One hundred and twenty five years ago in 1876, Alexander Graham Bell, invented the telephone. With this invention the communications industry originated. The following 125 years have seen an evolution of communication equipment, lead by Bell Laboratories, now the Research and Development department of Lucent Technologies. The three segments of this industry growing at the fastest pace include optical networking, wireless, and access equipment. This paper will analyze the optical networking segment in detail.
             Bell Laboratories first developed fiber optics in the 1970's. The equipment transforms electronic signals into light that is pulsated by lasers through fiber-optic cables, which consist of thin glass fibers. The first full-service fiber optic telephone system was located in Chicago during the late 1970's. Today, nearly all long distance traffic is carried through fiber-optic cables.
             The clear growth driver of the optical segment is dense wavelength division multiplexing (DWDM) systems. These systems are projected to grow between 50% and 60% in 2001. Breaking this down even farther finds growth projections of 56% for long-haul systems used to carry long-distance traffic. In metropolitan areas, which still remain a relatively untapped market, is expected to double the long-distance growth, with an increase of 117% this year.
             The most popular type of optical equipment currently available is referred to as OC-192. This equipment is capable of transmitting 10 gigabits per second. This speed is significantly faster than the OC-48 systems (2.5 gigabits per second), which were used up until the middle of last year. Lucent failed to see this change occurring and consequently became hampered with outdated inventory causing their loss of market share last year. The OC-192 should account for over 40% of transport revenue by year-end, compared to 32% last year.
             Despite the additional capacity generated ...