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SONET
Transmission Systems: Telecom Backbone Networking
1997-2002
a market research report
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Try to find a reason for carriers not to migrate to
SONET. We warn you, it’s not easy.
Price too high? Maybe, however Insight’s research
suggests that SONET prices are reaching parity with
asynchronous equipment and will continue to decline
further.
Otherwise, wherever you find an appetite for
high-bandwidth telecom services--Internet access, ATM
services, PC connectivity, and video--you’ll find
demand for SONET.
Whenever a telco needs to compete more efficiently--with
faster traffic provisioning and improved network
management--you’ll find investments in SONET.
Greater network reliability? The answer is SONET.
Around the globe, carriers want to provide residential
and business customers with one-stop shopping for voice,
multimedia, and data services. The enabling backbone
network technology? Again, it’s SONET.
Finally, as telcos and cable TV companies look to enter
each other’s businesses, SONET wins as the preferred
transmission method. And as SONET becomes more prevalent,
even more strategic uses of the technology will emerge.
Bottom line: the performance requirements of future
telecom networks cannot be met with the current
generation of asynchronous transmission equipment. This
mismatch in performance demand and supply has created the
opportunity for SONET to prosper. Insight expects SONET
to enjoy healthy double digit growth over the next five
years, while prices for SONET equipment will take a
double digit drop.
This report explains how global SONET/SDH requirements
are effecting carriers, their vendors, and ultimately,
the end customers. From detailed analysis regarding
carrier strategies, to forecasts of equipment
expenditures, this report explores every aspect of SONET/SDH worldwide adoption.
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Report Excerpt
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Changing Telecom Boundaries
Around the globe, carriers are beginning to develop the
resources to provide residential and business customers
one-stop shopping for voice, multimedia, and data
services. The technologies needed to offer these services
include the synchronous optical network (SONET) and
synchronous digital hierarchy (SDH) equipment used to
build broadband access and backbone transmission
networks. At a fundamental level SONET/SDH systems are
driven by the three phenomena driving telecom worldwide:
- Privatization of telecom with its concomitant spur to
new investment;
- The explosion of high-speed data to support Web access
to the Internet; and
- The introduction of full competition in North American
markets.
In the realm of SONET/SDH, systems technologies are being
developed to support cross-industry requirements.
Telephone carriers are looking at systems to support the
high bandwidth demands of multimedia signals, while cable
TV systems operators want to upgrade to support
bi-directional, switched voice and video signals. The
movement toward higher bandwidth network-related services
in the public networks significantly impacts the way
carriers relate to their customers and competitors. This
report explains how SONET and SDH requirements are
effecting carriers, their vendors, and ultimately the end
customers. More emphasis, however, is given to the North
American SONET market, the largest single market for SONET/SDH.
Global SONET/SDH Equipment Market
The SONET/SDH market is being driven by the needs of
carriers to reduce network costs, improve network
management, add new capacity for increased volumes and
higher bandwidth services, as well as to improve the
network's overall flexibility. With the recent agreement
at the World Trade Organization to liberalize the
telecommunications industry, we expect to witness the
industry's continuing rationalization, which will make
deals such as the merger of BT-MCI part and parcel of the
telecom scene for some time to come. It is in this light
that the long-standing relationships between many
carriers and equipment vendors will be loosened. As
carriers face increasing competition, they will source
from a wider variety of equipment vendors.
Carriers are buying SONET/SDH products for their
backbones, digital cross-connects (DCSes), digital loop
carriers (DLCs), and access systems. They are also buying
SONET for its associated network management tools.
Industry consensus is that asynchronous transfer mode
(ATM) traffic will increase the overall demand for SONET
because it is the only viable physical transport medium
for high-bandwidth applications using ATM cells in the
public network. According to Lucent, roughly 28 percent
of the SONET equipment they are now selling is geared
toward the ATM network.
SONET/SDH will find a strong regional market in the Asia/
Pacific region. Huge network upgrade programs continue in
China, Indonesia, Malaysia, and Thailand, not to mention
recent well-publicized upgrades in the Asian part of
Russia.
