Optical Transport Market
Goldman Sachs report: Optical Networking is the next mega trend in AI infrastructure
Goldman Sachs analysts forecast a $154billion opportunity in optical networking driven by skyrocketing capacity demands from hyperscale cloud and AI workloads. Carriers and vendors are integrating 10GbE edge networking and AI-RAN (Artificial Intelligence Radio Access Network) trials on live 5G networks.
Goldman argues that AI infrastructure is creating a networking bottleneck phase, where optical interconnects become essential to connect more chips, keep latency low, and let AI clusters scale efficiently. The total optical networking market forecast 9x increase to $154 billion is due to both scale-up and scale-out AI data center architectures grow.
AI compute gains are no longer just about faster GPU and HBM chips; they depend on moving data fast enough between chips, racks, and super-nodes. Goldman Sachs emphasizes that networking now “unlocks computing capability” by enabling seamless exchange across multiple AI chips, which is exactly where copper-based links start to fall short. That makes fiber-optic connectivity, pluggable optics, and co-packaged optics central to the next phase of AI build-out. The report splits opportunity across scale-up and scale-out networking, plus component categories such as copper cables, pluggable optical modules, CPO, and PCB midplanes.
External coverage of this report says Goldman Sachs sees scale-up as the larger pool, about $106 billion or 69% of the $154 billion TAM, while CPO could represent about $91 billion or 59% of the total, assuming 29% penetration in scale-out networking. In practical terms, the report is signaling that the highest-value optical opportunity sits inside tightly coupled AI systems, not just in long-haul or metro transport.
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Goldman projects the following:
- Dollar content increase by 16x / 45x in Scale Out / Scale Up per computing unit from GB300 NVL72 (per computing unit means 72 GPUs per rack to reach NVL72) to Rubin Ultra NVL576 (per computing unit means 72 GPUs per rack, and 8 racks together to reach NVL576), with opportunities across pluggable optical modules, optical engines in CPO, copper cables, and PCB midplanes.
- A 13x larger addressable market for optical modules / optical engines expanding from scale out (e.g. GB300 NVL72) to scale up (e.g. Nvidia Rubin Ultra [1.] NVL576 level 2 scale up via CPO) per computing unit. n
- A 10x larger value market for pluggable optical modules in scale out per computing unit from GB300 NVL72 to Rubin Ultra NVL576, even with a 29% CPO penetration rate. The numbers of pluggable optical module (1.6T equivalent) per computing unit would increase from 216 units in GB300 NVL72 to 2.5k units in Rubin Ultra NVL576.
Note 1. Nvidia Rubin Ultra is a flagship, next-generation AI and high-performance computing (HPC) processor succeeding the standard Rubin architecture. Scheduled to debut in late 2027, it utilizes massive multi-die chiplet designs and unprecedented memory configurations to power the next wave of generative and agentic AI.
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Market Forecasts:
The investment bank expects the aggregate dollar content per computing unit across scale up and scale out to increase by 29x from US$315k in GB300 NVL72 to US$9.4bn in Rubin Ultra NVL576, and assuming the numbers of racks through the full product cycle are 48k racks for GB300 NVL72, and 16.5k computing units for Rubin Ultra NVL576, the aggregate value TAM across scale up and scale out would increase by 9x from US$15bn in GB300 NVL72 (mainly in 2026) to US$154bn in Rubin Ultra NVL576 (mainly in 2028).
Among the US$154bn value TAM, 69% goes to scale up, or US$106bn, and CPO contributes US$91bn, or 59% of the US$154bn value TAM, assuming CPO at 29% penetration rate in scale out.
For network architects, the important takeaway is that AI clusters are becoming optics-heavy at more layers of the network stack, not just at the edge of the rack. The likely winners are suppliers that can reduce power, improve density, and simplify packaging for very high-bandwidth links, especially around CPO and advanced pluggables. This is less a story about traditional telecom optics and more about datacenter interconnects optimized for GPU fabrics and AI training/inference throughput.
The most consistently cited “top beneficiaries” are Coherent, Lumentum, and Fabrinet. These companies sit close to the core optical component modules and manufacturing layers that scale with higher AI interconnect demand. That makes them the most straightforward proxies for the forecasted optics expansion. The report’s thesis favors companies with strong exposure to high-end optical transport, coherent optics, and data-center interconnect rather than the broader optical networking/PON equipment companies like Ciena, Nokia/Infinera, Cisco/Acacia, ADVA, or Calix.
Conclusions:
Strategically, Goldman Sachs maintains that optical networking is no longer a niche enabling layer; it is becoming a core enabler of AI capex scaling. That shifts investor attention toward optical component vendors, silicon photonics, transceiver suppliers, and adjacent packaging ecosystems. The report’s core message is simple: as AI clusters grow, the network fabric becomes a first-order constraint, and optics are the most likely answer.
References:
2026 Fiber Connect Keynote: “The Future of Fiber Optics: AI and the Quantum”
How will fiber and equipment vendors meet the increased demand for fiber optics in 2026 due to AI data center buildouts?
Big Fiber’s $250M financing deal to buildout dark fiber routes for AI Data Center expansion
Analysis: Fiber Broadband Association (FBA) whitepaper: Upgrading MSO Networks to Fiber to the Home (FTTH): A Technical Perspective
Fiber Optic Boost: Corning and Meta in multiyear $6 billion deal to accelerate U.S data center buildout
Fiber Optic Networks & Subsea Cable Systems as the foundation for AI and Cloud services
AI infrastructure investments drive demand for Ciena’s products including 800G coherent optics
DriveNets and Ciena Complete Joint Testing of 400G ZR/ZR+ optics for Network Cloud Platform
Analysis: Nokia’s strong growth in Optical Networks and AI network infrastructure
Executive Summary:
While Nokia’s first-quarter profitability improved across all reported metrics, year-over-year comparisons were significantly affected by a €120 million ($140 million) non-recurring charge recorded in the Mobile Networks business in the prior-year period. On a comparable basis, net profit increased 93% to approximately €295 million ($345 million). Despite ongoing cost restructuring initiatives, the company’s comparable operating margin remained at 6.2%, well below the ~11% levels observed in the corresponding quarters of 2021 and 2022, indicating continued margin compression relative to earlier cycle peaks.
