Wireless iappliances at Net edge drives Optical

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iApplianceWeb
(08/28/02, 02:51:23 AM EDT)

SAN JOSE, Calif. - Any chance for a return to growth for the optical components industry lies in new applications and technologies in the first mile, said the former chief executive of JDS Uniphase during a keynote speech at Opticon 2002.

Optical links to emerging wireless access networks and to consumer electronics iappliance devices are the best hopes for a revival in the battered optical industry, said Kevin Kalkhoven, co-founder of Kalkhoven, Pettit & Levin Ventures LLC (Menlo Park, Calif.).

"It's the first mile and the first inch that will revive the market for bandwidth," Kalkhoven told the Opticon audience. "We have to be thinking about how we get high-speed communications to users."

Kalkhoven lobbied specifically for extending optical technologies to cellular basestations, emerging wireless mesh networks and devices like digital camcorders. "We will never get high-speed broadband connections to people by digging holes in the ground," he said.

Kalkhoven's venture capital firm, he said, is "definitely putting our money where our mouth is," by investing in Vista Broadband Networks, a wireless service operator in Petaluma, Calif., that is about to start a limited beta trial of a wireless mesh access service.

The Vista service offers up to 2-Mbit/second, full-duplex service based on a "Dustbuster-sized" radio basestation from Nokia that operates in the 5.4- to 5.8-GHz unlicensed frequency. The device uses a mesh-networking technique to route signals via nearby access points in other users' homes.

While the technology looks promising, it may take a year to create a service that costs $30 a month and an access point that users can readily install themselves, Kalkhoven said. "We are experimenting with it to see what the issues are, but we already have a high degree of acceptance," he added.

More broadly, next-generation 2.5 and third-generation cellular services are ripe for optical communications, Kalkhoven said. "There are substantial buildouts going on and very few of them are using optics. But when you talk to the companies providing and installing the systems, they are looking for solutions to getting more capacity in the basestations," he said.

Kalkhoven compared today's optical component companies with mainframe makers of the 1980s building by hand expensive and complex systems for a relatively limited market of high-end users. Just as the market for mainframes has been relatively flat during the past 20 years, optical component pro-viders will find that traditional telephone companies, the main market for their products, will not see much growth for the next several years.

Kalkhoven presented research indicating that capital expenditures by top carriers in North America will hover around $30 billion for the next several years. "That's a third of what we saw a few years ago [during the Internet boom]. And that figure still may be optimistic, because there could be another $10 billion in overstated telecom revenues," he said.

Carrier capital expenditures, which peaked at $90 billion in 2000, will now closely track revenue. With few new users in sight, however, carrier revenues are not expected to grow significantly for the next few years, which means that optical comms vendors must seek out new users, Kalkhoven concluded.

Kalkhoven also predicted that optics and electronics will merge more completely. "I believe very strongly we will see much greater merging of optics and electronics. The Optical Fibre Conference should be renamed the Optical Electronics Fibre Conference," he quipped, referring to one of the industry's largest gatherings. "These two industries will come together rapidly, reducing costs and reducing the number of materials science technologies required in optics," he said.

Kalkhoven said that as many as 18 separate materials science technologies are required for some optical components, most of which are still handmade - as were the early mainframes. Kalkhoven said he is investing in one startup that is building so-called intelligent transceivers by combining optics with microprocessors.

Nevertheless, Kalkhoven said, there's a widespread cultural resistance in optical companies to leveraging semiconductor manufacturing techniques. He also expressed regret that companies such as Agere are targeting strategic optoelectronic fabrication facilities for layoffs in the current downturn.

Kalkhoven left JDS Uniphase at the peak of the boom in May 2000 when he developed a heart condition. "I was just lucky, I guess," he quipped.