A new generation of terabit-capable digital signal processors will drive the dense wavelength-division multiplexing (DWDM) equipment market to $18 billion over the next five years, according to a fresh report from Dell'Oro.
Digital signal processors are a key component to DWDM systems, which increase the bandwidth of fiber networks by combining data signals from different sources onto a single fiber. Dell’Oro predicted processors capable of terabit speeds will grow at an accelerated rate through 2028.
The processors are expected to be “widely used” from large hyperscalers to smaller telecom operators, said Jimmy Yu, Dell'Oro analyst and the report's author. According to him, some operators will use terabit-capable processors to push wavelength speeds past 1 Tbps, and others will use them at a lower speed to transport across longer distances.
In particular, he said Chinese service providers will use these them for ultra-long-haul routes at 400 Gbps. The processors will also enable 800 Gbps service in shorter distances for operators "everywhere else." Dell’Oro anticipates that in five years, over half of capacity additions will come from DWDM systems built with sixth-generation coherent digital signal processors.
Last year, Dell'Oro said optical transport equipment demand is projected to reach $83 billion over the next five years, mainly driven by sales of coherent DWDM systems for metro and long-haul data center interconnect. Although, the research firm said demand for long haul equipment is likely to grow faster than metro equipment and contribute a higher share of market revenue going forward.
Terabit line cards to make up over half of DWDM market revenue
By 2028, the research firm also foresees that over half of DWDM market revenue will be derived from shipments of 1.2 Tbps and 1.6 Tbps-capable line cards, another key system component.
Yu said faster line cards bring “network efficiencies,” including greater signal capacity to travel along a single strand of fiber and lower cost-per-bit. Another benefit is lower power usage per bit, creating a path to a “more sustainable future for higher network capacity.”
Some providers are already pushing ahead toward terabit capabilities. In September, Cisco announced general availability of its new NCS 1014 C-Band 2.4T WDM line card. Using that card, Windstream and Cisco recently claimed the industry’s first successful 1 Tbps transmission over 1,100 kilometers. Windstream now plans to provide 800-gig service to its customers by mid-2024.
In a similar vein, Ciena said it would release an update to its WaveLogic 5 modem line – WaveLogic 6 – sometime in the first half of 2024. The equipment vendor claimed that WaveLogic 6 can deliver 1.6 Tbps over a single wavelength across 1,000 kilometers.
Higher baud demand elicits C+L band strategy
The report from Dell’Oro forecasted a trend toward higher “baud rates,” too. Baud refers to how fast information is transferred over a channel (faster baud means more data can be sent in a single channel.)
Specifically, the firm predicted baud rates over 100 GHz will surpass 40% of new installations by 2028.
Higher baud rates will result in a reduction in the total number of wavelengths (or channels) per fiber. However, larger channels with higher baud rates are expected to deliver better performance, longer reach and cost reduction.
Yu said the main impact will be that service providers that haven’t already considered using a combined C+L Band solution in their network should consider it for the future: “Higher baud rate signals will mean fewer channels if staying in just the traditional C Band. Adding L Band can nearly double up the available channels per fiber.”