Optical networking has emerged as Nokia’s primary growth engine, significantly outpacing the company’s overall performance. At the group level, Nokia reported first-quarter comparable revenue growth of 3% year-over-year (4% in constant currency) to €4.5 billion ($5.3 billion). The acquisition of Infinera, which was completed in March last year, surely helped. As did massive investments by AI data center companies because Nokia’s optical gear is used for both intra and inter data center connectivity.
The company said Thursday that first-quarter sales of optical network infrastructure rose 12% on year, driven by demand from AI and cloud customers in the Americas. It booked 1 billion euros ($1.17 billion) of orders from AI & Cloud customers in the quarter and now sees overall sales in the network infrastructure business growing 12%-14% this year, having previously expected 6%-8%. The company had previously announced it was investing in additional manufacturing capacity to support growth and maximize the opportunity in this accelerating market.
When Nokia held its capital markets day last November, the company expecting hyperscalers to invest about $540 billion in total capital expenditure this year. That number has now been raised to more than $700 billion, Nokia CEO Justin Hotard told reporters. As part of that flows into Nokia’s order book, first-quarter optical sales grew 56% year-over-year, to €821 million (US$959 million).
Image Credits: NOKIA
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Performance across segments remains uneven. Key drags included the fixed broadband segment within Network Infrastructure (NI)—which also encompasses optical—as well as the Mobile Networks (MN) radio access business. Despite these headwinds, CEO Justin Hotard is positioning NI, particularly its optical and IP routing units, as the core drivers of near-term growth. The company has raised its full-year NI growth outlook to 12–14%, up from the 6–8% range communicated in January, reflecting stronger momentum in high-capacity transport and IP networking demand.
Nokia is also guiding for full-year comparable operating profit in the range of €2.0–2.5 billion ($2.3–2.9 billion). At the midpoint, this would represent approximately 11% year-over-year growth relative to 2025, indicating improving operational leverage as higher-growth segments scale. The strongest momentum remains in optical and IP networking, while the legacy radio access business is still working through margin pressure, mix shifts, and the higher capital intensity of next-generation RAN evolution.
Within this context, the Mobile Infrastructure (MI) segment remains the principal source of performance uncertainty. Following internal reorganization, the “radio networks” unit—comprising the majority of the former Mobile Networks business—accounts for 63% of MI revenue. While constant-currency performance was broadly stable, reported radio networks revenue declined 5% year-over-year to €1.58 billion ($1.85 billion), contributing to a 3% decline in total MI revenue to approximately €2.5 billion.
Segment-level profitability metrics require careful normalization. MI reported operating profit of €222 million ($259 million), representing a 68% year-over-year increase. However, adjusting for the absence of the prior-year €120 million charge, operating profit would have declined by approximately 12%. On a normalized basis, operating margin would have decreased from ~9.8% to ~8.9%, rather than increasing from the reported 5.1%, indicating underlying margin pressure in the radio access portfolio.
Additional analytical complexity arises from the inclusion of Nokia Technologies within MI reporting. This licensing-driven business has historically exhibited operating margins exceeding 70%. Assuming a comparable margin profile in the current quarter, its implied operating contribution (~€270 million / $316 million) exceeds the total reported MI operating profit. This suggests that the combined radio networks and associated software activities may be operating at or near breakeven when disaggregated from licensing revenues, highlighting the importance of segment-level transparency in assessing the underlying economic performance of Nokia’s RAN portfolio.
A restructuring program, initiated under Pekka Lundmark and continued by CEO Justin Hotard, is designed to deliver approximately €1.2 billion ($1.4 billion) in annualized cost savings by the end of 2026. This is primarily driven by a planned reduction of approximately 14,000 positions from a September 2023 baseline of ~84,000 employees (excluding subsequently divested businesses). As of year-end 2025, Nokia reported 74,100 employees, excluding Infinera, implying that the majority of targeted reductions have been completed and that approximately 4,000 additional reductions remain. Management has indicated that future efficiency gains are expected to be incremental rather than driven by further large-scale restructuring.
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Analysis:
From a systems perspective, the key signal is that transport and aggregation layers are gaining strategic weight relative to the traditional macro-RAN hardware layer. Optical growth reflects the continued densification of metro and backbone networks, driven by higher east-west traffic, AI and cloud interconnect demand, and the need for lower-latency transport to support distributed radio and edge workloads. That makes optical and IP less of a “supporting cast” and more of the enabling fabric for cloudified telecom architectures.
The RAN market is moving toward software-defined, cloud-native, and increasingly AI-assisted architectures, which raises the bar for vendor differentiation. Nokia has been emphasizing AI-RAN and anyRAN work with NVIDIA and operators including BT, NTT Docomo, T-Mobile, and others, positioning itself around AI-for-RAN, AI-on-RAN, and AI-and-RAN use cases. Architecturally, this suggests the company is trying to move beyond a pure radio-box supplier model toward a compute-centric platform strategy tied to 5G-Advanced and AI-native 6G.
This transition intensifies competition with vendors pursuing virtualized RAN, Open RAN, and multi-vendor disaggregation strategies. In that environment, the critical battleground shifts from integrated proprietary base stations to software portability, orchestration, open interfaces, cloud infrastructure integration, and accelerator support. For Nokia, the commercial challenge is that the economics of vRAN and AI-RAN depend not only on technical readiness, but also on whether operators can justify new compute and orchestration layers without eroding total cost of ownership.
