RHK Forecasts North American DWDM Market Will Experience $1.3 Billion Growth by 2002; 1998 Top System Suppliers Hold 78% of Equipment Market.

SOUTH SAN FRANCISCO--(BUSINESS WIRE)--Jan. 18, 1999--RHK Inc. today released its annual survey and forecast of the Dense WDM transmission equipment industry, showing the North American market for DWDM systems will grow from $1.9 billion in 1998 to $3.2 billion in 2002, an overall growth of $1.3 billion or 70% over the next four years.

Findings from the survey and new report WDM and Optical Networks: Technology and Markets, show the top three systems suppliers with 78% of the market by dollar value. The survey reveals rapid deployment of DWDM equipment by long distance carriers (IXC) and a revised forecast of the expected rate of adoption of DWDM systems by the local exchange carriers (LEC), slower than RHK's projections a year ago.

The survey details the vendor market shares and shipments in dollars for each of the major vendors by type of equipment supplied and market segments served. The market leader in total dollars shipped was Nortel, followed by Lucent and Ciena. When considering systems that integrated SONET functionality with DWDM functions, the top suppliers were Nortel, Lucent, and Alcatel. The top suppliers for those that use transponders or wavelength translators were Ciena, Lucent and NEC. Ciena also led in shipments of systems with greater than 16 channels. RHK expects high-channel-count systems (greater than 16) with 10 Gbps channel capacity to grow fastest in the forecast period as service providers migrate to further increase capacity.

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        1998 Dense WDM Market Leaders by Dollar Value Shipped

Total Volume        Integrated SONET &         Open DWDM
Leaders              WDM Systems                Systems
1.Nortel             1.Nortel                  1.Ciena
2.Lucent             2.Lucent                  2.Lucent
3.Ciena              3.Alcatel                 3.NEC

The report also explores IXC and LEC adoption of DWDM systems from 1995 through 1998. IXCs continued growth during this period was largely driven by the launch of new competitive carriers and the increase in data services and Internet usage - increasing the demand for network capacity. LECs, however, were slower to deploy DWDM systems because the need for network wide capacity was not as critical.

"Although IXCs have been deploying WDM in the long-distance networks, WDM systems specifically designed for interoffice and metro applications are just now becoming available," remarks Mat Steinberg, Director of Optical Networking at RHK. "We expect, however, that WDM will gain wider acceptance with the ILECs and CLECs in 1999."

WDM and Optical Networks: Technology and Markets is part of RHK's ongoing WDM and Optical Networks Service. This service provides extensive research on key DWDM and optical networking vendors and service providers in North America; market forecasts of DWDM and OADM expenditures; and analysis of the market and technology drivers influencing DWDM deployment.

Ryan Hankin Kent, Inc., is a leading market research and consulting firm specializing in the analysis of advanced technologies for the public telecommunications network. The company provides syndicated services and custom consulting to technology vendors, service providers, and the investment community. RHK's areas of expertise include: WDM & Optical Networking, SONET/SDH, Loop Access Systems (NGDLC, xDSL, and FITL), ATM, Core Switching & Routing, Network Management, Cable Modems, Internet Content, Systems for Voice over IP, Internet Video, and other emerging technologies. RHK is based in South San Francisco, California. For complete service offerings, please contact Mike Mahan at 650/737-9600 x233. For more information, visit the company's Web site at www.rhk.com.