On Fiber Optic Communications

Perspective: Staff Reduction And Consequences

It is obvious that we are in the worst recession that the fiber optic industry has ever experienced. The other one, 1986-88, occurred when the long distance telephone companies reduced their purchases because they had completed their backbones. Our industry did not have other market segments to make up this lost volume. In that case, all of us in fiber were concerned, but we knew the market would pick up soon, since there were other, large market segments growing to fill the volume. Today, the prospect of large growing market segments is weak. Our current situation leads me to ask two questions: from what applications with recovery arise? And, how well will our industry handle this recovery?

Today iss market does not offer a strong expectation that a limited number of large market segments will grow to fill the volume available. DWDM technology significantly reduces the number of fibers required to provide capacity needs. (This is the second time the fiber optic industry has shot itself in the foot through technical innovation. The first time was the reduction in fiber volume that occurred when the industry switched from multimode fiber to singlemode fiber, in 1983). With DWDM, metro and long distance networks will exhibit reduced fiber needs. FTTH has not evolved to provide significant volume. Similarly, FTTD has not evolved to provide significant volume.

The source of significant future volume seems to be in reduced volumes from current market segments and from new applications. Fiber structural sensors for roads, dams, bridges, and pipelines; fiber perimeter security sensors; traffic management systems; and fiber in automobiles all offer the potential for moderate volumes. Yet each of these applications is unlikely to have the volume of past market segments. However, taken as a whole, this increased number of smaller market segments can create a viable, profitable industry. In summary, I am seeing a shift from an industry with a few large segments to an industry with an increased number of segments of reduced size.

Once we have this future volume, how will we deliver it? Most companies have laid off many of their personnel, from executives to machine operators. When the recovery occurs, production volumes will increase. Who will sell and make this increased volume? Part of the answer to this question is: new, relatively inexperienced personnel.

My concern is that these relatively inexperience personnel will make errors. These errors will give our industry a bad reputation. As an industry, we have constantly battled the problems of incorrect information, copper biases, beliefs in myths and anti fiber inertia. We do not need the addition of a bad reputation restricting the growth in use of fiber.

Already I am seeing some limited, subtle signs of problems with companies, which had been trouble free for most of the last ten to fifteen years. I am hoping that fiber optic companies recognize and address this potential problem before it becomes major drag on growth and profitability.

A bad reputation is easy to develop, because it takes no effort. But recovering from a bad reputation is often impossible.

In short, it is the best of times and the worst of times. If we look ahead to opportunities, it is the best of times. There are opportunities to turn into profits. If we look to the past, we may well see the passing of an era, to which there is no return.

Mr. Eric R. Pearson, CPC, CFOS, is a professional with 29 years of experience in fiber optics, an Editorial Advisor to FPN, a Director of the Fiber Optic Association, a Certified Professional Consultant, a Certified Fiber Optic Specialist, and President of Pearson Technologies Inc., a fiber optic technical consultancy and training organization.

Respectfully submitted for your consideration,

Eric R. Pearson, CPC, CFOS

President

Pearson Technologies Inc.

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