The year 2005 experienced an impressive revival in global demand for optical fibres. Developed and emerging economies had encouraging announcements on infrastructure development projects. There are new and sustainable demand drivers on the anvil and there is a flurry of activity to develop new products to address applications as fibre comes closer to the subscriber.
Global fibre optic industry As reported by CRU International, a UK research agency, the global demand for optical fibre products increased to 75.7 million km in 2005 compared with 62.5 million km in 2004, translating into a yearon-year growth of 21 per cent. CRU also tracked the global price trends for optical fibres and reported that prices have stabilised over the past 12 business quarters.
The growth of demand for fibre optic cables was due to stronger FTTx-related deployments in North America and Western Europe, as well as stronger backbone deployments in Eastern Europe, the Middle East and Africa.
There is a significant push to offer higher bandwidth services both by wireline and wireless operators in mature markets. Rapidly growing industry segments such as broadband, voice over internet protocol (VoIP), streaming media, technological innovations in fibre optics, dense wavelength division multiplexing (DWDM) and WDM have contributed to the growth in demand in the developed economies.
The increase in emerging market backbone deployments resulted from deregulation or “liberalising” market developments, investment in new infrastructure to compete with incumbents, and deployments in developing economies by utilities that have extensive rights of way.
North America showed the strongest growth in 2005 at 30 per cent, followed by Asia, Western Europe and Eastern Europe with 21 per cent, 14 per cent and 8 per cent growth respectively. In the emerging markets, comprising the Middle East, Africa and Latin America, the consolidated demand grew by 15 per cent.
In 2005, the Asian markets continued to constitute the largest demand segment at 48 per cent of the total global demand.The North American and Western European markets comprised 43 per cent.
Indian fibre optic industry
Based on market information and published sources, the fibre optic industry in India showed an increase in demand to 2.33 million km of cabled optical fibre in 2005-06. This represents a CAGR of about 36 per cent from fiscal year 200203 to fiscal year 2005-06.
Government incumbents like BSNL, MTNL and RailTel continued to be the largest buyers of fibre optic cable, closely followed by private telecom incumbents.
The Indian government as a buyer of fibre optic cables through the telecom incumbents and public sector undertakings, such as the power, and oil and gas sectors, cumulatively constituted about 65 per cent of the total purchases of fibre optic cables in India in fiscal year 2005-06.
With the formulation of the Broadband Policy in October 2004 and the build-out of networks capable of meeting the broadband subscriber targets laid down by the IT and telecommunications ministry, there was a healthy growth in demand. There was also an increasing adoption of fibre-based networks by the cable TV segment, multi-service operators (MSOs) and e-governance state initiatives.
Demand drivers and future outlook
In its April 2006 report on the fibre optic industry, KMI Research, a US-based telecom research agency, predicts that the global market for uncabled optical fibre would increase from $1.1 billion in 2005 to $1.7 billion in 2010, a CAGR of 9.5 per cent, which reflects both stronger demand and some price increases. KMI Research also estimates that the market for fibre optic cable would grow by a CAGR of 6.7 per cent from $3.5 billion in 2005 to $4.8 billion in 2010. This increase will be borne by stronger demand, and by a slower rate of decline in fibre optic cable prices.
KMI Research has also estimated that total worldwide demand would grow at a CAGR of about 10 per cent from 2005 to 2010 and FTTx-related deployments will contribute 10 per cent annualised growth through this period.
This means that cabled fibre demand would grow from 75 million fibre-km in 2005 to about 120 million fibre-km in 2010. This reflects the level of sustainable growth enjoyed by the telecom segment prior to the technology bubble of the late 1990s.
India is experiencing unprecedented growth in telecommunications. This growth is estimated to lead to an expenditure of over $50 billion till 2010.
Subscriber base projections for voice telephony surpass all expectations and for data, are beginning to follow a similar trajectory. New technologies and services like 3G rollouts, national internet backbone, e-governance, IPTV, FTTx, and continued upgrades and replacements of existing infrastructure set-ups are anticipated to keep demand for telecom equipment and telecom cables at growth rates higher than those elsewhere globally.
Broadband will be a preferred focus area with the union government hiking its budget for e-governance in India, and state governments taking the onus of implementation on themselves, favouring the rising use of online education, telemedicine networks and connectivity for rural knowledge centres. Greater use of online services in commerce, industry and transportation would create a broadband boom. The regulator has suggested a range of measures for an open sky policy for DTH, VSAT and uplinking using satellites that should boost broadband.
Indicating the future trends in the telecom industry, in its quarterly report published in January 2006, Cris-Infac, a leading research agency in India, states that, over the period 2005 to 2010, demand for fibre optic cables is expected to grow at a CAGR of 10 per cent. These higher offtakes of fibre optic cables would be dependent on the success of broadband services initiated during 2005-06 in several pilot cities.
Optical fibre product trends
Fibre to the premises (FTTH) deployments have been gaining momentum across the globe. Fibre deployment in the last mile of premises typically requires cables with low-bend radii to be installed within existing mini-conduits like electrical ducting, elevator shafts, etc.
The need to meet cable performance conditions in such deployments has resulted in the innovation of a unique optical fibre product ?? bend-insensitive fibre to support cable with a minimum bend radius of ~36 mm.
On account of high bend losses, conventional single-mode fibre is not suited for FTTH deployments. The bending performance of bend-insensitive fibre is advanced with respect to conventional single-mode fibre (CSMF) in several ways (see Table).
Due to its high resistance to the additional loss due to macro bending at 1550 nm and 1625 nm, it has direct application in the last segment of FTTH deployment.
Summary
With the tremendous impetus that the telecom industry is providing the economy and the resultant positive initiatives taken by the government, regulators and industry alike, the coming few years should see the digital divide being bridged between the culturally rich demography of India.
With optical fibre becoming ubiquitous, and broadband becoming a utility, 2006-07 promises to be the beginning of an always-connected future.
