OPTICAL FIBRE

Almost Two Billion km of Fibre Installed to Date

Sometime in mid-2013, the cumulative total of optical fibre installed since the late 1970s will pass the milestone of 2 billion km.  At year-end 2012, the cumulative total will be 1.89 billion, and the current rate of deployment is about 240 million fibre-km per year.  A small amount of bare fibre is lost in the process of making cable.  The percentage lost varies among cable types, but the average yield is considered to be 93% to 95%, which is up from levels of 91% to 93% in the 1990s.  This means that the world’s fibre producers, as a group, are turning out more than a quarter billion kilometres of bare fibre per year.  Ten years ago, the fibre-production total was 64 million km, so the fibre production has increased with a compound annual growth of 15% from 2002 to 2012.

Capacity Increases Keeping up with Demand

In the late 1980s and 1990s, there were several shortages. They occurred because the market had growth spurts with fibre demand rising at a rate faster than new fibre capacity could be brought on line.  Since 2002, the fibre producers have been able to increase capacity at a rate that has closely matched the demand growth.  In many years, there has been barely enough capacity, so for most of the decade, fibre supply and demand have been closely balanced.  A minor part of the capacity turned up after 2002 was equipment that had been shut down or “mothballed” after the market collapse in 2001.  Most of the new capacity has been activated in the last five years: CRU estimates that 140 million km of new fibre-draw capacity has been turned up since 2007.  About 100 million km of that new draw capacity has been added in China – about 72 % of amount activated after 2007.

Preform Production is the Limiting Factor

Fibre production has two main stages: the deposition of high-purity silica to make a preform, and the drawing of the preform into small-diameter fibre.  The perform process requires careful control over a complex chemical process, and the equipment is more expensive to install and operate than fibre-drawing equipment.  Plus, large preform operations can have advantages in manufacturing costs.  As a result, the world has 33 factories making preforms for standard communications fibres, and 55 factories drawing the fibre.  (There also are other operations making specialty fibres for sensors, optical amplifiers, medical systems, imaging, laser machining systems, and other applications.)  Generally, there has been more than enough draw capacity to make telecom fibre in recent years.  The close balance between fibre supply and demand in recent years has resulted from limitations in preform supply.  New preform capacity has barely kept up with demand, so that there has been little if any excess preform capacity for the past five years.

Balanced Supply and Price Stability

With the close balance between fibre supply and demand in the past three years, there has been relatively little movement in the price of the single-mode fibre used in the bulk of telecom network installations.  Prices for fibre single-mode fibre decreased with a compound annual rate of -15% from 1983 through 2003.  The rate from 2003 to 2006 was -14%, the rate from 2006 to 2009 was -2%, and the rate from 2009 to 2012 was -1%.  With fibre in tight supply, why haven’t prices risen in recent years?  One reason is that there continues to be aggressive competition for large one-year or multi-year contracts – the top 20 telecom operators in terms of 2012 optical cable consumption represented 144 million km of cabled fibre demand, or 60% of the 2012 market total.  The contracts for these operators are awarded in competitive bidding processes, and the large quantities put pressure on the bidders to be competitive.  Another reason is that only 35% of the fibre used by cable manufacturers is procured as a “merchant market” purchase.  The other 65% is supplied to the cable makers by a division of the same company, by a sister company, by a joint-venture partner, or some other affiliated company.

More than US$1 billion Invested in Fibre Capacity

CRU estimates that manufacturers throughout the world have invested more than US$1 billion in new fibre-producing capacity in the past five years.  Most of this investment has been in China, and much of that has been in operations established by joint-ventures of companies from China and other countries, including India, Japan, the Netherlands, and the US.  About 75% of the investment has been in new preform capacity, and the remainder has been in draw capacity.  Throughout the world, the total investment includes several new facilities, expansions of existing facilities, and upgrades to higher-capacity processes and equipment.

Fibre-making Processes Continue to Advance

One technical advance this year was the demonstration by Nextrom and DSM of fibre being drawn at 2,500 metres per minute (150 km per hour).  Nextrom makes draw towers and other equipment used in fibre production, and DSM makes the polymer resins used for coating the glass fibres as they are drawn.  Another technical advance has been the trend to larger preforms.  This trend in part has resulted from the use of separate processes to make the fibre’s core glass and cladding glass.  This allows more efficient bulk-deposition of the cladding glass.  Heraeus, for example, sells large cladding-glass cylinders that are collapsed onto core rods to make preforms that represent thousands of fibre-km.  At the 2012 International Wire and Cable Symposium, Heraeus said that to date, it has supplied materials to the fibre industry that represent more than 500 million fibre-km.  In addition to the cladding cylinders, Heraeus also sells substrate tubes and rods, but the large cladding cylinders have been a key part of the trend in recent years to increase preform size and improve fibre-making efficiency.

FTTx Applications Drive New Product Capabilities

Fiber –to-the-home, fiber-to-the-building, fiber-to-the-cellular station, and fiber-to-the-node systems, collectively labelled “FTTx,” have been driving the demand for optical cable in recent years.  And these applications also have driven extensive R&D and new-product introductions in the areas of smaller-diameter cables, improved cable handling, and lower-cost installation methods.  This has included new fibre designs such as fibre with smaller outside (coated) diameter – 200 µm vs. 250 µm – for some compact cable designs, and several classes of bend-insensitive fibre.  The DSM coating mentioned above in the high-speed draw demonstration also is designed to reduce micro-bending losses.  Plus, there has been work on optimizing the optical performance of fibre for new high-speed backbone transmission technology.  

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