Optical innovation as an economic opportunity

This article was originally published by LightWave.

 

What will be hot in 2024: Optical innovation as an economic opportunity

Economic challenges create a potential backdrop for new large-scale optical innovations to flourish.

Recent conversations during 2023 conferences and press coverage have focused on the telecom industry’s economic downturn. These challenges are significant, and all operators have had to reevaluate their strategies to continue serving and growing their customer base while navigating the economic slowdown.

Looking ahead to 2024, the telecom industry has the opportunity to adopt a more frugal approach to spending. However, these financial challenges present promising prospects for advancing large-scale optical innovation, which is already underway.

We can gain insights into the telecom market’s journey in 2024 by looking through the lens of optical innovation that helps our industry realize the benefits of open optical networking and coherent pluggable optics. These innovations will turn rising network operations costs into technological opportunities to make our networks more cost-effective, efficient and sustainable.

Aside from macroeconomic challenges, internet carriers must tackle the industry challenges of enterprise networking needs, network upgrades and expansions, hyper scaler capacity demands and more. One thing is sure – internet carriers are in the hot seat to leverage optical innovation and enable business-critical services for their customers, no matter the macroeconomic climate in 2024. That said, here are four 2024 predictions relating to large-scale optical innovation.

#1. Telecom’s economic challenges will continue – we will innovate as always 

Telecom will continue to face economic challenges in 2024, primarily bolstered by geopolitical tensions. Interest rates and inflation are rising, making network expansions and upgrades more expensive. Amid decreased telecom spending, many network operation costs, including power and space, are increasing. These rising costs are often passed to the customer, with 82% of business leaders affirming that increased network energy costs have a medium or high impact on the price of their services. However, I predict that optical innovation will be the skeleton key to telecom’s economic struggles, helping us unlock our networks’ full potential while reducing rising power and space costs.

#2. Large-scale adoption of open optical networking

Some carriers have historically resisted open optical networking, while others have welcomed it with open arms. This reluctance is understandable. Transforming your network infrastructure is difficult – but it is necessary.

Many carriers will accelerate their adoption of open optical networking to overcome 2024’s economic challenges. Integrating coherent pluggable optics through open line technologies will define this paradigm shift. As internet carriers contend with 2024’s accelerating networking demands amid continued economic challenges, open optical networking will empower carriers with the optimal interoperability, scalability and simplicity required to make their networks more economical to operate, quicker to adapt and easier to maintain, with many companies already making the shift.

Open optical networking will allow carriers to mix and match the best components for their customers’ connectivity needs, with standardized form factors (including QSFP-DD and others) helping them prevent vendor lock-in, making their networks more flexible and resilient to supply chain disruptions. Expanded equipment choices and open optical networking are good for our industry. They foster healthy competition among equipment vendors while ensuring internet carriers integrate the best gear into their networks.

#3. Widespread deployment of coherent pluggable optics

As internet carriers increasingly disaggregate their network infrastructure, the widespread deployment of 400G ZR coherent pluggable optics will increase. These components will enable the transmission of high-capacity bandwidth services over 20-30 km distances with less power required. Many network operators are already moving in this direction. Still, it will accelerate further, with additional widespread adoption of 400ZR+ coherent pluggables on the horizon, enabling data transmission over even longer distances.

Coherent pluggable optics are renowned for their high data transmission rates and ability to accelerate network upgrades and expansions, enabling carriers to deliver services with capacities up to 400G and higher. But the real benefit of these modules in 2024 will be their power efficiency, driving down energy costs while improving performance and capacity. Due to their compact form factors and improved power efficiency, coherent pluggable optics will be crucial in mitigating rising power and space costs.

More importantly, this improved power efficiency will make our networks more sustainable, strengthening the tech ecosystem’s broader sustainability efforts instead of significant innovations in power sourcing. Coherent pluggable optics also enable the practical implementation of IPoDWDM (IP over Dense wavelength-division multiplexing), leading to my next prediction.

#4. IPoDWDM will finally come to fruition – but 400G will be enough for now

Although IPoDWDM is not a new concept, it will see widespread implementation in 2024 as more carriers leverage evolutions in routing silicon and standards to realize IPoDWDM outside of specialized deployments. Internet carriers will accelerate IPoDWDM implementation through coherent pluggable optics, with these modules plugging directly into routers to allow carriers to transmit optical signals between routers (while using amplifiers in between) without needing optical transponders.

Replacing certain parts of their Internet backbone and collapsing the IP and optical layers will allow carriers to reduce CAPEX and OPEX costs by removing older, less power-efficient equipment. However, I predict 400G will be enough for internet carriers to meet their customers’ capacity requirements in 2024. While 800G will be welcome over time, widespread implementation of 800G will still come in carriers’ networks, although data centers will show continued interest in 2024.

Optimism, Open Optics and Opportunity: Onward

As we gather at industry conferences in 2024, let’s focus on where we need to go rather than where we are currently in our industry. In the challenging economic landscape of telecom, there is an opportunity for innovation and transformation in optical networking and other domains. It is crucial to realize this vision when the tech ecosystem needs it most. Despite our challenges, I am optimistic that we can meet them and build better networks for the enterprises, hyperscalers, service providers and consumers who rely on them. However, this will require a paradigm shift of large-scale optical innovation like never before.

 

Mattias Fridström, Chief Evangelist