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Carriers are clamoring for higher speed optical transport to handle the growth in traffic from broadband and mobile applications, but will evaluate competing technologies on the basis of cost per bit per km transmitted. Their pricing expectations show a willingness to move to 40G and 100G technology at price differentials higher than conventional wisdom dictates, and their actions in 2008–2010 show a need to adopt 40G technology at prices that are far above these thresholds. We believe 100G coherent component technology inherently should not cost more than 2x 40G technology, which when translated to equipment pricing, should result in a rapid switch over to 100G transmission when it becomes widely available in 2013.

Once this transition is underway, vendors will differentiate themselves not by the availability of 100G technology, but more by the ability to tame these fat pipes with effective switching technology, whether that be OTN switching or full-blown IP/MPLS switching. Ultimately, the companies that will be successful at 100G are those with architectures that can reduce the amount of equipment and interconnect by collapsing hardware into single units shipped in high volume, while providing the best software and management tools to direct these resources.