A Suppliers Perspective on BroadbandBy Donald R. Widener and Gerry Hubers, Murata Electronics North America
What's happened to the telecommunication market? Only a short time ago, what appeared to be a never-ending chain of opportunity has quickly become a quagmire of confusion and inventory at all levels throughout the supply chain. Although analysts have all made their own predictions when the technology sector will recover, no one can specifically pinpoint the specific time and place when this will happen. Even in an economic slow down, one known constant is that R&D will continue to move forward in preparation of the next technology and/or application breakthrough.
With the many competing wired and wireless technologies available to today's consumer marketplace, lower tier component suppliers are required to make strategic business decisions in order to best support these technologies. Success is very dependent upon the consumer adaptability, economic conditions, geography conditions, feasibility and availability. It is unlikely that each technology currently under development will be highly successful. Some may not survive and others will be only moderately successful in selected geographic locations.
At the core of each product is the individual components that join to comprise the complete design. The lack of any single component could ultimately determine the success or failure of that product's market acceptance. The continued development of key components is vital but frequently overlooked during the initial design stage. Understanding the importance of each application within a market is critical to ensure a company allocates resources accordingly to maximize return on investment.
Choosing a Successful Technology
In the real world of limited resources it is vitally important that component manufacturing companies make good decisions in how they choose what technologies have the best chance of success. An incorrect decision can affect an adequate return on investment. Valuable resources can be expended and components may be designed for a technology that never gains acceptance within the market.
The Broadband Access market in North America presents component manufacturers with a complex decision making process. The multiple competing technologies combined with the lack of similarity in the component parameters require suppliers to make decisions on focusing limited development resources. Five-year growth estimates in the Broadband Wireless Access market would appear to justify this allocation of resources.
Main technologies providing last mile broadband access to both business and consumer's are (but not limited to):
Fixed Wireless Access (FWA)
Local Multipoint Distribution Services (LMDS)
Multipoint Multichannel Distribution Services (MMDS)
Fiber to the Curb/Home/Neighborhood (FTTx).
The recent roller coaster ride in the telecommunication market calls for a thorough review of each broadband technology. This review is necessary to understand the possible or likely future direction by each technology. Global influences along with regional requirements must also be included as a part of this review process.
A good example of why this type of review is important is the success of cable modems within North America. The success of the cable modem market is tied to the proliferation of traditional cable to most North American urban households. Although successful in North America, cable modems would not likely be a viable option in other countries due to the lack of this existing cable infrastructure. Minus a good review process, a supplier to this market could become enamored with the overall success and not see through to a key root contribution. Attempting to believe this success possible to other countries where the supporting infrastructure is not in place is a formula for likely financial disaster.
The following matrix shows one of the decision-making tools used by Murata Electronics in studying the market.
The success of any single technology can also be extremely dependent upon the existence of supporting infrastructure.
In countries or rural areas where limited wired access is not available, the direction of adopting a wireless system represents the more adaptable and feasible solution such as MMDS or LMDS. Even though these applications were originally designed for outlying rural areas, companies are now focusing on urban areas due to the higher population densities. Using 2.6 GHz as the carrier frequency, MMDS has an extended coverage radius of approximately 50 kms per base station. With the wide coverage area, the infrastructure can be constructed fairly quickly at a reasonable cost. LMDS utilizes a much higher carrier frequency of 28 - 31 GHz and thereby limits the coverage radius between 2 - 5 kms. One of the main limitations of MMDS and LMDS is the need for line-of-sight requirements between transmitter and receiver. This however is difficult in a urban setting due to buildings and other large obstacles impeding the direct path which causes shadow signals. Provisions are currently under development to resolve these issues.
With LMDS and MMDS technologies located in a highly populated area, environmental concerns also arise as the need for an increase in the number of base stations is required. Prime location for towers is typically at the highest point within a geographic area. Zoning by-laws and individual awareness that towers may not be an attractive addition to their residential neighborhood is impacting new tower construction.
Looking forward to what is being touted as the ultimate in high-speed connection, fiber to the home/business (FTTx) continues to grow in popularity. New fiber installations continue to move forward bringing the Internet and other services into the home. Expansion is focused on new residential areas and the upgrading urban settings where trenching is allowed.
