Network Middle East electronic edition April 4, 2005

The free space optics (FSO) business is light years away from fulfilling the expectations it generated during the heady days of the late 1990s. However, new deals being struck between FSO vendors with mainstream telco suppliers could provide the shot in the arm the industry needs to stay alive.

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By  Simon Duddy Published  April 2, 2005

Light years away|~||~||~|The free space optics (FSO) business is light years away from fulfilling the expectations it generated during the heady days of the late 1990s. However, new deals being struck between FSO vendors with mainstream telco suppliers could provide the shot in the arm the industry needs to stay alive. In the midst of the telecommunications boom, start-ups convinced venture capitalists to invest small fortunes claiming the laser-based technology would play a central part in last-mile communications. Just a few short years later and this optimism had evaporated and, for many, was replaced by a deep sense of pessimism. When a leader in the segment, AirFiber, went out of business in 2003 after receiving US$92 million in investment over the previous four years, many feared for the business as a whole. Indeed as AirFiber wound down, its CEO Brett Helm declared the sector dead and claimed FSO would never be an ongoing and viable business. There were many reasons behind this abrupt turnaround in fortunes from technical limitations to a sharp slowdown in the telecommunications sector. Among the technical reasons, the lack of reliability demonstrated by FSO technology was crucial. With the technology useless in fog, it fell well short of the five 9s level of reliability typically asked for by telcos. Although, later versions of the technology have proved more robust, they are still essentially limited in adverse weather conditions. This means that while FSO offers a solutions that is fast and relatively cheap to install and maintain, it is rarely enough on its own. Most enterprises will also need to invest in a back-up link to ensure continuity of service. The limited range and need for a clear line of sight of has also limited implementations, although with some vendors incorporating mesh technology into their solutions, it may be possible to overcome some of these problems. Aside from technical problems the FSO business had the misfortune to launch just before a major slump in the telco business, which hit even well established suppliers like Nortel hard. For start-ups, these years were much tougher. Many FSO vendors did not help themselves by targeting telcos too heavily. When the business did not materialise, they were often slow to shift their attention to enterprises. While the enterprise-focused approach has not amassed fortunes for FSO vendors, it is those companies that have managed to secure significant enterprise business that survived. With FSO firmly a niche solution, the emphasis is still on survival and the strategy that looks most promising centres on recognising that FSO is one of a number of solutions that can satisfy a customer’s communications needs. The challenge is making the transition from a niche technology in a niche market to a mainstream market where FSO becomes a commodity. Partnerships with heavyweight networking and telephony vendors are certain to be very important in the future of FSO. Alliances have already been formed between FSO vendors and telecommunications vendors, with fSONA’s tie up with Alcatel and LightPointe’s deal with Huawei two good examples. These moves are likely to be mutually beneficial as it gives FSO vendors the added reach associated with these larger players, while it fills an important niche for the likes of Alcatel and Huawei who strive to offer end-to-end telecommunications solutions.||**||

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