Fiber-Optics Firms Pursue Military Local-Area Business.

As the downturn in the high-tech industry continues, fiber-optics manufacturers are stepping up their efforts to corner a larger share of the potentially lucrative business of installing cabling for local-area networks, or LANs, for computer systems on the nation's military installations.

In all, the Defense Department operates more than 25,000 computer systems, located on 519 fixed installations in the United States and abroad. These computers are key elements in many high-tech weapons, command and control functions, the Global Positioning System, inventory and transportation management programs, medical equipment and pay and personnel record-keeping. Most of them, these days, are linked through LANs.

Upgrading the cables and connectors to handle recent technology--such as video-conferencing, multimedia and 3D modeling-could cost as much as a billion dollars per year, according to Dan Silver, market development manager at the 3M Telecom Systems Division in Austin, Texas. His company, he asserted, is leading the competition for the fiber-optics portion of that business.

"It's a huge market," he said, "and we're the only company focusing on an all-fiber technology.

Fiber optics are bundles of thin glass filaments through which light beams are transmitted, Silver explained. Fiber optics can carry up to 30,000 times the information of electric waves over copper wire, he said.

Traditionally, however, LANs have used copper cables--the original conduits for electrical power--because they were considered less expensive, more supple and simpler to install than fiber. In fact, Copper still accounts for 80 percent of LAN cabling. But it has limitations compared to fiber optics, according to Silver.

"Copper cabling can be run no further than 90 meters from a central telecommunications closet to a desktop computer," Silver said. But fiber can span distances as great as two kilometers or more, he said.

This means that an organization using fiber needs fewer closets and can place its computers further apart. That's significant for military bases, which can stretch over hundreds of square miles and include hundreds of offices, Silver said.

Then, there's the matter of longevity. Copper cabling usually is replaced every three to five years, Silver said, whereas fiber is good for 20 years or more.

Three years ago, 3M came up with a product that it says makes use of the strong points of fiber and overcomes its weaknesses, making it competitive with copper.

The product, called the Volition system, consists of all of the components needed to install a complete fiber optic-system, stretching from where the cable enters the building to the desktop, explained Silver.

The key ingredient in the Volition system is a low-cost, high-performance fiber connector called VF-45. This device is a two-part, molded plastic plug and socket, which is simpler to use than traditional fiber connectors, according to Silver.

The VF-45 socket rakes only two minutes to install, compared to 30 minutes for older versions, and it costs about $2.50 apiece, or seven to eight times less than traditional fiber connectors, Silver said.

The VF-45 was invented by 3M engineer James Bylander after a trip to an Austin hardware store and the purchase of an $.89 wall-outlet switchbox. The box, he noticed, contained sharp angles that gave him the idea to use sharp-angled grooves, or v-grooves, to align and connect fibers.

Other components of the Volition system include a crush-resistant, flexible patch cord and a media converter that transforms an electrical signal to an optical one and vice versa. The media converter allows customers to build a network that takes advantage of high-bandwidth fiber in their horizontal cabling plant without replacing their existing network interface cards (NICs) and hubs, Silver explained.

Volition cables are made of .09, 50 and 62.5 micron glass optical fiber. The cable connecting the wail outlet to the computer is highly durable and abrasion-resistant, said Silver. It has a compressible glass layer to make it tough enough to withstand cable pulling, stripping, termination and 90-degree bends, he explained.

Such components are key factors in reducing the costs associated with fiber, according to a recent study by the Tolly Group, a testing and consulting firm located in Manasquan, N.J. The study, cited by 3M officials, said that fiber-based networks can cost 15 to 22 percent less than copper LANs. The study provided two examples:

* A 60,000 square-foot building with 267 users had an average pet-user cost of $962.76 for copper cabling. With fiber-optic cabling, five telecommunications closets were reduced to two for a cost of $806.80 per user. Total savings: $40,000 in hardware costs alone.

* A 240,000 square-foot building with 1,067 users spent an average of $996 per user for copper cabling. Using fiber-optic cabling, 23 telecommunications closets and one main equipment room were dropped to 11 telecommunications closets and one main equipment room for an aggregate of $773.09 per user, or a total savings of more than $235,000 in hardware costs.

With prices becoming more competitive, military installations are beginning to opt for fiber optics. Thus far, an estimated 19 Army, Navy and Air Force bases have installed Volition systems within their facilities.

The Materials and Manufacturing Directorate of the U.S. Air Force Research Laboratory, for example, deployed more than 200 miles of fiber-optic cabling among 1,300 network nodes within five buildings of its headquarters at Wright-Patterson Air Force Base, Ohio.

The directorate's decision to go with fiber rather than copper was due primarily to fiber's greater bandwidth capability and resistance to radio frequency and electromagnetic interference, said communications and computer branch chief Mark Groff.

"It was a little more expensive than copper, Groff told National Defense. But installing copper would have meant that "we would have to give up real estate," and space is tight at his facility, he said.

"We're a laboratory, and the buildings are big," Groff explained. "That meant that either the cables had to be long, or we had to have lots of telecommunications closets."

The directorate was also concerned about noise, Groff said. "Unshielded copper generates electrical noise," he said. "We wanted to minimize that."