The broader networking trend is convergence between mobile, optical, IP, and cloud infrastructure. The same traffic growth that pressures RAN capacity also increases demand for optical transport, IP routing, and security-aware automation across the transport and service layers. In that sense, Nokia’s segment mix highlights a wider industry direction: radio access is becoming only one part of a larger distributed compute and transport system, rather than the dominant center of gravity.
In conclusion, Nokia is benefiting as telecom architecture is becoming more horizontal and software-driven, while still facing friction in the vertically integrated legacy RAN model. Optical and IP are scaling nicely with increased high speed data center traffic; RAN is being redefined by cloud (vRAN), AI, and disaggregation; and the vendor that can best align silicon, software, orchestration, and transport will be better positioned for 5G-Advanced and early 6G/IMT 2030 transitions.
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References:
https://www.nokia.com/about-us/investors/results-reports/
Nokia in major pivot from traditional telecom to AI, cloud infrastructure, data center networking and 6G
Nokia’s AI Applications Study: “Physical AI” may require RAN redesign to support high‑volume, low‑latency uplink traffic
Nokia to showcase agentic AI network slicing; Ericsson partners with Ookla to measure 5G network slicing performance
Australia’s NBN and Nokia demonstrate multi-generation optical technologies concurrently over existing FTTP infrastructure
China’s telecom industry rapid growth in 2025 eludes Nokia and Ericsson as sales collapse
Dell’Oro: Analysis of the Nokia-NVIDIA-partnership on AI RAN
Indosat Ooredoo Hutchison, Nokia and Nvidia AI-RAN research center in Indonesia amongst telco skepticism
Nokia Bell Labs and KDDI Research partner for 6G energy efficiency and network resiliency
Fiber Broadband Association Middle Mile WG: how to use “Digital Infrastructure Networks” for coordinated fiber backbone investments
The Fiber Broadband Association (FBA) today released guidance from its Middle Mile Working Group (WG) which outlines how states can strengthen digital infrastructure through coordinated fiber backbone investment. Fiber is the foundation of AI, powering the high-capacity, low-latency, secure connectivity that links data centers, cloud infrastructure, and the communities that depend on them. To meet rising national demand, the U.S. must scale fiber deployment 2.3x by 2029. This goal requires accelerated infrastructure builds and strong coordination among states, utilities, and industry partners.
Digital Infrastructure Networks are strategic fiber optic systems that connect the core internet backbone to last-mile broadband providers. By strengthening these middle-mile connections, states can reduce the cost of broadband deployment, improve network resiliency, and expand connectivity to unserved and underserved communities.
“Middle-mile infrastructure is what allows broadband networks to scale,” said Sachin Gupta, Chair of the Middle Mile Working Group and Vice President of Business and Technology Strategies at Centranet. “When high-capacity fiber backbones are located closer to underserved communities, providers can extend last-mile networks more affordably, reach more locations, operate more efficiently, and better serve communities across the state.”
Among the recommendations:
- Coordinate infrastructure projects across agencies to streamline deployment and reduce unnecessary construction
- Implement “dig once” policies that install conduit or fiber whenever roads or utility corridors are opened for construction
- Leverage state-owned assets, including rights-of-way, existing fiber routes, and utility infrastructure
- Modernize permitting and coordination processes to accelerate broadband builds
FBA will further explore these strategies during two Middle Mile Working Group breakout sessions at Fiber Connect 2026, taking place Tuesday morning. The sessions include:
- Rural Collaboration, Infrastructure Planning, and Sustaining Affordable, High-Performance Middle Mile Broadband
- Unlocking New Middle Mile Opportunities for ISPs and Community Networks
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Technical Topology: The DWDM Advantage:
- Massive Spectral Efficiency: Multiplexing up to 96+ channels onto a single fiber, with each wavelength supporting 100G, 400G, or 800G data rates.
- Scalable Architecture: Capacity can be increased incrementally by lighting new wavelengths without forklift upgrades or additional trenching.
- Resilient Topologies:
- Ring Networks: Often preferred for regional backhaul, utilizing Optical Add/Drop Multiplexers (OADMs) to provide self-healing 1+1 protection and sub-50ms failover.
- Mesh Networks: The gold standard for reliability, offering multiple diverse paths to ensure uptime even during multiple fiber cuts.
- Long-Haul Performance: Utilizing Erbium-Doped Fiber Amplifiers (EDFAs) and Raman amplification to maintain signal integrity over spans exceeding 1,000 km without electronic regeneration.
References:
Learn more; fiberconnect.fiberbroadband.org. Learn more about FBA’s research here or subscribe to FBA’s Fiber Forward Weekly newsletter here to stay updated.
Digital Infrastructure Networks: Meeting the Broadband Challenge for State Governments
Australia’s NBN and Nokia demonstrate multi-generation optical technologies concurrently over existing FTTP infrastructure
Automating Fiber Testing in the Last Mile: An Experiment from the Field
U.S. fiber rollouts now pass ~52% of homes and businesses but are still far behind HFC
Highlights of FiberConnect 2024: PON-related products dominate
Fiber Broadband Association: 1.4M Fiber Miles Needed for 5G in Top 25 U.S. Metros
AT&T expands its fiber-optic network amid slowdown in mobile subscriber growth
STL completes successful Multi-Core Fiber (MCF) trial with Colt in London, UK
India based STL, a global provider of optical and digital connectivity solutions for AI-era networks, has completed multi-core fiber (MCF) field trials with Colt Technology Services on Colt’s London metro optical network. The trial is a meaningful proof point for space-division multiplexing (SDM) in carrier environments, demonstrating that MCF can lift per-fiber strand capacity while staying within existing civil and duct constraints and improving overall network energy and cost metrics.
The deployment used STL’s Multiverse™ four-core MCF, designed with the same 125 µm cladding diameter as conventional single-mode fibre (SMF) and a 250/200 µm coating, enabling seamless handling with existing cable designs and installation practices. The trial route connected two Colt Points of Presence (PoPs) on the London metro network over spans of approximately 9 km and 63 km, representing both short-haul metro and longer metro-regional use cases.
