The metro optical network market (including traditional SONET, next-generation SONET, dense wavelength division multiplexing (DWDM) and optical Ethernet) is expected to grow from $13 billion in 2001 to $23.6 billion in 2005, making it one of the fastest growing segments in the telecommunications equipment industry, according to Cahners In-Stat Group, Scottsdale, AZ.

Cahners reports that over the next year, legacy synchronous optical network and synchronous digital hierarchy (SONET/SDH) networks will be expanded and upgraded as carriers weather the current economic climate.

However, newly constructed networks that are designed specifically for data-centric traffic and based on next-generation optical network systems will offer the best hope for future profitability. These networks will lower operating costs, improve packet handling efficiency, and position network operators to capture revenue from new services.

The current U.S. economic recession and depressed demand for broadband services will likely continue through at least mid-2002, Cahners said. Network investment will be minimized, with network operators trying to minimize losses. The long-term forecast for U.S. and international metro optical network markets remains positive and will be the primary driving force in the metro optical equipment market.