Table 1-1 and Figure I-1 [removed for excerpting
purposes] show the global market for public networks. The
total market for SONET/SDH equipment will grow to $15.2
billion by 2002, with a compound annual growth rate (CAGR) of over 24 percent between 1996 to 2002. The
countries which will be the largest SONET and SDH markets
will be the US, China, Germany, India, Mexico, the United
Kingdom, and Canada. SONET currently has a jump start on
SDH because the US started a much more aggressive and
earlier implementation of SONET.
SDH Market
The SDH market will initially be smaller than SONET's.
Table I-2 and Figure I-2 [removed for excerpting
purposes] show that SDH will represent only 40 percent of
the 1996 SONET/SDH market. The 1996 SDH market will
surpass SONET [info removed for excerpting purposes]. The
rest of the world, Latin America, and Europe will be the
largest users of SDH. Siemens, Alcatel, and to some
extent Ericsson, Nortel, NEC, and Fujitsu will dominate
the SDH market. Other rivals, such as Hitachi and
Hyundai, are also penetrating the market.
SONET Market
SONET is entering a new stage of growth as vendors begin
offering Phase 3-compliant equipment and carriers begin
to see the operational benefits long promised by SONET
technology show up on their bottom lines. Moreover,
Insight's research suggests that price barriers to SONET
equipment adoption are decreasing: SONET prices are
reaching parity with asynchronous equipment and will
continue to decline further. The cost of developing new
SONET systems, however, remains high, putting increased
pressure on vendor margins. For vendors willing to make
the commitment, we expect to see healthy double-digit
growth into the first years of the new century.
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Market Segmentation
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- SONET/SDH access
speed
- OC-3
- OC-12
- OC-48
- OC-192
- OC-768
- SONET/SDH equipment
- Terminals
- Add-Drop Multiplexers
(ADM)
- Optical
- Interfaces
- Non-optical Interfaces
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Table of Contents
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Chapter I
EXECUTIVE SUMMARY
1.1 Changing Telecom Boundaries
1.2 Global SONET/SDH Equipment Market
1.2.1 SDH Market
1.2.2 SONET Market
Chapter II
INTRODUCTION
2.1 Factors Driving the SONET/SDH Market
2.1.1 Growth of SONET Transport Market
2.1.2 Growth of SONET Product Lines
2.2 Where SONET/SDH is Heading Now
2.2.1 FTTC/Digital Systems
2.2.2 SONET and FITL
2.2.3 Fiber/Coax Systems
2.2.4 SONET/SDH Vendors
2.3 SONET/SDH Evolution
2.3.1 OC-192 TDM and WDM
2.3.2 SONET/SDH Ring Interconnection
2.3.3 SONET/SDH Upgrades to ATM
2.3.4 Element Layer Managers
Chapter III
SONET/SDH TECHNOLOGY
3.1 Development of Standards
3.1.1 SDH and SONET Standards
3.2 SDH Technology
3.2.1 Synchronous Transfer Mode
3.2.2 SDH and ATM
3.3 SONET Technology
3.3.1 SONET Digital Cross-Connect Systems
3.3.2 SONET Applications
3.3.3 WDM and TDM
3.3.4 SONET and ATM
3.3.5 SONET and Frame Relay
3.4 SONET Compared with SDH
3.5 SONET/SDH Protocol Architecture
3.5.1 Point-to-Point Protocols and Virtual Tributaries