From a transmission standpoint, the network achieved an 800 Gbps line rate with service validation for 100GE and 400GE, aligning with current high-capacity router and data-centre interconnect interfaces. STL and Colt validated performance across a broad set of optical and system parameters, including chromatic dispersion (CD), polarization mode dispersion (PMD), inter-core crosstalk, throughput, fault behavior, OTDR signatures, insertion loss, and optical return loss (ORL), with results within expected design envelopes. This indicates that Multiverse™ MCF can be engineered and operated to comparable performance baselines as legacy SMF while delivering higher spatial capacity.
Architecturally, STL’s MCF platform integrates four independent cores within a standard SMF cladding profile, effectively multiplying per-fibre capacity without increasing cable diameter. For operators, this directly addresses constraints in congested metro ducts, legacy civil infrastructure, and brownfield routes where augmenting capacity by pulling additional cables is either cost-prohibitive or operationally disruptive. In these scenarios, MCF creates a higher bit-per-mm² and bit-per-duct investment profile, improving both capex efficiency (less civil work, fewer ducts) and opex metrics such as energy per transported bit.
STL positions itself as one of the early movers in taking MCF from controlled lab demonstrations into operational networks, including buried and ducted plant, backed by a full ecosystem spanning fibre, cable, and connectivity hardware through its Optotec portfolio. Coupled with STL’s broader focus on AI-ready optical infrastructure and 5G-ready digital network solutions, the Colt trial underlines a practical migration path for carriers looking to future-proof metro and data-centre interconnect footprints against emerging AI, cloud, and 5G traffic patterns without wholesale rebuilds of underlying passive infrastructure.
“As network demand accelerates, customers are looking for more bandwidth without sacrificing security, performance, or sustainability,” said Buddy Bayer, Chief Operating Officer, Colt Technology Services. “At Colt, we continue to push optical networking forward, and this pilot represents an important step in Europe and the USA. It reflects our focus on building scalable networks that deliver growth in capacity without increasing environmental impact.”
Dr Badri Gomatam, CTO, STL, said the trial highlights the value of joint innovation in advancing optical infrastructure. “Collaborations like this speed up adoption of next-generation connectivity technologies. STL’s Multiverse MCF portfolio is designed for the high-density, ultra-low latency, and resilient connectivity requirements of AI, hyperscale cloud, and future digital platforms globally,” he said. STL stated that the trial results strengthen confidence in MCF as a viable technology for the growing bandwidth requirements driven by AI workloads, cloud scale-out, and new digital services.
“As network demand accelerates, customers are looking for more bandwidth without sacrificing security, performance, or sustainability,” said Buddy Bayer, Chief Operating Officer, Colt Technology Services. “At Colt, we continue to push optical networking forward, and this pilot represents an important step in Europe and the USA. It reflects our focus on building scalable networks that deliver growth in capacity without increasing environmental impact.”
Dr Badri Gomatam, CTO, STL, said the trial highlights the value of joint innovation in advancing optical infrastructure. “Collaborations like this speed up adoption of next-generation connectivity technologies. STL’s Multiverse MCF portfolio is designed for the high-density, ultra-low latency, and resilient connectivity requirements of AI, hyperscale cloud, and future digital platforms globally,” he said. STL stated that the trial results strengthen confidence in MCF as a viable technology for the growing bandwidth requirements driven by AI workloads, cloud scale-out, and new digital services.
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About STL-– Sterlite Technologies Ltd:
STL is a global provider of advanced connectivity solutions, offering end-to-end products and services for building AI-ready networks across FTTx, rural broadband, enterprise, and data centres. With manufacturing operations in North America, Europe, and Asia, STL supplies connectivity solutions in more than 100 countries and works with telecom operators, cloud and data center companies, internet service providers, and large enterprises to build future-ready AI digital infrastructure.
On January 23, 2026, STL reported continued sequential improvement in Operational EBITDA margin for the fifth consecutive quarter, driven by a higher-margin product mix and increased contribution from the US market. With the US–India Bilateral Trade Agreement under advanced discussion, STL remains well-positioned to leverage emerging opportunities by offering reliable, high-quality solutions for building AI-ready digital infrastructure.
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References:
https://www.intechopen.com/chapters/78908
How will fiber and equipment vendors meet the increased demand for fiber optics in 2026 due to AI data center buildouts?
Big tech spending on AI data centers and
AT&T sets 1.6 Tbps long distance speed record on its white box based fiber optic network
Dell’Oro: Optical Transport Systems market +15% year-over-year in 3Q2025 driven by Cloud Service Providers
Dell’Oro Group recently published its 3Q25 Optical Transport report, highlighting continued strength in the market as demand accelerates across customer segments and technology areas. Below is a summary of the key findings from this latest research.
The Optical Transport Systems market increased by 15% year-over-year (Y/Y) in 3Q2025, driven by robust demand across all major customer groups and technology segments. The most significant growth was seen in Cloud Service Providers (CSPs) which grew +58% Y/Y and the DWDM Long Haul segment which grew +24% Y/Y. Direct sales for data center interconnect (DCI) continued to be the driving application for optical transport equipment sales, growing 34% Y/Y. Non-DCI also performed well, rising 7% Y/Y, driven by increased spending by communication service providers (CSPs).
In the first nine months of 2025, two vendors—Ciena and Nokia—gained more than one percentage point of market share. Other vendors that gained some market share included 1Finity, Adtran, Cisco, and Smartoptics. Note that Nokia acquired Infinera -a fiber optic equipment company on February 28, 2025.
Image Source: Jimmy Yu, Dell’Oro Group
The Dell’Oro Group Optical Transport Quarterly Report offers complete, in-depth coverage of the market with tables covering manufacturers’ revenue, average selling prices, and unit shipments (by speed up to 1.6 Tbps). The report tracks DWDM long haul, WDM metro, multiservice multiplexers (SONET/SDH), data center interconnect (metro and long haul), disaggregated WDM systems, and IPoDWDM ZR/ZR+ Optics. To purchase this report, please contact us at [email protected].
