The Market for packet optical networking equipment — populated by vendors such as Alcatel-Lucent, Ciena, Fujitsu Network Communications, Meriton Networks (now Xtera Communications, Nortel Networks and Tellabs — was developed to help carriers around the world transition from legacy Sonet and SDH networks to a mix of WDM and Ethernet. That transition will be led globally by North American carriers as a group — and sooner rather than later.

Major carriers worldwide have been projecting declines in their spending on Sonet and SDH equipment for the past two years. According to Infonetics Research, last year was the first year in which Sonet/SDH spending fell below 60% of total optical spending. (It was 59%; the other 41% was spent on WDM gear). In 2010, carriers worldwide will spend more on WDM than they spend on Sonet. But carriers in North America will lead the way, said Michael Howard, founder and principal analyst for Infonetics. “North America is probably going to be the first region to spend more on WDM than on Sonet — possibly in 2009,” he said. “It could even happen this year.”