3.6 Network Reliability
3.6.1 Ring Architectures
3.6.2 Self-Healing Architectures
3.6.3 SONET/SDH Automatic Protection Switching
Chapter IV
SONET/SDH NETWORK MANAGEMENT
4.1 Introduction
4.1.1 Network Management Capabilities
4.1.2 Functional Subsystems for a SONET Network
Management System
4.1.3 Transport Network Management for SDH Networks
4.1.4 SONET/SDH Signals Facilitating Network Management
4.1.5 TMN Network Management Standard
4.1.6 SDH Management
4.1.7 SDH Management Network
4.1.8 The Challenge of SONET/SDH Network Management
4.1.9 Flow of Management Information: International
Carriers
4.1.10 Management and Control Structure in BT’s SONET/SDH Network
4.2 Network Management Products
4.2.1 Lucent’s SDH Network Management System
4.2.2 Vertel’s SDH Management System
Chapter V
CARRIER DEMAND
5.1 SONET in the Local Access Operation
5.2 The Speed Race
5.2.1 Market Growth By Access Speed
5.3 Major US LECs’ Expenditures on SONET Systems
5.3.1 Ameritech
5.3.2 Bell Atlantic
5.3.3 BellSouth
5.3.4 GTE
5.3.5 NYNEX
5.3.6 Pacific Bell
5.3.7 SBC
5.3.8 US West
5.4 US Interexchange Carriers and SONET
5.4.1 IXC Market by SONET Access Speed
5.4.2 IXC Market by SONET Expenditure
5.4.2.1 MCI
5.4.2.2 AT&T
5.4.2.3 Sprint
5.4.2.4 Other Carriers
5.5 From Local To Global Domain
5.5.1 International Operators
5.5.1.1 British Telecom
5.5.1.2 NTT
5.5.1.3 France Telecom
Chapter VI
FIBER INSTALLATION
6.1 Market Trends
6.1.1 US and Canada
6.2 US Telcos
6.2.1 Bell Atlantic
6.2.2 BellSouth
6.2.3 SNET
6.2.4 WorldCom
6.2.5 Frontier Corporation
6.2.6 Main IXC Routes
6.3 Elsewhere On The Globe
6.3.1 Submarine Cable Industry
6.3.2 Europe
6.3.3 Asia
6.3.4 Latin America
6.3.5 South Africa
Chapter VII
PROFILES OF SELECTED NORTH AMERICAN SONET VENDORS
7.1 Introduction
7.1.1 Comparison: SONET/SDH Products
7.2 Alcatel
7.2.1. Alcatel Network Systems and Hewlett-Packard
7.3 Fujitsu Network Communications
7.4 Hitachi
7.5 Lucent Technologies
7.6 NEC
7.7 Nortel
Chapter VIII
MARKET FORECAST AND TRENDS
8.1 SONET/SDH Market
8.1.1 Price Model For SONET/SDH Configurations
8.2 Global SDH Market
8.2.2 SDH Deployment in Europe
8.3 Global SONET Market
8.3.1 Japan’s Implementation of SONET
8.3.2 North American SONET Market
8.4 Market Trends
8.4.1 Planning and Strategies for SONET Deployment
8.4.2 Integration of SONET Interfaces on Other
Terminating
Equipment
8.4.3 Price Trends
8.4.5 Is the SONET Market Self-Limiting?
8.4.6 Choices About SONET Equipment
8.4.6.1 SONET ADMs and DCSes
8.4.6.2 ATM Edge Nodes
8.4.6.3 Element Layer Managers
8.4.6.4 Growth in Analog Broadcast Video Services
8.4.7 SONET Interoperability Issues
Table of Figures
Chapter I
I-1 Global Sales Revenue of SONET/SDH Equipment,
1996-2002
I-2 Global SDH Equipment Revenues, 1996-2002
I-3 Global SONET Equipment Revenues, 1996-2002
Chapter II
II-1 Industry Foot Step
II-2 Residential and Business Access Lines, 1990-2000
II-3 Telco Planned Spending on Network Upgrades
II-4 Typical Broadband Access Arch.
Chapter III
III-1 STS-N Frame
III-2 SDH STM-N Frame Structure
III-3 DCS Distributed Control Arch.
III-4 DCS Centralized Control Arch.