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Backgrounder:
- Optical Transceivers: Convert electrical signals into optical signals for transmission over fibers, and vice versa, at the endpoints of a link.
- Wavelength Division Multiplexers (WDM/DWDM): Devices that combine multiple optical signals (each on a different wavelength) into a single fiber for transmission, and separate them at the receiving end, maximizing fiber capacity.
- Optical Add/Drop Multiplexers (OADMs): Allow specific wavelengths (channels) to be added or removed from a fiber link at intermediate points in the network without interrupting the other channels.
- Optical Cross-Connects (OXCs) / Optical Switches: Used to route optical signals from one incoming fiber to a different outgoing fiber in the optical domain, often used in core networks.
- Regenerators / Optical Amplifiers (EDFAs): Used to amplify or regenerate optical signals over long distances to maintain signal strength and quality.
- OTN Terminal Equipment / Muxponders & Transponders: These devices package client signals (like Ethernet, Fibre Channel, or even SONET/SDH signals) into the standard OTN frame format (ITU G.709) for efficient transport.
- SONET/SDH: These are legacy, connection-oriented, circuit-switched technologies originally designed for carrying voice traffic in North America (SONET) and globally (SDH). They operate at the physical layer (Layer 1) and use Time Division Multiplexing (TDM).
- Usage: They are still widely deployed in existing network infrastructure, especially where high reliability and stringent latency requirements for legacy TDM services are necessary.
- OTN: OTN (ITU-T G.709 standard) is the modern successor, designed to combine the management and protection capabilities of SONET/SDH with the bandwidth efficiency of WDM.
- Usage: OTN has largely replaced SONET/SDH in new core and metro networks due to its ability to transparently carry multiple types of traffic (Ethernet, IP, Fibre Channel, and SONET/SDH frames) over a single, high-capacity infrastructure. It offers enhanced performance monitoring, Forward Error Correction (FEC) for longer reach, and greater scalability.
- Huawei has consistently maintained a leading position in the global optical networking market.
- Ciena is a major leader, particularly in North America (holding nearly 50% share in the U.S. market) and among cloud providers, benefiting from strong demand for its WaveLogic 6e and 400ZR/ZR+ solutions.
- Nokia has significantly strengthened its position, becoming the second-largest optical networking vendor globally (with approximately 20% market share) following its acquisition of Infinera in February 2025. The combined company saw substantial growth in revenue from cloud customers.
- Cisco saw a 31% increase in revenue from cloud operators in Q2 2025, a key driver of market growth.
- ZTE and FiberHome are also among the top six, often noted for their competitive solutions in global and emerging markets.
- Excluding sales into China, the leading vendors are Ciena, Huawei, Nokia, Infinera (now part of Nokia), and Fujitsu, accounting for around 80% of that specific market segment.
References:
Optical Transport Market Surges 15% in 3Q25, According to Dell’Oro Group
Dell’Oro: Optical Transport market to hit $17B by 2027; Lumen Technologies 400G wavelength market
LightCounting: Q1 2024 Optical Network Equipment market split between telecoms (-) and hyperscalers (+)
Highlights of LightCounting’s December 2023 Quarterly Market Update on Optical Networking
Dell’Oro: Optical Transport Market Down 2% in 1st 9 Months of 2021
Dell’Oro: Optical Transport Equipment Market Stagnant in 1Q 2021; Jimmy Yu’s Take
Dell’ Oro: Huawei still top telecom equipment supplier; optical transport market +1% in 2020
AI infrastructure investments drive demand for Ciena’s products including 800G coherent optics
Artificial Intelligence (AI) infrastructure investments are starting to shift toward networks needed to support the technology, rather than focusing exclusively on computing and power, according to Ciena Chief Executive Gary Smith. The trends helped Ciena swing to a profit and post a 24% jump in sales in the recent quarter.
The company enables high-speed fiber optic connectivity for telecommunications and data centers, helping hyper-scalers such as Amazon and Microsoft support AI initiatives via data center interconnects and intra-data center networking. Currently, the company is ramping up production to meet surging demand fueled by cloud and AI investments.
“There’s no point in investing in these massive amounts of GPUs if we’re going to strand it because we didn’t invest in the network,” Smith said Thursday.
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Ciena sees a bright future in 800G coherent optics that can accommodate AI traffic. Smith said a global cloud provider has selected Ciena’s coherent 800-gig pluggable modules and Reconfigurable Line System (RLS) photonics for investing in geographically distributed, regional GPU clusters. “With our coherent optical technology ideally suited for this type of connectivity, we expect to see more of these opportunities emerge as cloud providers evolve their data center network architectures to support their AI strategies,” he added.
It’s still early innings for 800G adoption, but demand is climbing due to AI and cloud connectivity. Vertical Systems Group expects to see “a measurable increase” in 800G installations this year. Dell’Oro optical networking analyst Jimmy Yu noted on LinkedIn Ciena’s data center interconnect win is the first he’s heard of that involves connecting GPU clusters across 100+ kilometer spans. “It was a hot topic of discussion for nearly 2 years. It is now going to start,” Yu said.
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Ciena’s future growth opportunities include network service and cloud service providers as well as ODM/OEM sales of optical components.
