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Optical Networking Best Practices Handbook by John R. Vacca

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9.3. IP-OPTICAL INTEGRATION

The optical networking market has seen major changes over the past several years, having undergone a nearly polar transformation from its heyday with the bursting of the telecom bubble. Briefly consider the key developments of this period. The late 1990s saw unprecedented traffic growth as the Internet took shape and usage rates soared. Guided by overly optimistic analyst projections, massive amounts of capital flooded the market, and numerous outfits (both incumbent and startup) scrambled to address open carrier and vendor opportunities [3]. Concurrently, there was a rapid maturation in optical DWDM technology, which many saw as a perfect fit for emerging carrier needs. These synergistic factors created a very ripe environment, and many operators embarked upon impressive network builds, particularly in the long-haul space [3].

As is well known, the preceding euphoria did not last. With massive overexpansion, carriers, particularly startups, undertook excessive debt and struggled to maintain untested business models. Meanwhile, vendor space saw extreme competition and oversupply, resulting in severe market fragmentation that prevented many from achieving critical revenue levels. Inevitably, these factors gave way to a rapid market decline, the signs of which have been all too evident: plummeting capitalizations, massive funding cuts, and large-scale consolidations/downsizings. Perhaps most painful, many key product and technology innovation cycles have ...

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