|
Their individual circumstances vary, but consumers of fiber optic cable still are experiencing a worldwide supply shortage that may not ease until next year. And those with contracts locking in their supply are faring better than those without.
For instance, the worldwide shortage of fiber-optic cable has put a severe crimp in the plans of GPU Telecom's Jeff Hafer as he attempts to build out a 2,000-mile system in Pennsylvania and New Jersey by the end of this year.
Hafer, GPU Telecom's manager of projects and operations, last year generally was quoted four to six weeks delivery for cable. Practically without warning, delivery dates were broadened to 30 to 72 weeks.
Patrick Fay, a fiber optic analyst with KMI Corp., Newport R.I., says, "It really comes down to an increased number of network operators who are deploying larger networks and the cable they are installing has higher fiber count. So it really has a ripple effect."
KMI contributed information to a new market review and forecast by the Telecommunications Industry Association that shows some 15.5 million miles of fiber are projected to be deployed this year in the United States, growing to 25.7 million miles in 2004, with spending on fiber-optic cable that year approaching $25 billion.
GPU Telecom's problem remains a common one. Curt Weinstein, MetroFiber director of Corning's Optical Fiber Division based in Corning, N.Y., says the supply tightness his company has experienced over the last year and a half will continue during 2001 due to continuing global demand.
Corning announced this past year some $1.2 billion in new and expanded plants in North Carolina and Australia. But according to Weinstein it takes 18 to 24 months for new production to get underway, pushing any significant relief back beyond this year.
KMI's Fay says because of the shortage in North America, network developers are put on allocation schedules. They have to tell the cable vendors what they are going to need every quarter.
So while bandwidth may continue to grow, it may not grow at the rate companies such as Level 3 Communications Inc. and others would like. The smart ones, however, already have locked in their sources of supply. For instance, this past fall Level 3 and Corning agreed to cooperatively research, develop and deploy new generations of optical fiber, while the same deal made Corning the network operator's worldwide supplier for at least four years.
Corning's Weinstein stresses that Corning works to fulfill its contractual obligations, even "at the expense of going after significant new opportunities."
Broadwing, Inc., Austin, Tex., also is confident it seems to have solved its current cable problems., "We aren't experiencing any shortages," says Bill Muckle, vice president of network construction. "I have letters of intent in place with a large cable manufacturer to cover our fiber needs."
Vendors freely admit that not all network operators are in as good a position as Broadwing. Charlie Reavis, sales and marketing vice president for Lucent Technologies' optical fiber solutions business, says, "There is definitely a global supply and demand situation that really has been created by the literal explosion for the need for more bandwidth." To solve the problem, Lucent is in the midst of a billion-dollar expansion at its plants in Georgia, North Carolina, Brazil, Denmark and China.
"For existing customers with contracts we have schedules we work out with them depending on their network requirements," Reavis says. For new customers, he says, "It depends on the customers, their business plans, and the strategic business relationship that we will be developing with them."
He expects the supply situation to be in imbalance "probably until the end of 2002." Lucent is "basically sold out through most of 2001," Reavis adds.
Derrick Herbst, director of marketing for Pirelli Cables and Systems, North America, Lexington, S.C., says his company is in a similar situation: "Basically, what we have had to do is focus on our existing strategic and contractual customers. We have had, in most cases or in all cases, to limit those customers to certain amounts of fiber because we can't supply sufficient cable."
One bright spot: The supply shortage has stabilized pricing for cable in recent months according to Natalie Veres, director of marketing communications for the North American branch of Alcatel's optical fiber division. Before demand accelerated, industrywide prices had taken a "serious downturn," Veres says. During the past several months, she explains, "We have seen a flattening out but certainly no increases. We envision that the prices will remain fairly stable."
Veres says Alcatel has an allocation system based on the strategic relationships. She adds, "What we do is work with each of our key customers to divide up the available capacity throughout the year." She says Alcatel also is sold out for this year.
Alcatel's primary fiber manufacturing location is in Claremont, N.C. Other sites are in France, Germany, Brazil and Switzerland. Alcatel plans to boost manufacturing capacity at all of them.
|
