Report Says that Free Space Optics Will Change the Broadband Landscape

October 24, 2000 -- Free Space Optics (FSO), an emerging technology that transports data from point-to-point and multipoint via laser technology, will grow from its current nascent state to a strong niche player in the next five years, says a new study by The Strategis Group. The study, "Free Space Optics: Fixed Wireless Broadband," estimates that global equipment revenues are projected to reach around $2 billion in 2005, up from under $100 million in 2000.

"There is a definite place for this technology in the market," says James Mendelson, Strategis Group analyst and lead author of the study. "With its benefits, such as quick deployment time and high capacity links, FSO should have strong appeal for both new and established carriers. Carriers, like Allied Riser and XO Communications, may use FSO in conjunction with other technologies to expand their current networks while others, such as Terabeam, see the technology as a means to break into the broadband market."

FSO Equipment Revenue, 1999-2005
(U.S. $ Millions)
1999 $1.7
2000 $51.4
2001 $111.7
2002 $199.8
2003 $354.1
2004 $579.2
2005 $864.9
Source: The Strategis Group, Inc.

FSO equipment currently is being deployed for a variety of applications, such as last-mile connections to buildings, mobile networks assist, network backup and emergency relief. Among these applications, last-mile access may provide the greatest opportunity since FSO provides the high-speed links that customers need without the costs of laying fiber to the end user. In 2005, last-mile access will represent over two-thirds of the total FSO equipment market, according to The Strategis Group.

Despite its potential, FSO still has many hurdles to overcome before it will be deployed widely. There are technology issues, such as line-of-sight requirements and weather degradation. While vendors, such as Airfiber, LightPointe and AirFiber, are addressing these problems through shorter and (when necessary) repeating links, the biggest obstacle facing FSO may be its reputation or lack of one.

"Many people just don't know or trust the technology," says Mendelson. "With other fixed wireless technologies, such as LMDS and MMDS, people had a strong understanding of RF [radio frequency] technology because of the wide use of mobile phones. However, lasers still remain somewhat of a mystery. In order to be successful, FSO vendors must first educate the market. Then, they must quickly deliver on their promises of fast, reliable, high bandwidth connections."