References:
https://www.wsj.com/business/earnings/ciena-swings-to-profit-as-ai-investments-drive-demand-0195f30c
https://investor.ciena.com/static-files/d964ccac-74b3-43d9-a73e-ecf67fab6060
https://www.fierce-network.com/broadband/ciena-now-expects-tariff-costs-10m-quarter
Lumen and Ciena Transmit 1.2 Tbps Wavelength Service Across 3,050 Kilometers
Lumen and Ciena have teamed up for a significant new network trial. They have successfully demonstrated a 1.2Tbps wavelength spanning 3,050k m (more than 1,800 miles) on Lumen’s Ultra-Low-Loss (ULL) fiber network, making it the world’s longest 1.2 terabit non-regenerated signal. The trial leveraged Ciena’s WL6e technology over a 6500 photonic line system and Lumen’s fiber network between Denver and Dallas. They also used 800Gbps routing technology from Juniper’s PTX Series to establish Ethernet and IP services. Lumen’s 400G-enabled network already spans over 78,000 route miles, and the company continues to invest in next-generation fiber to enhance its Ultra-Low Loss (ULL) fiber network, the largest in North America.
Using 800G interfaces, Lumen and Ciena successfully tested and qualified the services to support wavelength, Ethernet, and IP services over the 1.2 Tbps single carrier channel. The live network trial from Denver to Dallas used Ciena’s latest WaveLogic 6 Extreme (WL6e) technology equipped in the Waveserver platform running over a 6500 photonic line system.
“1.2 terabits per second isn’t just about incredible speed and long distances, it’s about the value of enabling the next wave of digital transformation. Lumen is at the forefront of building a next-generation network designed to handle the explosive growth of AI and cloud workloads,” said Dave Ward, Lumen’s chief technology and product officer. “Our investment in increased capacity, powered by Ciena’s WaveLogic 6 technology, provides our hyperscale cloud partners and enterprises with the ultra-high-capacity connectivity needed to scale their AI and cloud applications. With 400G connectivity speeds today and a seamless upgrade path to 1.2 terabits, Lumen stands as the trusted network for AI.”
The trial also showcased the impressive performance and seamless interoperability between Ciena’s Waveserver platform and the Juniper PTX10002-36QDD Packet Transport Router at 800 Gbps over the ultra-long-haul 1.2 Tbps intercity network. By leveraging the performance, flexibility and scalability of the Juniper PTX Series Routers, Lumen successfully established Ethernet and IP services with minimal latency and zero packet loss throughout the tests.
Editor’s Note:
While the companies March 27th joint press release stated the 1.2T bps wavelength transport was a record, AT&T claimed two weeks earlier that it “achieved a long distance world record top speed of 1.6Tb/s over a single wavelength across 296 km of its long haul fiber optic network.” We reported that in this IEEE Techblog post. So yes, it’s a record considering the Lumen network wavelength distance was > 10 times that claimed by AT&T.
Faster connections up to 1.2 Tbps wavelengths means less lag, more capacity and the flexibility to handle the most data-hungry applications across multiple industries:
- AI & Machine Learning
- Hyperscale Cloud & Data Center Interconnects
- Financial Trading and Market Data Transport
- Cybersecurity & AI-powered Threat Intelligence
- Media & Streaming
“At Microsoft, the demand for ultra-high-speed, low-latency connectivity is growing exponentially as AI workloads, cloud applications, and real-time analytics scale,” Lumen said. “Lumen and Ciena’s successful wavelength trial showcases a forward-thinking approach to meeting these growing demands. By enabling more efficient data movement over vast distances, this solution helps us optimize cloud performance, enhance customer experiences, and support the rapid expansion of AI training and inferencing models across our global infrastructure.”
Ciena’s WL6e is the industry’s first high-bandwidth coherent transceiver using state-of-the-art 3nm silicon, capable of carrying capacity up to 1.6 terabits per second per wavelength.
“As the pioneer in high-speed optical innovation, we are dedicated to helping our customers set new benchmarks in network performance and efficiency,” said Brodie Gage, Ciena senior vice president, global products and supply chain. “This industry-first trial with Lumen marks a pivotal step in our efforts to prepare networks for the AI era. Lumen’s network does not stand still. Continuous investment in the latest network technology is essential for keeping up with bandwidth demands today and into the future.”
Additional Resources:
About Lumen Technologies:
Lumen is unleashing the world’s digital potential. We ignite business growth by connecting people, data, and applications – quickly, securely, and effortlessly. As the trusted network for AI, Lumen uses the scale of our network to help companies realize AI’s full potential. From metro connectivity to long-haul data transport to our edge cloud, security, managed service, and digital platform capabilities, we meet our customers’ needs today and as they build for tomorrow.
SOURCE: Lumen Technologies
References:
Analysts weigh in: AT&T in talks to buy Lumen’s consumer fiber unit – Bloomberg
AT&T sets 1.6 Tbps long distance speed record on its white box based fiber optic network
China Telecom with ZTE demo single-wavelength 1.2T bps hollow-core fiber transmission system over 100T bps
AT&T sets 1.6 Tbps long distance speed record on its white box based fiber optic network
AT&T claims it achieved a long distance world record top speed of 1.6Tb/s over a single wavelength across 296 km of its long haul fiber optic network (spanning Newark, New Jersey to Philadelphia, Pennsylvania). That is four times faster than its current top speed of 400Gb/s per wavelength!
The 1.6Tb/s wavelength carried two IEEE 802.3df-2024 standard-based 800 Gigabit Ethernet end-to-end circuits, an industry first. It is a full, uninterrupted data path utilizing a single light frequency across the entire fiber length between two endpoints. The single-carrier 1.6 Tb/s wavelength was transported alongside existing live customer traffic on 100Gb/s and 400Gb/s wavelengths.
Open-sourced white box switches were the network equipment used during the trial. The white boxes are designed using the Broadcom Jericho3 packet processor chip and can provide up to 18 x 800G network interface ports all within a 2RU platform. The (Israel based) DriveNets Network Cloud software-based solution is hardware-agnostic and runs open APIs on the white boxes to perform data and control plane functions, including routing at 800G. The use of white boxes and the disaggregation of the hardware and software control costs and facilitate faster innovation.