III-5 Four-Fiber BLSR Span Switching
III-6 Four-Fiber BLSR Ring Switching
Chapter IV
IV-1 TMN Architecture
IV-2 SDH Layer Structure
IV-3 SDH Management Network
IV-4 Protocol Suites for QA1 and QB1
IV-5 Protocol Suites for Q.ecc Interface
IV-6 X.25 on a DCC Network with Static Routing
IV-7 Virtual Packet-Switched Data Network Exclusively on
DCCs
with Dynamic Routing
Chapter V
V-1 Access Providers, 1996-2002
V-2 Commercially Available SONET Speed, 1983-1996
V-3 Major US LECs’ SONET Expenditures by Access
Speed, 1997-2002
V-4 Major US LECs’ Total SONET Expenditures by
Access Speed, 1997-2002
V-5 Sales of SONET Equipment to IXCs, 1996-2002
V-6 Total Sales of SONET Equipment to IXCs, 1996-2002
V-7 North American Long Distance Expenditures on SONET by Access Speed, 1997-2002
V-8 Total North American Long Distance Expenditures on
SONET by Access Speed, 1997-2002
Chapter VI
VI-1 Worldwide Installed Fiber Optic Cable, 1996-2000
VI-2 Underwater Fiber Optic Cables, 1997
Chapter VIII
VIII-1 Global SONET/SDH Equipment Market, 1996-2002
VIII-2 Global Sales Revenue of SONET/SDH Equipment,
1996-2002
VIII-3 Comparison of Worldwide SONET and SDH Equipment
Markets, 1996-2002
VIII-4 Price of a Built Configuration
VIII-5 Global SDH Equipment Market, 1996-2002
VIII-6 Leading SDH Applications in Western Europe, 1996
and 2002
VIII-7 1996 SDH Market Share
VIII-8 Global SONET Equipment Market, 1996-2002
VIII-9 SONET Market Share, 1995 & 1996
VIII-10 North American SONET Market By Access Speed,
1996-2002
VIII-11 Total North American SONET Market Expenditures,
1996-2002
VIII-12 Forecast of the Average Price for SONET
Equipment, 1996-2002
Table of Tables
Chapter I
I-1 Global Sales Revenue of SONET/SDH Equipment,
1996-2002
I-2 Global SDH Equipment Revenues, 1996-2002
I-3 Global SONET Equipment Revenues, 1996-2002
Chapter II
II-1 Residential and Business Access Lines, 1990-2000
II-2 Telco Planned Spending on Network Upgrades
II-3 Factors Affecting Rate and Type of Network Build
II-4 Upgrades Required to Support Both Voice and Video
Services
II-5 Availability of OC-768/STM-256
Chapter III
III-1 SONET Standards
III-2 SDH Standards
III-3 SONET and SDH Hierarchies
III-4 SONET/SDH Virtual Tributaries
Chapter IV
IV-1 Logical Layer Reference
IV-2 Provisioning Comparison
Chapter V
V-1 Sales of SONET Equipment to Local Access Providers, 1996-2002
V-2 Major US LECs’ SONET Expenditures by Access
Speed, 1997-2002
V-3 Sales of SONET Equipment to IXCs, 1996-2002
V-4 North American Long Distance Expenditures on SONET, 1997-2002
Chapter VII
VII-1 Comparison: SONET/SDH Products
Chapter VIII
VIII-1 Global SONET/SDH Equipment Market, 1996-2002
VIII-2 Price Forecast for SONET/SDH Equipment, 1996-2002
VIII-3 Example of a Built Configuration
VIII-4 1997 Pricing of an Asynchronous Fiber Optic
Transmission System
VIII-5 1997 Pricing for SONET Fiber Optic Transmission
Systems
VIII-6 Global SDH Equipment Market, 1996-2002
VIII-7 Global SONET Equipment Market, 1996-2002
VIII-8 Estimated 1996 North American SONET Market Share
VIII-9 NTT SONET Procurement, 1996
VIII-10 North American SONET Market By Access Speed
VIII-11 Total North American SONET Market Expenditures,
1996-2002
VIII-12 Factors Effecting Prices of SONET Systems
VIII-13 Forecast of the Average Price for SONET
Equipment, 1996-2002
VIII-14 Approaches to Interconnecting Rings
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Telecom
Market
Research,
