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In 1999, the New York City Fire Department couldn't get permits to lay cable to connect its dispersed local area networks. So the department turned to a laser-based high-speed connectivity technology called free space optics, following the lead of corporations like the Smithsonian Institution, Barclays Bank and Capital One.
Now that these early adopters have demonstrated the technology's commercial viability, the companies developing free space optical equipment have their sights set on bigger game: broadband service providers. Several providers are testing the technology, and some are already hooked.
Because of its low cost, high bandwidth and rapid deployment features, free space optics fills a "sweet spot" in Tellaire Corp.'s last-mile access strategy. "We think it is a great technology," says Andy Obst, chief operating officer of the Dallas, Texas-based wholesale service provider, which deployed commercial free space optical networks last year in Austin and Houston and is building a network in New York City.
Free space optics, also called wireless fiber, is poised to make a big impact on the last-mile access market. Since these laser links operate at fiber-like speed, they can fill the gap where fiber connectivity is too difficult or costly to obtain. And unlike its fixed wireless local multipoint distribution service and multichannel multipoint distribution service counterparts, the technology doesn't require an FCC license.
Yet the biggest hurdle to wide-scale implementation, apart from its short-range limitation and susceptibility to fog, is its reputation-or lack of one. The free space optical market is so young, "we're still at the 'does this stuff work?' stage," says Strategis Group analyst James Mendelson. Mendelson predicts the market will grow from its current nascent state to a strong niche player in the next five years, reaching $2 billion in global equipment revenues. That's up from under $100 million last year.
Likewise, it's still too early to predict how equipment vendors' diverse business plans will play out. Optical Access in San Diego, Calif., counts several thousand installations worldwide, most of which are enterprises but some are service providers, including Tellaire and Broadband Highway, a Los Angeles area Internet service provider that migrated 40 beta testers to paying customers this month.
Created last year from MRV Communications' acquisition of point-to-point vendors Astro Terra Corp. and Jolt Ltd., Optical Access sets itself apart from other players by including MRV's Internet protocol switching, routing and network management technology in its free space optical mix. This strategy gives service providers remote provisioning capabilities in a turnkey package, says Allen Brandt, vice president of business development. Hoping to gain market sanction of its approach, the company filed for an initial public offering last October.
Two-year-old LightPointe Communications Inc., also headquartered in San Diego, raised $12 million in private equity last year to expand manufacturing and marketing efforts. With 400 enterprise installations worldwide, the company anticipates one or more service providers will launch market trials or commercial deployments this spring.
Lightpointe's free space optical gear emphasizes flexibility to address the chaos in metro areas, says chief technology officer Heinz Willebrand. Its approach is protocol-independent, offers point-to-point, point-to-multipoint and optical mesh transmission, and works from a rooftop or office window.
Another San Diego-based free space optical vendor, AirFiber Inc., is bypassing the enterprise crowd and aiming solely at service providers with "carrier-grade" products that offer the highest reliability. Its ATM-based redundant mesh, or multiple point-to-point, network handles short distances of 200 to 500 meters and incorporates multiple paths in every building. "Every carrier wants four to five 9's [99.999 percent] reliability," says Janet McVeigh, vice president of marketing. "That's why the [traditional point-to-point] free space optics guys haven't sold that much to carriers."
Backed by $37.5 million of venture financing, AirFiber has seven trials underway worldwide, including trials with service providers DDI in Japan, Broadband Optical Access in Spain, and Allied Riser Communications Corp. and Teligent in the United States. Its partner and major investor Nortel Networks is working to ensure the vendor's equipment is sufficiently rugged to perform on rooftops for years.
While Optical Access, Lightpointe and AirFiber are strictly equipment suppliers, one free space optics vendor plans to act as its own service provider-at least initially. Terabeam in Seattle, Wash., will target enterprise users when it rolls out commercial IP-based networks in six markets this year. Carrier trials of its technology also may begin next year, says Jim Masterson, vice president of sales and marketing.
The company has garnered more than $500 million in financing, mostly from Lucent Technologies, and attracted high-profile telecom executives, like former AT&T Wireless chief Dan Hesse, who joined the three-year-old company last spring as CEO.
When Terabeam launches its first commercial network in Seattle, it will sign up at least one customer: beta tester Avenue A, a digital media advertising company with clients like Microsoft and Eddie Bauer. Instead of waiting months for a local carrier to install a landline high-speed data connection, Avenue A decided to use free space optics to connect two buildings seven city blocks apart but within line of sight.
The time it took to get online with 100-megabit access "was too good to be true," says Jamie Marra, vice president of information technology. Still, the company used a terrestrial DS3 line at 45 megabits as a backup in case of a failure in the optical connection. Several times during the initial nine-month testing period, dense fog interrupted the optical signal, a problem Terabeam corrected in subsequent versions of its equipment. Reliability has improved sufficiently that Avenue A plans to replace its backup DS3 line with a redundant optical unit.
In metro areas, free space optics will force local carriers to re-think customer response times, says Marra. That's good news to equipment vendors, who hope service providers embrace this new broadband technology quickly-before its light begins to fade.
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