The two 800GbE signals from the white box were multiplexed to 1.6 Tb/s in Ciena’s WaveLogic 6 Extreme coherent optical transponder, which is the first coherent optical solution to use a 200Gbaud design and 3nm coherent DSP ASIC and to reach speeds up to 1.6 Tb/s on a single carrier. The WL6e technology reduces the space and power per transmitted bit by 50% compared to current 800G transponders. This trial is the first to demonstrate WL6e at 1.6Tb/s with standards compliant 800GbE clients.
In the Newark and Philadelphia offices, 800G DR8 pluggable transceivers from Coherent were installed in the white box router and WL6e transponder to create the cross-office connectivity between the packet and optical technologies. And 800GbE client signals, provided by Keysight’s AresOne-M 800GE testset, fed the white box through additional pairs of 800G DR8 pluggable client optics, allowing verification of end-to-end performance of the two 800GbE services from Newark to Philadelphia.
Quotes:
“Traffic on AT&T’s network continues to increase as consumers are using more connected devices,” said Mike Satterlee, vice president, Network Infrastructure and Services, AT&T. “We anticipate network traffic growth to double by 2028 and the technologies demonstrated in this trial will play a key role in AT&T’s continued efforts to keep up with increasing customer demand to send data, watch videos, and use streaming services.”
“This groundbreaking achievement with AT&T adds to a growing list of Ciena industry-firsts that push the boundaries of optical network speed and capacity,” said Dino DiPerna, senior vice president, Global Research and Development, Ciena. “Ciena’s WaveLogic 6 coherent optics will support AT&T’s next gen converged optical network and efforts to build a cloud-based and AI-ready network with greater scale, flexibility and efficiency.”
Verizon’s 1.6Tb/s on Metro Fiber Network:
AT&T’s announcement comes just a few months after arch-rival Verizon announced a 1.6 Tb/s milestone of its own. Verizon also, working with Ciena, achieved that peak speed on a single wavelength, but on its metro fiber (not long distance) network. Verizon is mainly looking to advance through M&A. Its proposed acquisition of Frontier Communications is still pending, with some Frontier shareholders insisting that the US$20 billion price tag undervalues the operator.
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AT&T has spent the past six months demonstrating that it aims to build its way to fiber domination. It rolled out fiber to around 600,000 premises in the 4th quarter of last year, taking its total fiber footprint to 28.9 million locations; it is shooting for 50 million by the end of 2029.
References:
https://about.att.com/story/2025/data-transport.html
https://www.business.att.com/products/wavelength-services.html
https://www.telecoms.com/fibre/at-t-touts-1-6-tbps-fibre-speed-milestone-as-us-battle-continues
AT&T Highlights: 5G mid-band spectrum, AT&T Fiber, Gigapower joint venture with BlackRock/disaggregation traffic milestone
Nokia, Windstream Wholesale and Colt complete world’s first ultra-fast 800GbE optical and IP service trial
China Telecom with ZTE demo single-wavelength 1.2T bps hollow-core fiber transmission system over 100T bps
T-Mobile posts impressive wireless growth stats in 2Q-2024; fiber optic network acquisition binge to complement its FWA business
Bell Canada buying Ziply Fiber for C$7 billion; will become 3rd largest fiber ISP in U.S.
Nokia, Windstream Wholesale and Colt complete world’s first ultra-fast 800GbE optical and IP service trial
Nokia, Windstream, and Colt Technology Services have completed an 800 Gigabit Ethernet (800 GbE) trial spanning 8,500km between London and Chicago over a subsea and terrestrial route. The trial showcased innovative power-saving networking technologies from the three global tech businesses to test the boundaries of next-generation wavelength, capacity, speed and latency between two of the world’s largest financial trading hubs.
Colt’s five transatlantic subsea cables and part of its extensive terrestrial fiber optic network were connected with Windstream Wholesale’s domestic U.S. low latency, optical fiber Intelligent Converged Optical Network (ICON) monitoring speed and performance. Colt and Windstream Wholesale have partnered to demonstrate the world’s first transoceanic 800 gigabit ethernet (GbE) end-to-end service transport from router to router over 1Tbps optical transport. The trial was successfully delivered using Nokia’s sixth-generation Photonic Service Engine (PSE-6s) coherent optics and 7750 Service Router (SR) high-performance routing platforms boosting internet service speeds and supporting ultra-high wavelength capacity, while maintaining power efficiency.
The companies say that 800G marks a breakthrough in service bandwidth, doubling capacity to support advanced network applications like AI data center networking, content delivery networks, and financial data hub connections.
| Ethernet Rate | AUI | BP | Cu Cable | MMF 50m | MMF 100m | SMF 500m | SMF 2km |
|---|---|---|---|---|---|---|---|
| 400 Gb/s | — | — | — | — | — | — | 4 pairs |
| 800 Gb/s | 8 lanes | 8 lanes | 8 pairs | 8 pairs | 8 pairs | 8 pairs | 8 pairs |
Quotes:
Buddy Bayer, Chief Operating Officer of Colt Technology Services, said: “Pushing the boundaries of technology innovation is a fundamental part of our customer commitment: it means we stay a step ahead of the market, so we’re ready when our customers ask, “What’s next for us?” This trial has seen us build a powerful industry collaboration to explore the ‘what’s next?’. It’s tested the limits of infrastructure performance and capability across thousands of miles of land and sea with incredible networking technologies, and it’s demonstrated the power and potential of what can be achieved, without skipping a beat.”
Joe Scattareggia, President of Windstream Wholesale, said: “Our latest innovation represents a true game-changer for global connectivity. By partnering with two extraordinary leaders in the industry, we’re enabling unprecedented bandwidth capabilities that are essential for driving AI-powered applications worldwide for our customers. As an optical technology leader, Windstream Wholesale and our partners are establishing 800GbE as the next evolutionary advancement increase for wave services. This collaboration has pushed the boundaries of what’s possible, creating a network solution like no other. Together, we’re not just meeting the demands of the future—we’re shaping it.”
