Tiny mirrors to prevent Web from choking

Lucas van Grinsven, European technology correspondent

TEL AVIV: The Internet is growing so fast that scientists predict surging

demand will need traffic centers using microscopic halls of mirrors to bounce

light beams of data around the world.

But companies rushing to cash in must weigh up a spectrum of lightning-fast

solutions currently on offer, and specialists told a conference here that

research is moving so fast more options are coming to the fore.

As Internet traffic is transformed into bundles of multi-colored beams of

light that cross oceans through thousands of miles of optical fiber, there is a

growing need for super-fast connection points where these waves of light roll

in.

Without them, the Internet will choke.

Recent numbers show that the hunt is on for the latest optical technology,

mainly being developed in just two regions in the world: Israel and Silicon

Valley.

Of the 100 Israeli companies funded by venture capitalists this year, at

least 30 start-ups are in optical technology, according to Yigal Erlich of

Israel Venture Association.

A record $2.35 billion of venture capital was raised for Israeli high-tech

start-ups so far this year, mostly in optical networking. In the third quarter

alone, $600 million was raised for communications companies.

This was double the previous record of $300 million raised in one quarter,

then for Internet stocks.

Last week, three key players said they were expanding their investments in

Israel, or considering doing so. These are France's Alcatel, Germany's Siemens

AG and Canada-based JDS Uniphase.

"The two centers of optical technology development around the world are

on the West Coast of the US and in Israel," said Christian Gregoire,

vice-president, research and development, at France's telecom equipment maker

Alcatel.

Gregoire said this was the reason why he had been personally sifting through

the Israeli market since this summer.

Companies like Alcatel, but also rivals such as Lucent, Nortel and optical

equipment manufacturers such as JDS Uniphase, are craving for technology that

will allow them to keep up with the hyper growth of the Internet - and give them

a few months' lead over their rivals.

A collection of bottlenecks



Internet data traffic is doubling every three to four months as hundreds of
millions of people go online, but the infrastructure is not growing at the same

speed.

The capacity of a single optical fiber doubles only every 12 months, three to

four times slower than data traffic.

While this bottleneck can be solved by digging more cables into the ground,

it relays the problem to the next stage, the intersections where these fibers

come together.

Microelectronic chips in these traffic centers, which forward the data to the

next junction, double their speed at an even slower rate - every 18 months.

This shows that the Internet will come to a grinding halt unless new

technologies are introduced, Professor Aharan Agranat of Hebrew University says.

"Electronics will reach its limits," he said.

Instead of using microelectronic chips, which transform light into an

electronic signal and then back, optical chips simply mirror the light beams

into the right direction, which can be done in nanoseconds instead of

milliseconds.

"Photonic switching gives us the capacity we need," Alcatel's

Gregoire said.

The need for these new switches will create a big market in the very near

future.

The core optical switching market is projected to grow to $15 billion in

Europe and North America by 2004 from a mere $544 million in 2000.

Continued...

Stable growth opportunity



This is why Lucent agreed to pay $4.5 billion for two-year-old Israeli firm
Chromatis, which gave it the technology to boost the capacity of its metro

optical networks by four times, and bring it on par with its big rivals.

Just by having that technology, Lucent now expects to sell additional

equipment worth hundreds of millions of dollars.

Other Israeli start-ups, which have yet to float are Sapiens, Lynx Photonic,

Charlotte's Web, Chiaro, CyOptics and Trellis.

Investors believe the optical market offers a much more stable growth

opportunity than the hyped up Internet market.

"Optical is profound. Demand has just started to be felt. It will take

many years before the US and European infrastructures will be fitted out,"

John Powers, managing director at US investment bank Robertson Stephens, told

Reuters.

Eli Toker, general manager of optical networking at ECI Telecom, a provider

of network solutions, said: "This is the golden age of optics."

However, it is unclear which optical technology will win, said Dan Sadot,

scientist at Ben Gurion University in Jerusalem.

"There's no commercial solution in optical switching," he said,

adding this is why he had set up his own XLight Photonics.

Some five or six different technologies are being tried out. Much attention

has been paid to Micro-electro mechanical systems (MEMS) which put up

microscopic mirrors to direct light beams. Other solutions use bubbles to do the

same job.

Mind-boggling array



But Liquid Chrystals, Thermo-Optics, Holograms, Liquid Gratings and Acousto-Optics
are also among the mind-boggling array of optical switching technologies that

are being tested.

"Nobody is in a position to say what the heart of the optical switching

device will be," Alcatel's Gregoire said.

He added that this was the reason his company was teaming up with

Hewlett-Packard spin-off Agilent to test bubble technology, as well as working

with US-based OMM on MEMS-technology.

But research has already moved on to the next stage of even faster

transmission and some large equipment makers have set up shop in Israel and

Silicon Valley to stay close to the small communities of researchers there.

Siemens said last week it would invest directly in start-ups after having

previously invested via venture capitalists for the last two years.

The European technology director of Canada-based JDS Uniphase, Dutchman Wim

Nijman, told Reuters he was also scouting for new investment opportunities.

Alcatel is also very interested in partnership with Israeli companies and is

exploring possibilities of setting up an incubator fund, Gregoire told Reuters.

But violence and political instability in the region could prevent these

investments, he warned.

(C) Reuters Limited 2000.