Omdia’s view: 400G is ready as a carrier service

The latest report from market research firm Omdia says that 400G as an operator service is quietly gaining momentum and is gradually evolving into a mild industry boom.

In November 2019, AT&T launched 400G network connectivity. AT&T noted that this was beyond the scope of a proof of concept and was a major upgrade to its existing network. Its 400G connection was achieved on a long-distance network between Dallas and Atlanta. In April 2020, Windstream announced the successful completion of a 400G trial of long-haul (LR) client optics. This LR optic can support 10 km of coverage, providing greater flexibility for interconnection between client routers and transmission systems. Although Windstream's announcement is just a trial, they hope to discuss the deployment of end-to-end 400G services with customers.

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Stepping back, the number of carrier services currently offering 100G as a service is growing in the market. 100G is primarily targeted at high-bandwidth wholesale services to carriers and cloud providers. 100G as a service is also being used for high-end retail applications in enterprise verticals such as the financial industry. 100G services are "boutique" compared to lower-speed, mass-market branch office services. The key enabler for 100G services is the global upgrade of the optical core. As the optical core has scaled to multi-terabit levels, 100G as a service has become viable. Ecosystem and cost per bit are the initial controlling factors that must be overcome. Core and edge routers are starting to deliver 100G clients at scale. 100G as a service must compete and beat existing service offerings on price.

Who will be the potential buyers of 400G as a service for operators? Intuitively, these buyers may be the same organizations that have already deployed 100G in large quantities, noted Ian Redpath, chief analyst for optical networks and optical devices at Omdia. Cloud providers are actively seeking to transition from a 100G-centric infrastructure to a fully operational 400G-centric infrastructure. Cloud providers have a large scale of optical network deployment: optical fiber inside the data center connects the vast server infrastructure to the vast metropolitan area network and long-haul network, and the global submarine optical network connects its global data centers. The push for technology continues, but it will depend on the entire ecosystem and economic factors. If the main elements do not surpass previous generations of technology in terms of cost per bit, then the deployment will be more experimental rather than large-scale deployment. The industry is making progress in the scale deployment of 400G/600G/800G metropolitan area network, long-haul network and submarine network. WAN upgrades to 400G and above optical networks are still in the early stages of a multi-year deployment cycle. As more and more of the latest generation networks are in place, the market opportunity for 400G services is also growing. The financial industry will also be an early adopter due to its in-house technical expertise and strong financial resources to support technological upgrades.

Finally, 400G as a service will continue to evolve like previous generations of services. There will likely be a "technical prowess" phase in the future, with major operators entering the market first. Operators will likely take a success-based approach, upgrading networks where anchor buyers have committed to point-to-point routing, and then gradually progress to full networks, increasing network effects. If the entire ecosystem is upgraded gradually, we will achieve a large-scale mass market for 400G in time.