FierceTelecom's poll on the potential for another bandwidth glut brought out the optimists: About 73% of the readers who have taken our poll believe that bandwidth demand is for real this time-that the heralded exaflood of exabytes is on its way, while the other 27% are concerned the industry's recent bandwidth investments and urgency are jumping the gun. The poll has garnered a lot of interest in particular from the companies that have the most to lose if a bandwidth glut happens-and the most to win if bandwidth demand is for real: network equipment vendors. Optical networking vendor Ciena Corp. is one of those firms, and FierceTelecom recently spoke with Ciena CEO Gary Smith about bandwidth demand, industry attitudes in the wake of a "nuclear downturn," and what might result from ongoing vendor consolidation.
FT: There is supposed to be an exaflood on the way. Should we build an ark?
GS: All I can tell you is what our carrier customers tell us, and what they are saying is that there is an exponential growth in demand for capacity, especially in the metro network, and that this need is grounded in real demand for real applications. It's driving the migration by carriers to converged Ethernet architectures. We're seeing the applications now that are driving the demand, like mobile broadband and video. Some of it is peer-to-peer traffic, and some of it is based on applications that are out there but haven't even gotten going yet.
FT: What's an example of an application we know is coming but haven't felt the effect of yet?
GS: The growth in P2P traffic was something that was hard to predict. Now, we're seeing bandwidth demand for HD video and TV to the desktop, which is an application that hasn't really gotten going yet, but there is a lot of support for it.
FT: What's the overall attitude of a telecom industry that has been burned before by bandwidth optimism?
GS: What's different is that the industry is cautiously optimistic about its expectations. Carriers see this demand, but they are also cognizant of the broader economic environment overall. There's a good, balanced attitude that we didn't see before. Having been one of the people who lived through the nuclear downtown of this industry, I can tell you that this time, the optimism is well-grounded. Carriers are stepping up their investments in their infrastructure in response.
FT: Have we seen the peak of vendor consolidation yet?
GS: On the vendor side, there has been some pretty major M&A the last three or four years. There might be more, but I don't subscribe to this view that there will be three or four very large vendors globally that do everything. I think with some of the deals already, we've seen the results of that strategy, and they do not look good.