Prices still have to come down before the market moves to mass adoption, however, the firm says.

Global revenue for 40G line cards in 2007 was US$178 million and Ovum expects the market to grow 48% annually through 2013, to almost $2 billion.

More than 30 network operators have spent more than $250 million since 2005 deploying the technology globally, Ovum says. The largest 40G application by volume thus far is for router-to-router interconnect, and Comcast and have the largest commercial deployments. Government-funded defense and research networks also have contributed significantly to revenues, the firm notes.

introduced its offering to the market in April 2008 and has already gained more than 30 customers, according to Ovum. In addition, the Optical Internetworking Forum industry standard group announced in August that it selected Nortel's implementation as the standardized modulation format for long-distance DWDM transmission, a move welcomed by component suppliers as it makes their investment cases easier to justify, the firm asserts.