Federico Guillén, President of Network Infrastructure at Nokia, said: “Such an ambitious project — to link two of the world’s most important financial hubs — sets the bar very high for network capacity, speed, security and reliability. This demonstration would simply not have been possible without the commitment of Nokia and our partners to the highest standards of innovation in networking technology. Together, we are redefining the art of the possible for IP and optical networks enabling cross-continental subsea and terrestrial communications.”
Following the successful completion of the trial, the organizations are currently exploring options to bring 800GbE connectivity services to market for global business customers.
Resources and additional information:
Webpage: Nokia PSE-6s
Webpage: Nokia Optical Networks
About Nokia:
As a B2B technology innovation leader, we are pioneering networks that sense, think and act by leveraging our work across mobile, fixed and cloud networks. In addition, we create value with intellectual property and long-term research, led by the award-winning Nokia Bell Labs.
With truly open architectures that seamlessly integrate into any ecosystem, our high-performance networks create new opportunities for monetization and scale. Service providers, enterprises and partners worldwide trust Nokia to deliver secure, reliable and sustainable networks today – and work with us to create the digital services and applications of the future.
About Colt Technology Services:
Colt Technology Services (Colt) is a global digital infrastructure company which creates extraordinary connections to help businesses succeed. Powered by amazing people and like-minded partners, Colt is driven by its purpose: to put the power of the digital universe in the hands of its customers, wherever, whenever and however they choose.
Since 1992, Colt has set itself apart through its deep commitment to its customers, growing from its heritage in the City of London to a global business spanning 40+ countries, with over 6,000 employees and more than 80 offices around the world. Colt’s customers benefit from expansive digital infrastructure connecting 32,000 buildings across 230 cities, more than 50 Metropolitan Area Networks and 250+ Points of Presence across Europe, Asia, the Middle East, Africa and North America’s largest business hubs.
Privately owned, Colt is one of the most financially sound companies in the sector. Obsessed with delivering industry-leading customer experience, Colt is guided by its dedication to customer innovation, by its values and its responsibility to its customers, partners, people and the planet.
For more information, please visit www.colt.net
About Windstream Wholesale:
Windstream Wholesale is an innovative optical technology leader that delivers fast, flexible, and customized wavelength and dark fiber solutions to carriers, content providers, and hyperscalers in the U.S. and Canada. Windstream Wholesale is one of three brands managed by Windstream. The company’s quality-first approach connects customers to new opportunities and possibilities by delivering a full suite of advanced communications services. Windstream also offers fiber-based broadband to residential and small business customers in 18 states as well as managed cloud communications and security services to mid-to-large enterprises and government entities across the U.S. Windstream is a privately held company headquartered in Little Rock, Ark. Additional information about Windstream Wholesale is available at windstreamwholesale.com. Follow us on X (Twitter) @Windstream and LinkedIn at @Windstream.
To view the Windstream Wholesale network map, visit https://www.windstreamwholesale.com/wp-content/uploads/2022/05/Windstream-Wholesale-National-Network.pdf
References:
https://standards.ieee.org/beyond-standards/ethernets-next-bar/
AI adoption to accelerate growth in the $215 billion Data Center market
Ethernet Alliance multi-vendor interoperability demo (10GbE to 800GbE) at OFC 2023
Cisco 800G line card for Cisco 8000 Series Routers powered by Silicon One ASIC
Infinera, DZS, and Calnex Successfully Demonstrate 5G Mobile xHaul with Open XR
Infinera announced today a successful multi-vendor demonstration of 5G mobile broadband xHaul using coherent open XR optics point-to-multipoint optical transmission. The multi-vendor interoperability testing, conducted with DZS and Calnex, represents a key step toward enabling mobile operators to greatly simplify and cost-reduce 5G and next-generation mobile transport network rollouts through the reduction of the number of optical transceivers, resulting in significant total cost of ownership savings.
Hosted in the European Open Test & Integration Center in Torino by TIM, the high-capacity xHaul application testing included fronthaul, midhaul, and backhaul transport scenarios with XR-based coherent pluggable optics deployed in third-party hosts supporting point-to-point and point-to-multipoint optical transmission. Results of the performance testing included successful demonstration of xHaul synchronization and timing distribution in a point-to-multipoint optical transport architecture.
“It is not only the significant bandwidth demands of 5G that create challenges for mobile operators, but also the fundamental misalignment between actual 5G network traffic patterns and the underlying transport technology,” said Ron Johnson, SVP and General Manager, Optical Subsystems and Global Engineering Group, Infinera. “Working in close collaboration with industry-leading mobile operators such as TIM, this testing validates the critical role that XR optics innovation can play in transforming the economics of 5G transport and paving the way for efficient 6G networks.”
Equipment used in the interoperable xHaul testing included Infinera ICE-X intelligent coherent pluggables, the DZS Saber 2200, and Calnex Paragon-NEO. Part of the work carried out by TIM and Infinera was supported by the EU project ALLEGRO, GA No. 101092766.
About DZS:
DZS (Nasdaq: DZSI) is a developer of Network Edge, Connectivity and Cloud Software solutions enabling broadband everywhere.
About Infinera:
Infinera is a global supplier of innovative open optical networking solutions and advanced optical semiconductors that enable carriers, cloud operators, governments, and enterprises to scale network bandwidth, accelerate service innovation, and automate network operations. Infinera solutions deliver industry-leading economics and performance in long-haul, submarine, data center interconnect, and metro transport applications. To learn more about Infinera, visit www.infinera.com, follow us on X and LinkedIn, and subscribe for updates.
References:
Telenor Deploys 5G xHaul Transport Network from Cisco and NEC; xHaul & ITU-T G.8300 Explained
Orange Deploys Infinera’s GX Series to Power AMITIE Subsea Cable
Infinera trial for Telstra InfraCo’s intercity fiber project delivered 61.3 Tbps between Melbourne and Sydney, Australia
Fiber Build-Out Boom Update: GTT & Ziply Fiber, Infinera in Louisiana, Bluebird Network in Illinois
