Newly formed company looks for piece of DWDM pie

Two Canadian entities formed an alliance last month to create a new company to focus on optical networking technology.

Ottawa-based Mitel Corp., a provider of semiconductors and communications systems worldwide, and the National Research Council of Canada (NRC), as well as other unnamed investors, teamed up to create Optenia Inc. The new company’s technology is based on joint research between Mitel and the NRC in the area of dense wavelength division multiplexing (DWDM), which allows for multiple wavelengths of light to be sent over one fibre-optic connection, dramatically increasing available bandwidth.

“It was very much a matter of we’ve got this thing developed. What’s the most appropriate way to move it into the commercialization phase? It was decided it would be best to set up an entirely separate company in order to attract additional investment, lessen the risk for Mitel and to attract the kind of skilled expertise that you need in the photonics area,” said Michael Salter, a spokesperson for Optenia.

The collaborative work between Mitel and the NRC started about three years ago and focuses on photonic components. In August of last year, Mitel announced it had completed working prototypes of the DWDM technology. Using a technique called Arrayed Waveguide Grating (AWG), the prototype was a semiconductor offering up to 40 channels per fibre. According to Mitel, most current commercial DWDM technologies are limited to 16 channels. Salter said he expects that the next step in the technology will allow for 80 channels per fibre.

Because of the high cost of laying fibre, the more wavelengths per individual fibre, the cheaper bandwidth is over photonic networks, Salter said.

“I would say that [DWDM] is a market that has fairly limited deployment at this stage,” said Dan McLean, research manager, network support and integration, at International Data Corp. Canada in Toronto. “There’s not a lot of DWDM technology that’s being utilized by Canadian communication companies, but it’s also an area with a high degree of interest.”

McLean predicted that there will probably be a lot more DWDM implementation within the next 18 months. There is a much greater demand for DWDM technology in the U.S. than there is in Canada. Carriers who want to offer DWDM are more likely to be offering that extra bandwidth to customers in the U.S. and worldwide than they are to Canadian customers.

The new company, Optenia, currently has about 26 employees, half of which come from Mitel’s numbers and the other half mostly from the NRC. Mitel owns a majority interest in Optenia, and Optenia will be seeking additional venture capital by the spring, Salter said. As more venture capital money goes into the company, Mitel’s holdings in Optenia will decline proportionately.

Heading up Optenia is CEO Moris Simson, who left his position as senior vice-president, strategy and corporate development at Mitel to take on his new role at Optenia.

Optenia anticipates full production of the semiconductor in the first quarter of 2002.

Even though companies are not going to be spending money on DWDM for at least a year, companies are already thinking about it and making plans to do so, McLean said. Companies are already starting to look at suppliers.

“You could almost argue that Mitel might be a little late on board with this technology, considering when you look at a company like Nortel and all of the investment it made in photonic technology close to a year ago.”