The Time to Invest Is NOW

By Tom Huegerich, ADC

“When the going gets tough, the tough get going.” The first part of this adage certainly describes the current global economic situation. The second part applies to service providers that are investing in their networks right now. Rather than hunkering down until the economy gets better, they are spending money today to drive fiber deeper and deeper into their networks — to the curb, to the home and to the wireless antenna.

They recognize that despite the economic downturn, the demand for bandwidth promises — or threatens, depending on one's point of view — to grow rapidly despite the economic challenges. According to the “Global Bandwidth Study,” an independent report commissioned by photonics firm CIP Technologies and produced last year by David Payne of the University of Wales (Swansea), the worldwide demand for Internet bandwidth in 2010 will exceed 160 terabytes per second (Tbits/s). That's more than the total of all broadband network usage between 1998 and 2008. Noting that online video and data are the biggest bandwidth drivers, Payne wrote in his report that by 2018, global bandwidth usage could grow "to 40 to 100 times the levels seen in networks today," — assuming, of course, that service providers make the capacity available.

Let's take a look at some of the specific immediate and near-term developments that will cause individuals and businesses to fuel the demand for all that bandwidth:

• The advent of low-cost, high-definition video, which is part of the trend among consumers in tough economic times to stay at home and use PCs and mobile devices for bandwidth-intensive entertainment, including on-demand TV video, Internet-to-PC video and online gaming;
• The focus of businesses to cut travel costs by relying more on videoconferencing and to compete more effectively by using every global communications tool at their disposal;
• The digitization of medical records and the associated need to move all those data around funded by the American Recovery and Reinvestment Act (ARRA);
• Entirely new machine-to-machine (M2M) infrastructure applications; for example, bridge, highway and "smart electricity grid" sensors that also generate enormous volumes of data to be transported to centralized computers and data centers for processing and storage;
• The roll-out of high-speed 3G/4G wireless networks and applications — not withstanding the fact that the bandwidth demands of existing wireless services already are clogging mobile backhaul networks; and
• The current U.S. government's support of universal access to broadband, which will bring even more users and bandwidth-hungry applications onto the network.

It seems obvious that bandwidth demand increases in good times, yet it will also rise in difficult economic times, simply because users will need to rely more heavily on the network for both work and play. It's equally obvious that the only way service providers can deliver the required network capacity is to drive fiber as deeply into the network as possible, as soon as possible. By making the tough CAPEX decisions now to get ahead of the bandwidth curve, savvy service providers also will get ahead of their competitors. And, in terms of revenue, market share and profitability will stay ahead of them in the long term.

Tom Huegerich, a 25-year veteran of the fiber industry, is vice president of business development for ADC's Global Connectivity Solutions Business Unit. In this role, he and his team are focused on new and emerging applications of optical fiber for new markets, customers, and related technologies. Huegerich joined ADC in May 2004 when it acquired The KRONE Group. Since then he has had overall profit responsibility for ADC’s central office fiber connectivity product lines. He also served as a director of product management and as general manager of ADC’s optical cable business.