Demand for New Components
Development of these new technologies stimulate the need for new components. Many of these components are a derivative or sub-derivative of an existing product, however that was not always the case. Prior to the proliferation of today's cellular phone explosion, wireless component development was generally well planned and typically guided by the technology roadmaps established between the customer and component manufacturer. Since that time component development has increased at a faster rate then previously expected. Components are now 4 - 5 times smaller with performance levels that exceed those developed only a few years before.
Broadband applications are quickly becoming the base for next generation component development as application frequencies continue to increase and the demand for data throughput rises.
For any new component development, the criteria is frequently only a concept until many steps have been taken prior to final production. For non-existent components, manufacturers must develop their product well in advance of their customer's requirements. In many cases these components are defined and are often produced 12 - 18 months in advance to the end product release. This translates to a relatively short development time for the component manufacturer, as the end customer also requires time to define their requirements and design their own products.
With the increase of new technologies, weighing the cost and risk is important as each technology is only as good as its' consumers acceptance. Should a technology or end product not mature to market, a considerable amount of investment and engineering development time can be lost without realizing any financial reward.
Component Design Solutions
For many broadband applications, component manufacturers are able to provide multiple solutions for the same application. In the case of high frequency RF filters, Murata Electronics offers 3 different component solutions, SAW Filters, LC Filters, and Monoblock Filters (GigaFil). Each of these component technologies have their own distinct advantages and should be reviewed in detail. Comparison of these different technologies allows the individual designer to determine the correct features and performance requirements that will meet the design criteria.
Increasing the complexity of these designs through component integration has also been a key technology driver for the component manufacturer. Combining multiple chips (i.e.: capacitors, resistors, inductors, etc.) into a single package quickly advances technology that was once non-existent. Although more design intensive from the component manufacturers perspective, this form of integration can contribute to the reduction of the end products design time with the possibility of reducing the users overall cost. Another component solution being offered by component manufacturers is an offering a complete functional module design. Often a functional module is designed for a specific application. (i.e.: xDSL power amplifier module) where the end customer relies heavily on the component manufacturer for engineering expertise. This eliminates the engineering burden of the user and offers a quick and economical "Plug & Go" solution for the customer.
From a component supplier viewpoint, it's imperative to continuously monitor the market status of each technology, both from a macro perspective and micro perspective. The telecommunications market is very dynamic and constantly evolving. One technology can quickly become the de facto standard and thereby eliminate multiple competing technologies.
Although only a few broadband applications have been outlined, many more exist. Companies attempting to bring forth the next niche product or main stream technology, continue to focus heavily on R&D. Success of a single company is seldom possible without solid relationships with other companies. A clear understanding of each organization's capabilities through Early Supplier Involvement (ESI) has become increasingly important to exchange ideas and mutual technological interests. This could include reducing design cycle times, shared decision making processes and new product development requirements. Whether requests for smaller packages, improved performance, component integration or new module designs, exchange of this type information is important as part of the relationship.
Return on investment still represents a key focus at all stages of the development cycle, starting with the lower tier component supplier through to the end product manufacturer.
Looking back at the history of the telecommunications market can assure us of several things. First, we can trust in a strong recovery to the current downturn in the market. The recent peak to valley experience is nothing new to this market. Second, we can be sure that technology will continue to evolve at a rapid pace in spite of economic fluctuations. Finally, history shows us that the most successful companies use these down periods as a tempering process and the changes that occur ultimately help in long term successes.
One of the most valuable things we can learn from the market is that the long-term success of technologies, developers, manufacturers and suppliers is strongly tied. Companies cannot work in a vacuum in this evolving market and expect favorable results. It is imperative that information sharing takes a stronger place in designer/manufacturer/supplier relationships in a market where rapid evolution and multiple competing technologies exist.
Donald Widener (email@example.com) is the Market Segment Manager for the Communications II Market and Gerry Hubers (firstname.lastname@example.org) is the Market Segment Manager for Computer and Multi-Media Markets for Murata Electronics North America.