ECOC 2009: Technology, money, people

Here’s a copy of my leader article in the ECOC magazine:

And so to Vienna for the 35th year of ECOC, which is billed — quite rightly in my view — as the leading optical networking event in Europe. Personal highlights from last year included the post-deadline paper from Alcatel-Lucent and Draka, which reported 40 Gbit/s transmission over transoceanic distances for the first time, JDSU’s photonic integrated amplifier, and Rod Alferness’ plenary lecture on predictions for the next 10 years of telecoms. I’m sure 2009 will provide a similar combination of interesting technical results, innovative new product announcements, and insightful debate on the future of optical networking technology. In short, pure heaven for technophiles like me.

But while rejoicing in our love of technology, can we ignore the fact that since last year the world has become gripped by a recession deeper than anything seen before in our lifetimes? In my view, we can’t afford to. As an fledgling reporter it was drummed into me that there are always three aspects to every idea: technology, money and people. In the context of ECOC, technology and the sharing of ideas (“communication” in the personal sense) are the event’s raison d’etre; that’s two out of three covered. But when it comes to money, how does it all fit together?

Here’s a cautionary tale: at the time of writing the vendor with the most optical networking market share doesn’t have an announced 100 Gbit/s field trial; while the vendor with the most 100 Gbit/s field trials, is currently reorganizing under Chapter 11 bankruptcy protection and looks unlikely to survive as a stand-alone company. Industry analyst Mark Lum, who originally pointed out this odd juxtaposition of circumstances, is quick to add that there is no cause and effect going on here. Nevertheless, this goes to show that having the best technology is no guarantee of financial reward.

Of course, cause and effect do tend to operate more reliably in the other direction — there does need to be investment in R&D to secure the future of a business. For the optical components community, which has been working hard to build viable businesses after the tech crash of the early 2000s, the credit crisis could not have come at a worse time. Many optical components and equipment vendors are still struggling with difficult balance sheets, thin product margins, and risk-averse CFOs, all of which can put the squeeze on R&D spending.

A recent report from the OECD confirmed what we perhaps feared in our hearts: that innovation is already under threat. Historically, business R&D spending and patent filings have moved in parallel with GDP, slowing markedly during the economic downturns of the early 1990s and early 2000s. Recent evidence, based on corporate reports from the first quarter of 2009, confirms this is happening again, with R&D spending declining in many cases. US venture capital investments plunged 60% in the first quarter of 2009 and the same is true in Europe and in China. Patent applications are down. What now?

But while the recession will undoubtedly change the world, it is not the end. One bright spot is the research and education community, which seems to display a certain amount of “crisis immunity” — probably due to the fact that their focus is on the potential value of technology, rather than simply revenue generation.

As a result, R&D decision makers in the education sector are more eager to try “bleeding edge” technologies in order to assess their usefulness. In fact, a project leader from the Czech research and education network CESNET told me that if they didn’t deploy the latest kit then they wouldn’t get the funding. Hence CESNET was one of the first outfits to operate a reconfigurable optical add-drop multiplexer (ROADM) enabled network in Europe. Similarly, the UK research network JANET was one of the first to test and deploy 40 Gbit/s wavelengths in collaboration with Nortel. These kind of efforts help new technologies gain acceptance.

What’s more, academic R&D funding is typically planned on longer timescales than vendor budgets. Within Europe CELTIC is a unique organization that brings together service providers, manufacturers, universities and research institutions to fulfil short to medium-term research goals relating to telecoms (the moniker stands for Cooperation for a sustained European Leadership in Telecommunications). The total budget that has been defined for CELTIC between 2004 and 2011 is €1 billion, a number that has not been impacted by recent economic uncertainty.

Collaboration between industry and academia is nothing new of course. When universities and research institution select the topics on which to perform fundamental research, industrial roadmaps frequently play a role. Conversely, optical vendors can often secure European or national grant funding by working with an academic partner. But the recession looks set to push collaboration to new levels.

While industrial R&D budgets may be feeling the pain, the worldwide recession has opened up new opportunities for external funding, particularly in light of the renewed focus on the value of a “digital economy” at both European and national levels.

In the UK for example, the Technology Strategy Board (TSB), which is a government body that promotes collaborative R&D and technology transfer, has made Digital Britain a core programme. £1m of feasibility projects on next-generation optical access are already underway, with the hope that these efforts can evolve into larger projects funded by the European Commission’s Framework 7 program or the proposed Photonics21 ERANET+ fund. In total £30m has been earmarked for Digital Britain themed research, which includes not just optical infrastructure but a range of related topics from internet security to new methods of content delivery over digital test-beds.

Clearly, co-operation between industry and academia will be an important source of technological progress in optical networking for the foreseeable future. And that’s why an event like ECOC, which brings the two worlds together with its technical conference and exhibition, should take on a new significance for all concerned.

Pauline Rigby is a science and technology writer specialising in optical communications, and former editor of FibreSystems Europe magazine.