There is a fibre glut.
There’s scads and scads of unlit optical strands sitting idle, waiting to be loaded up with a seemingly infinite number of wavelengths, with each individual wavelength carrying an ever greater amount of traffic.
There is so much extra bandwidth available that prices for capacity will drop, maybe forever.
Or at least this is a very popular assumption.
But a report from telecom consultancy TeleChoice makes the case that just the opposite could be true. Demand for that capacity could blossom so quickly that all current fibres, lit and unlit, will be brimming with voice, video and data.
The TeleChoice report is based on modeling it did with its computer tool called MADCAP, which stands for Model for Advanced Capital Planning. The model plugs in data about 22 actual fibre routes among 12 cities: Atlanta; Boston, Chicago; Dallas; Denver; Houston; Los Angeles; Miami; New York, San Francisco; Seattle; and Washington, D.C. MADCAP then allows you to tinker with different variables and see what happens to all that fibre capacity.
The report works out three scenarios: Doom and Gloom; Rational Expansion; and Free Money.
Under Doom and Gloom, investors will hold off on financing expansion of the metro networks that feed intercity fibre links.
With Rational Expansion, investors will fund rapid build-out of metro networks, making it possible to pump traffic onto the currently idle long-haul traffic.
The Free Money script assumes that money will loosen up not only for metro network development, but for further expansion of long-distance routes.
Only Doom and Gloom leaves unused fibre capacity, says Russ McGuire, TeleChoice’s chief strategy officer. Even under that model, though, capacity on one route -between San Francisco and Los Angeles – would be consumed, he says.
Under Rational Expansion and Free Money, long-haul carriers would have to add fibres to stay up with demand, McGuire says.
He acknowledges that he doesn’t know what will actually happen, but that’s not important. “The point isn’t to get the right answer. The point is to realize such a broad range of possibilities exists and to prepare for them,” he says.
Enterprise executives should pay attention. “They probably assume pricing will continue to fall and that it is foolish to lock in to a single provider because there will always be better deals. They feel, ‘I’m in control. I’m the buyer, he’s the seller, and he’s got an excess of supply,’ ” McGuire said.
But given the plausiblity of the assumption that investors will fund metro network expansions, these assumptions could prove false. Enterprises need a plan in place for the possibility that the glut dries up. They need to answer this question, McGuire says: “If I get in a situation where bandwidth is scarce and expensive versus plentiful and cheap, how do I design my network?”