shape Packet-Optical Access and Metro
The impact of 5G on the CSP network technology ecosystem beyond the radio access will be substantial, and transport is the first domain where this has become evident. Beyond capacity requirements an order of magnitude higher than was the case with 4G, 5G also needs stringent timing and synchronization and defines very low-latency system-wide latency budgets, which translate into very strict requirements for each network element in the communications link. As opposed to 4G, where most deployed base stations were macro, 5G architecture is much more versatile and opens the way for significantly more disaggregation between different elements of radio access. This directly translates into a much greater role for fronthaul and midhaul that need to seamlessly connect these disaggregated parts of radio network access. Taken together, the new speed, precision, and latency requirements of 5G have already led most operators to renew and augment their mobile x-haul portfolios. Additionally, the continually increasing volume of new connections and the need for flexibility to support functions like network slicing have brought on a realistic and urgent need to deploy automation and orchestration solutions across the transport networks.
With 5G gaining ground, 2021 will bring a new focus on increasing capacity, versatility, and automation in packet-optical access and metro. While 2020 was the year when CSP network planners focused on defining needs and making technology choices for their future networks, 2021 will bring sales directly focused on satisfying the transport requirements of 5G networks, first in X-haul and then deeper in the metro networks, which will need to scale at the same pace as X-haul.
Cheap, Fast, and Versatile Pluggables Will Bring Renewed Focus on IPoDWDM
IPoDWDM is a recurring topic in the transport networks ecosystem and has been a part of the ‘background noise’ for a long time. The idea of integrating optical transport interfaces into IP platforms seems logical, and integrating IP and optical transport domains sounds like a good concept for reducing network complexity and cost. In practice, however, this idea is going against the established organizational structures of many vendors and operators. More importantly, the different pace of development of IP and optical platforms made planning and roadmaps for IPoDWDM infrastructures somewhat cumbersome and impractical.
However, beyond these fundamental considerations, shifts in the structure of the telecom technology vendor market and developments in both IP and optical technology open ways for the new wave of IPoDWDM. The number of IP or optical specialists has dwindled over the past several years, and even those that remain can easily integrate optical transport interfaces into their network elements as the optical pluggable options continue to standardize and multiply. All this translates into increased appeal of IPoDWDM; for some types of networks, users, or use cases, IPoDWDM is likely to become a much more attractive proposition going forward.
In 2021, operators considering IPoDWDM deployments will gain access to very attractive options, including wider availability of 400ZR, 400ZR+, and 400G CFP2-DCO modules. While neither of these will bring tectonic changes to the marketplace comparable to, for example, the emergence of DCI platforms, the availability of fast, affordable, and standardized pluggables, along with the new capacity requirements, will open space for more IPoDWDM deployments in the marketplace in 2021.
Spectral Efficiency Will Reach New Heights, and Competition Will Remain Fierce
Since the invention of coherent optical interfaces, vendors have competed on spectral efficiency – how many bytes can be transported through an optical fiber pair. Until recently, vendors focused on achieving spectral efficiency by increasing single wavelength capacity – a consequence of a market largely defined by standard optical channel spacing. This in turn, defined the way optical line systems were built and limited the number of parameters a vendor could change to increase the traffic in an already defined optical channel. However, with increased adoption of flex ROADMs and the growth of demand for coherent interfaces coming from non-traditional operators like webscales or ICPs, vendors are now able to increase spectral efficiency by manipulating channel width.
Additionally, DSP technology has now advanced to a point at which a single coherent solution can be programmed to use different modulations and baud rates, and therefore adapt to conditions of a particular optical link, enabling operators to gain spectral efficiency – and additional capacity – without investing into the often costly laying of additional optical fibers. The economics of fiber system builds are an additional factor: with the costs of laying fiber remaining high or increasing over time, operators are motivated to seek new ways of better utilizing fiber and optimizing the cost of optical transport equipment as well as its power and space usage.
Over the coming year, optical transport vendors will gradually shift the focus of their messaging from headline wavelength capacities to practical spectrum efficiency gains offered in different applications. This will, in part, stem from an increased number of 800G solutions becoming widely available in the marketplace, but also from capacity crunch on routes where deploying new fiber is costly, time consuming, or both. With new tools at their disposal, operators will increasingly adopt a more flexible view of their transport network architectures, focused on overall fiber capacity and spectral efficiency, rather than standard wavelength capacity. In response to this, vendors will need to diversify their messaging and present their capabilities across several dimensions, reducing focus on maximum wavelength capacity as the industry currency.