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May 19, 2023

The Future of Data Center Growth and 400G Coherent Optics in Latin America 

Latin America is seeing significant growth in the data center industry, driven by increasing demand for cloud computing and bandwidth-intensive technologies. One critical component of this growth is the deployment of new fiber optic subsea cables, such as the Humboldt cable system, which enables faster, more reliable connectivity between Latin America and the rest of the world. The increased adoption of digital services and the resultant surge in data transmission will have a snowball effect, placing accelerated bandwidth and performance demands on data center operators regionally. Where 100G/200G CFP2-DCO transceivers used to be considered state-of-the-art for data center interconnection (DCI), data center network engineers will increasingly require support deploying the new generation of 400ZR and OpenZR+ coherent optics. 

Latin American Data Center Evolution – The Need for New, Coherent Solutions 

Let’s look in more detail at Latin America’s surging demand for bandwidth-intensive services and their effect on the region’s data center market. 

Even a brief look at Latin America’s cloud storage market size and growth demonstrates that the need for greater bandwidth to handle surging amounts of data is incredibly strong. For example, according to Market Data Forecast, the Latin American cloud storage services market will reach $145 billion by 2026, growing at a whopping CAGR of 27.8%. S&P Global Market Intelligence also reports that, since 2020, Latin America has become  home to 10 new cloud regions with giants like Amazon, Google, Microsoft and Oracle expanding their presence in the area. 

The area will also see some major submarine cable projects come into operation over the next several years, including the Humboldt Cable. This new system is a 14,000-kilometer submarine cable that connects Valparaíso, Chile, and Sydney, Australia. Construction on the cable will begin this year and will take approximately three years to complete. It will be the first subsea cable to give Latin America a direct link to Australia. But even with this new cable, demand for data transport in the area will barely be satiated. According to Latin American development bank CAF’s Eduardo Chomali, “Over 30 submarine cables would have to be built in Latin America in the next decade to meet increasing connectivity demands.” 

This increased demand is simultaneously driving growth in the Latin American data center market. According to a report by ResearchAndMarkets, the sector is expected to grow at a compound annual growth rate (CAGR) of over 7% between 2021 and 2026. So, what does this mean from an optical networking perspective? From our point of view, the growth of the Latin American data center market and increased regional adoption of bandwidth-intensive services will mean surging demand for 400G. Here’s what that will look like from a transceiver perspective. 

Moving Away from CFP2-DCO for Higher Bandwidth Networks 

As Latin American demand for digital services continues to grow, the need for greater bandwidth and faster speeds is causing data center engineers to move from legacy CFP2-DCO optics to modern, coherent 400ZR and OpenZR+ optics. 

As we’ve noted in our CFP2-DCO FAQ Sheet, coherent technology – specifically the CFP2-DCO family of optics – emerged to meet the growing demand for 100 and 200Gb/s optical transport. A smaller, better performing and more cost-effective improvement over original CFP-DCO optics, this transceiver type enabled 100G/200G services at distances up to 1,000 km with 16QAM and 2,000 km with QPSK. Learn more about our CFP2-DCO product line and its configurable specifications and capabilities. As bandwidth requirements have increased, the CFP2-DCO form factor has evolved to keep up, notably with a CFP2-400G-DCO option. This module enables 400G network transmission up to 800km (or even 1,000km depending on fiber link quality, amplification and ROADM spans). That said, as demand for higher network speeds and increased bandwidth continues to grow, Latin American data centers are increasingly looking for options that offer a better trade-off in terms of optical performance, efficient use of total bandwidth per 1RU and an ability to interoperate easily with existing equipment (thereby lowering the total cost of ownership). In this regard, CFP2-DCO may not be the optimal choice for DCI applications at 400G and beyond. 

The CFP2-DCO form factor is larger than the QSFP-DD and OSFP form factors used for 400ZR and OpenZR+. In a 1RU switch/router operators can install up to 36x QSFP-DD transceivers, while CFP2 pluggables will only be able to have a few units in the single digits per 1RU depending on the host platform.  With the popularity of the 400ZR and OpenZR+ standards, especially around the QSFP-DD form factor, these pluggables offer a much better cost opportunity for 400G coherent applications in data center network architectures. They are also interoperable (with some exceptions) with products from multiple vendors as demonstrated through numerous plugfests and interoperability demonstrations. In short, CFP2-DCO is a robust technology, but when it comes to 400G, the new generation of 400ZR and OpenZR+ optics offer better value for DCI applications.   

Getting a Lay of the Land for 400ZR and OpenZR+ 

In a recent eBook, we wrote about 400G, we provided network engineers with an in-depth look at the latest innovations within 400G as well as the deployment challenges posed by these next-generation technologies. We specifically examined 400ZR and OpenZR+ (optics often referred to as 400G ZR+ or 400G ZRP). 

As an OIF standard, 400ZR coherent optics deliver 400Gbps of bandwidth over a single optical wavelength using DWDM. This technology enables point-to-point 400GbE Data Center Interconnect (DCI) for distances up to 80-120km, with the use of amplifiers but without the need for specialized optical transport equipment. Because the 400ZR standard was born from a hyperscale need for enhanced DCI performance using small form factor pluggable modules like QSFP-DD and OSFP, it will arguably have a strong role in shaping the future networks of Latin American data centers. Smaller in size than OSFP packaged optical modules and offering a lower power consumption overall, the QSFP-DD form factor will continue to be the market leader for coherent optics of this type. 

For its part, OpenZR+ can be thought of as the continuation of 400ZR, and this is one of the reasons it is also called 400G ZR+. Open, flexible and interoperable, OpenZR+ is, in many ways, the answer to the network operator’s desire for a coherent solution that can offer greater functionalities over longer distances than 400ZR optics. While the 400ZR standard uses Concatenated FEC (C-FEC), OpenZR+ enables the use of Open FEC (O-FEC). O-FEC’s better compensation for chromatic dispersion allows these modules to achieve a greater reach of up to hundreds of kilometers with the use of external amplification. OpenZR+ transceivers can also be used at different rates, from 100GbE to 400GbE, and modulation schemes (from DP-QPSK to DP-16QAM) depending on application needs. In many ways, this standard is a combination of the DCI-oriented technology of 400ZR and the longer haul-oriented capabilities of Open ROADM that commonly use the CFP2 form factor. 

As digital services continue to proliferate throughout Latin America, edge networks will continue to extend further away from traditional data center core hotspots. As this happens, OpenZR+ can help data center engineers cast their DCI edge networks over a much wider geographic area. As well, for hyperscale line systems with 75GHz DWDM grid spacing, the additional gain from the use of O-FEC in OpenZR+ can successfully compensate for the signal degradation that can occur within those networks. The multiple use cases for this type of optic provides an attractive option for forward-thinking data center engineers in Latin America (and globally). 

To learn more about the benefits and deployment challenges of 400ZR and OpenZR+ transceivers, download our ebook here. 

In short, the Latin American data center market is experiencing significant growth, driven by increasing demand for digital services and the deployment of fiber optic subsea cables. As demand for faster, more reliable connectivity continues to grow, we can expect to see continued investment and expansion in the region’s data center infrastructure, with a transition from CFP2-DCO transceivers to those for 400ZR and OpenZR+ becoming increasingly necessary. These exciting developments are paving the way for a more connected and innovative Latin America.