Josh Grasmick

The Internet, and its user base of billions of people worldwide, is in the middle of a crisis — a bandwidth crunch that impacts us all.

Since the Internet boom of the 1990s, Internet infrastructure has not had a major upgrade in carrying capacity. Now, for the first time in more than a decade, we are on the edge of an immense spending cycle aimed at upgrading those “old pipes”.

The critical shift in standard that needs to take place to keep those “pipes” from clogging is from decade-old 10G (10-gigabit) bandwidth capacities to the faster, higher-capacity 100G network — also known as 100G Ethernet. This new network bandwidth will become a global standard, running underground from city-to-city and undersea from continent-to-continent.

As with all creative destruction, there will be victims and beneficiaries. Luckily for you, this new spending cycle will be a multiyear benefit for one particular group: fiber optic networking companies.

You see, the fast lane of the information superhighway travels on pulses of light, moving primarily through fiber-optic cables and secondly through satellite.

America’s favorite sport is coming to grips with the need to embrace new technology that connects its fans.

Over long distances — and increasingly over short ones — fiber-optic technology supplies the communications medium of choice. Here’s why fiber-optic networking and equipment suppliers will be one of the best tech trades of the decade …

The Three Big Drivers of Big Data

There are three big drivers of traffic in big data…

The first is video distribution.

Google’s YouTube, Hulu, and Netflix have helped video become the biggest single consumer of bandwidth capacity in the network. For one thing, these platforms keep adding higher quantities of video to their services. But the video content has improved in quality as well. High definition video doubles bandwidth, and emerging 3-D video formats doubles it yet again.

The second driver of the bandwidth crunch is voice.

Leaving aside the fact that programs like Skype, FaceTime and Google Chat combine high bandwidth video with their phone calls; communications are becoming more and more international. Such long distances demand more reliability. Moving alongside voice is also music, which is digitized and broadcasted through popular apps like Pandora, Spotify, and more.

Last of our big three bandwidth users is data.

Cloud computing, or the migration of software and computing services from independent networks to online providers, is the big kahuna when it comes to data. When we store our data in cloud-based data centers, it’s channeled over vast geographical areas in order to maintain resilience and closeness to end-users. That means that when we plug into the Internet, The Cloud must be able to accommodate incoming traffic from anywhere and everywhere.

There are, of course, less obvious contributors to the bandwidth crisis.

Machine-to-machine communications contribute automatically. Smart grids such as connected utility-metering systems use a lot of bandwidth too. Remote monitoring services are tied to hospitals, schools and security systems. And then there are the ever-populating point-of-sale retail terminals of the variety you use in the “self-checkout” line at the grocery store.

The point is: big data cannot be stopped. And somebody is going to need to build Internet infrastructure that can handle all the growth. At this rate, bandwidth infrastructure will become as important as road, water and electricity systems within the next decade.

NFL Stadiums Embrace Tech

I’m not the only one saying that either. America’s favorite sport is coming to grips with the need to embrace new technology that connects its fans.

According to CNN,

“Stadium owners and operators need to get their hands on the fact that they need to put in Wi-Fi like they need to put in plumbing.”

Think about it. When you’re at a game, sweep the crowd and see how many people are using their smartphones. People are constantly keeping track of the score, updating their fantasy football picks, forwarding highlights, sharing moments and chattering through social media …

And if you don’t see this, it’s because the stadium you’re in can’t handle the web traffic!

About a dozen stadiums in the U.S. have Wi-Fi capability, and about 20 have Wi-Fi in certain areas. Most operate on service provided by Verizon and/or AT&T.

The problem is that these cellular carriers may not be able to handle the bandwidth at their current capacity.

That’s not good news for some of the biggest telecom operators, like AT&T (T), Verizon (VZ), British Telecom (BT) and China Mobile (CHL). “Each year, the carriers look for ways to innovate and get greater productivity,” affirms Andrew Schmitt, an optical analyst at Infonetics Research. “Moving to 100G is a big jump, but they have to do it to remain competitive.”

In addition to the big operators, wholesale telecom carriers such as Level 3 Communications (LVLT) and Internet network service providers like Equinix (EQIX) have the same problem.

Then there are the tech giants such as Amazon (AMZN), Microsoft (MSFT) and Google (GOOG). Each must invest heavily to build and expand massive data networks. For three consecutive quarters, for example, the king of search spent over $1 billion on data centers and servers.

Such companies have proved they are willing to spend billions to hold existing customers and claim new market share. They have no choice but to upgrade their networks to 100G speeds in the future.

The Internet’s present infrastructure was not built with the intention of being the chief conduit to deliver all this data, voice and video content.

We have no choice. We must make the switch.

The 100G expansion will favor innovators who are ahead of the game

Here is a list of companies for you to check out that are all competing in this sector:

Ciena (NASDAQ: CIEN), JDSU Uniphase Corp (NASDAQ: JDSU)., Finisar Corporation (NASDAQ: FNSR), Infinera (NASDAQ: INFN)…

Smaller ones include Oclaro, Inc (NASDAQ: OCLR) and NeoPhotonics Corp (NYSE: NPTN).

The 100G expansion will favor innovators who are ahead of the game, and weaker competitors will be increasingly disrupted and weeded out of the industry. The past decade has seen fiber optic networking companies consolidate, with more consolidation expected as different vendors compete for the new network standard.

That’s why it’s so important to be ahead of the game with the most disruptive tech and most disruptive business model going forward.

Don’t worry. We’ll continue this theme in your future issues.

Best,

Josh Grasmick
for Tomorrow in Review

Ed. Note: The overhaul of the existing fiber-optic infrastructure will be a huge boon for a handful of lucky tech companies. To make sure you get in on the ground floor of this emerging trend, sign up for the FREE Tomorrow in Review email edition.

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Josh Grasmick

Josh Grasmick is managing editor of Tomorrow in Review and associate editor of Technology Profits Confidential and Breakthrough Technology Alert. After graduating from Washington College with a degree in English, the self-described autodidact was interviewed by Time magazine for his novel entrepreneurship and worldwide eco-adventures. His experience with those in the fields of science, medicine and technology puts readers ahead of the curve and on top of the market.

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