Security is another factor that was important to the directorate, as is at most military installations. Unlike standard copper wiring, fiber doesn't emanate signals that can pose a potential security risk, Groff said. "Fiber is a lot harder to tap into," he said. "It's got a much higher security rating."

The copper industry, however, isn't conceding the military market--or for that matter, the civilian one--to fiber optics any time soon. For one thing, change is slow. Even with new technology, installing fiber is only economical in new construction or during thorough renovations of existing facilities.

Also, copper manufacturers are continuing to improve their cabling. Since 1994, the industry has increased the bandwidth capacity of copper cabling for telecommunications systems within commercial buildings from Category 3, which could carry electronic signals at bandwidths no greater than 16 megaherrz (MHz), to Category 5e, which can handle up to 100 MHz. The industry currently is developing standards for Category 6, with a maximum of 250 MHz, and Category 7, with up to 600 MHz.

Fiber's bandwidth capacity is 50 times that of Category 5 copper cable and eight times that of Category 7. Nevertheless, the LAN cable has been one of copper's fastest growing markets and will continue to be for the foreseeable future, according to William T. Black, vice president for wire and cable at the Copper Development Association in New York City.

"Fiber is certainly penetrating the market," Black said. "But the market is so huge, and it is changing so slowly. The market is also growing. There are a lot more links all the time, and many of the new links are copper."

Still, there may be a time when fiber dominates the LAN cable market--perhaps "before my grandchildren are dead," Black said.

Even within the fiber-optics industry, 3M has plenty of competition. "There are half a dozen products out there," said 3M's Silver. "But we're the only ones offering an all-fiber system.

The entire fiber-optics industry has been hit by the weakening economy. According to the most recent report from the Commerce Department, the U.S. economy grew by a mere 0.7 percent in the spring, the lowest growth rate in eight years.

Among the hardest hit was the technology sector, which includes fiber optics. In July, for example, Lucent Technologies, of Murray Hill, N.J., reported losses of 35 cents per share in the third quarter of 2001. To cut its losses, the company's chairman and CEO, Henry Schacht, announced a number of steps, including reducing its work force by approximately 19,000 since January. Another 15,000 to 20,000 workers would be laid off in 2002, Schacht said.

Lucent also agreed in July to sell its Optical Fiber Solutions business to Furukawa Electric Co., Ltd., of Tokyo, and Corning Incorporated, of Corning, NY., for a combined total of $2.75 billion. The sale to Furukawa is subject to regulatory approval.

Meanwhile, Corning served word in June that it was delaying construction of a new optical fiber manufacturing facility in Oklahoma City and slowing expansion of an existing one in Concord, N.C..

In addition to the general slowdown, 3M's effort to sell fiber-optic cabling to the military services may be hindered by the Defense Department's plan to conduct another round of base realignments and closures (BRAC) in 2003. The chairman of the Joint Chiefs of Staff, Gen. Henry R Shelton, told the House Armed Services Committee in June that, as a result of force reductions over the past decade, the armed forces still have 23 percent more installations than they need. Maintaining those facilities, he said, diverts funds badly needed for modernization and readiness.

Despite the looming BRAC, however, 3M officials remain confident that there remain plenty of untapped markets for their fiber optic products as surviving military bases seek to modernize their telecommunications facilities.

The company is also optimistic about the long-term fiber-optics market in general. In June, 3M announced that it has increased production of ceramic-ferruled fiber-optic connectors.

Demand for fiber-optic networks and their components is strong, said 3M marketing operations manager Al Covino. "There are only four ceramic-ferrule manufacturers in the world, and all of them are currently running at capacity," he said.

"In most cases, we have the capacity to fill existing orders land] meet existing lead times," Covino said. The company, he added, expects to "significantly expand our business."

Pentagon Contracts for Souped-Up Wide-Area Network

The Defense Department earlier this summer awarded a 10-year $450 million contract to provide advanced wide-area networking services for its Defense Research and Engineering Network, or DREN.

The contract announced in July by Delores Etter, deputy undersecretary of defense for science and technology, was granted to Global Crossing Government Markets, a Washington, D.C-based unit of Global Crossing Ltd., of Hamilton, Bermuda. It has a three-year base, with seven one-year options.

DREN is the department's long-haul communication service provider for its High Performance Computing Modernization Program, or HPCMP. Using its high-speed Internet backbone, Global Crossing plans to design, develop and manage a state-of-the-art secure, virtual private wide-area network (WAN) for DREN.

Unlike local-area networks--computer links spanning a relatively small area, usually in a single building or group of buildings--WANs connect a larger number of users, usually spread over a greater geographic area.

Under the terms of the contract Global Crossing will create the world's largest, single, contiguous fiber optic network The new network will enable 6,000 scientists and engineers at defense laboratories, test centers, universities and industry sites to communicate and collaborate in real time throughout the United States, Puerto Rico, Guam and other U.S. territories.

The [c1]system will provide advanced networking services, including Internet protocol (IP), asynchronous transfer mode (ATM) and state-of-the-industry wavelength. It will accommodate video, imaging and digital data transmissions. [c1]