How Energy Efficiency, Wi-Fi 7 are Driving Optical LAN Adoption

Optical LAN has been around for many years. But as infrastructure costs climb, more companies are turning to the technology to replace bulky legacy copper cabling.

Innovation in generative AI, 3D modeling and analytics is bringing an increased need for high-speed Ethernet. Meanwhile, optical LAN is evolving to support more high-density environments and greater distances. According to Nokia, optical LAN delivers up to 70% less cabling and 40% less power than copper-based cabling.

Optical LAN, also known as passive optical LAN , uses a point-to-multipoint network compared with traditional LAN, which uses routers and switches for connectivity. The technology provides a significant leap in network efficiency, scalability and sustainability compared with traditional copper-based cabling, according to Rob Enderle, principal analyst at Enderle Group.

"Modern optical LAN is rapidly gaining traction and becoming a preferred standard in many new deployments, though it hasn't universally replaced copper yet," Enderle said. "Traditional LAN was predominantly copper-based Ethernet, with fiber optics typically reserved for backbone connections between wiring closets."

Although copper wire can reach higher capacity, it has shorter reach, said Ana Pesovic, marketing director of fixed networks fiber at Nokia. With fiber, speeds of 2.5 gigabit per second and 10 Gbps speeds are becoming common, she added.

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Andre Kindness, principal analyst at Forrester, noted that optical LAN brings security benefits for areas such as the military because fiber lines can't get cut as easily as copper wire.

"If it does get cut, you can pick that up pretty quickly -- versus in a copper world, that's not the case," Kindness said.

Traditional fiber optic cables and Ethernet use point-to-point connections with dedicated fiber links and Ethernet switches for an individual user or endpoint. In contrast, optical LAN uses a centralized architecture where a single strand of fiber can serve multiple users through passive optical splitters. This offers higher speeds, better cost efficiency and future-proofing options.

The centralization of infrastructure for optical LAN enables it to maintain a small footprint, according to Enderle.

"Optical LAN delivers high internet speeds due to fiber's immense bandwidth capacity," Enderle said. "It achieves a small IT footprint by centralizing active electronics in the data center, eliminating numerous intermediate switches. This centralization, combined with fewer cables and passive optical splitters, drastically reduces material, installation and ongoing power/cooling costs, leading to lower Capex."

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Enderle noted that Nokia is a leader in the optical LAN market due to its expertise in passive optical network (PON) technology and its global presence. Other companies in the space include Calix, DZS, Huawei and ZTE.

How Optical LAN Reduces Expenses for Network Operators

Nokia said traditional fiber optic cables require active switching at multiple layers, which brings added expense and complexity. Optical LAN enables organizations to scale and become future-ready to handle high-density environments that bring long-term operational cost savings, according to Nokia.

Companies are increasingly adopting optical LAN, Enderle said, focusing on greenfield environments as well as infrastructure upgrades as they see the technology's long-term benefits. As copper reaches its bandwidth limit, there's an opportunity for optical LAN to push more data at first and then offer "substantial additional headroom," he added.

"In addition, it significantly reduces both capital and operational expenses by requiring less equipment, cabling and cooling while providing higher bandwidth, and it does so with a smaller physical footprint," he said.

Traditional cable, CAT and copper-based cabling require additional switches compared with optical LAN, which can last for 20 to 30 years or more, according to Pesovic.

"With optical LAN, you need one centralized switch that can cover an entire campus, because it has a 30-kilometer reach," she said.

How Wi-Fi 7 Propels Organizations to Adopt Optical LAN

As organizations move to Wi-Fi 7, optical LAN can deliver better coverage, lower latency and more capacity, according to Pesovic. This is necessary, she said, because organizations need better Wi-Fi.

"We have more devices, and fiber is the best way to deal with that from a capacity, energy-efficiency point of view," Pesovic said, noting the fiber optic cable infrastructure required for Wi-Fi. "We always say, although the world is going wireless, the wireless is going wired," Pesovic said.

To set up Wi-Fi 7, she added, enterprises need to replace traditional cabling and switches with optical LAN to get the best reach.

Why Organizations are Using Optical LAN

Pesovic explained how optical LAN is more energy efficient than traditional Ethernet, using 40% less power.

"The less equipment you have, the less IT rooms you have, and the less you need to cool these IT rooms to keep the optimal temperature for these switches to work," Pesovic said.

Optical fiber provides an opportunity for enterprises to use one medium to connect everything, she added.

Nokia highlighted how optical LAN helps organizations, such as universities, airports and health systems, manage connectivity between multiple buildings on campuses. According to Enderle, optical LAN's high bandwidth, extended reach and simplified management are compelling across these industries, supporting large medical imaging files, IoT devices and future-proof connectivity for smart buildings.

Museums use optical LAN for reliable data transfers and to enable centralized management of data, according to Nokia. It helps them be more energy efficient and minimize interruptions to visitor experiences. Historical institutions can use thinner fiber optic cables that are less intrusive and can run across the walls, so visitors can't see them, Pesovic said.

Meanwhile, Kindness said he sees a role for optical LAN in the energy industry, where oil pumps are connected together at oil fields or at airports when terminals are being connected. He added that he expects optical LAN will grow particularly in niche markets, such as IoT environments that can't use traditional Ethernet. That could include railroad lines and environments with long distances to deliver electricity, as well as those that are hypersensitive about security, he added.

Enderle said that the connection between optical LAN and 50G passive optical networks (50G PON) will drive the evolution of optical LAN.

"Optical LAN will continue to evolve toward even higher speeds, with advancements like 50G PON becoming more prevalent, supporting the ever-increasing demand for bandwidth and low latency," Enderle said. "Further integration with IoT, AI-driven network management and enhanced security features will also define its future trajectory."