Site: Ortel Corporation
2015 West Chestnut Street
Alhambra, CA 91803

Date Visited: October 7, 1994

Report Author: S. Esener



L. Coldren
S. Esener
S. Forrest
P. Shumate


Israel Ury
Chief Technology Officer and Director
Amnon Yariv
Chairman, Board of Directors
Lawrence Stark
Vice President, New Business Development
Nadav Bar-Chaim
Vice President, Device Structures and Materials
Hank Blauvelt
Vice President, Fiber-optic Technologies
Daniel Renner
Director of Engineering
P. C. Chen
Senior Staff Scientist


Ortel was founded in April 1980 with the objective of producing high-speed semiconductor lasers. Since 1987, Ortel's main emphasis has become the development of linear fiber-optic technology, which it pioneered. Ortel now employs approximately 300 people worldwide. The company has subsidiaries in France and Germany. Roughly 17% of the employees (48 people) are directly involved in R&D. Ortel's revenues in 1994 were about $30 million. R&D expenses were about 14% of total revenues in the same year.

Ortel designs, manufactures, sells, and supports linear fiber-optic products for transmission of a variety of digital, digitally compressed, or analog information via radio frequency (rf) signals on fiber-optic cable. The main application of Ortel's technology is cable television (CATV). Linear fiber-optic technology provides the CATV system operators a low-cost means to transform their traditional one-way, video-only distribution systems to interactive, two-way, video-voice, and data delivery systems. Other applications include satellite earth stations, cellular networks, and certain government communication projects. Ortel's products include packaged lasers and photodiodes coupled to optical fiber (modules), transmitters, receivers incorporating modules and other circuits (sub-systems), and transmitters and receivers in modular rack mount chassis designs (links). Ortel markets and sells its products worldwide to OEM manufacturers and system integrators. Ortel's main customers include communication equipment manufacturers and integrators such as General Instrument Corp., Bosch, Philips, and Thompson Broadband Systems.


Israel Ury, a cofounder of Ortel Corporation and presently Chief Scientist, described the technical activities that led Ortel to become the enabler and market pusher for linear fiber optics. Linear fiber optics is now accepted by U.S. CATV corporations and is slowly being accepted by telecommunication companies (TELCO). In addition, linear fiber-optic systems have applications in cellular networks, earth station communication for satellite installations, and certain government communication projects.

Linear Fiber Optics for CATV and TELCO

Traditional telephone networks are based on digital fiber-optic links from the central office down to the last mile, and use twisted pairs to distribute services over the last mile. This network is ubiquitous but suffers from low bandwidth and therefore does not allow for video transmission. On the other hand, traditional CATV network is fully based on coaxial lines, including the last mile. Since this requires many amplifiers and repeaters, the signal quality in general is reduced as the communication distance grows, and the network has potential for many failure points. Thus, to reach more distant subscribers and to provide increased channel capacity, CATV operators are faced with expensive rebuilds of their systems. Most importantly, present CATV networks offer limited interactive capability (that is, limited two-way communication). Ortel's architectural approach is a hybrid solution that utilizes good features of both networks; it uses the fiber-optic links of the telephone network to the last mile and takes advantage of the coaxial network to carry the signal over the last mile to the homes. This provides fully interactive service, with high signal quality due to the fiber-optic links, and it uses the already-in-place extensive coaxial infrastructure while assuring high bandwidth.

Compared to digital fiber optics, the main advantage of linear fiber optics is that it does not require a decoder with every receiver, which significantly reduces the cost to the CATV subscriber. Assuming 200 million TV sets and 100 million VCRs in the United States, the decoders required by a digital network would cost $50 - $90 billion. The cost-effectiveness of the linear fiber-optic network has been the driving force behind Ortel's recent success.

According to Ury, the linear fiber-optic network has big market potential in the United States ($1.9 billion) and in Europe ($1.6 billion), but not necessarily in Asia and Japan, because other network architectures may be employed there. The total world market for CATV networks is estimated to be $4.8 billion. At the time of the JTEC visit, Ortel had 30% of the U.S. CATV network market. Of Ortel products, 30% are sold in Europe, mostly to OEM manufacturers. Ortel's sales in Japan are negligible. Similarly, since the linear fiber-optic system has not been adopted in Japan, this is not a main line business for Japanese companies either.

Ortel designers feel that presently the local loop will consist of 500 homes; thus, from a cost-effectiveness point of view, the magic number is one laser per 500 homes, with the goal of increasing that ratio to one laser per 200 homes rather rapidly. They expect the component costs to drop 20% per year, using cost-learning curves to project this estimate. They believe the cost will be driven by customers. CATV companies know how much they are willing to spend per customer but do not necessarily know what to get.

The enabling technology for this network is linearized lasers and photodetectors operating at 1.3 microns. Early in the game, Ortel opted for a linear laser approach rather then external linearized modulators, since the modulator approach would be costlier and their coupling still remains difficult. However, Ortel researchers feel that external modulators could be effective at higher levels in the network. Hitachi recently demonstrated good external modulators (both absorption and phase).

Ortel's approach to laser linearization is accomplished by an external circuit and is based on rf predistortion. This is a technique in which the performance of linear devices can be considerably improved by preconditioning signals in such a way as to negate predictable deviations from ideal performance. Ortel has pioneered this area and retains a competitive advantage due to its patented predistorter design. In this approach, the most critical parameter to control is laser chirp, which must be controlled within a critical range for best network performance. Ortel's DFB lasers operate at the 40 to 750 MHz range and provide 500 analog + digital channel capacity and are mostly used at CATV headends or TELCO central offices. Although there is little work in Japan in this area, Fujitsu lasers have exhibited the best linear behavior, and Sumitomo could also be considered a potential competitor.

Application of Linear Fiber Optics to Cellular and Wireless Communications

The availability and popularity of cellular phones has created increased demands on cell capacity in congested locations. As the number of phone calls have increased, more cells and antennas are needed, requiring new base stations and equipment. More complete cellular coverage inside buildings is required as well. Cellular system operators must distribute rf signals throughout their network. It is not cost-effective to use coaxial lines to transmit cellular radio signals from existing base station to remote antennas. In addition, in some locations shadow areas can occur due to physical blocking of the signal by structures such as buildings.

Linear fiber-optic products can be used to provide a direct transmission path for rf signals between the base station and the remote antenna site. They can also be used for rf signal distribution inside buildings. This allows for consolidation of the required equipment at the base stations, allowing the operator to dynamically allocate channels to remote antennas. It eliminates the need for amplifiers, thus reducing installation and maintenance costs.

For cellular base stations it is critical to have linearized lasers operating at 800 to 1000 MHz frequencies, providing at least 96 channels. For personal communications and PCN links, 1.7 to 2.2 GHz radio frequencies are required. Ortel has introduced components that satisfy these requirements, based on its DFB lasers and the rf predistortion circuits. Recently, the Japanese have announced DFB laser research at 1.8 GHz.

Ortel has two main customers in this area. A system is being installed for the healthcare emergency system at the University of Atlanta. Ortel has also entered in an ARPA consortium for analog fiber with Hughes Aerospace.

Application of Linear Fiber Optics to Satellite Communications

Satellite earth stations have been relying on coaxial links to distribute rf satellite signals between antennas and nearby control rooms. The communication distance needs to be kept short because of signal deterioration on coaxial links, even when they are designed for specific frequency bands. Presently, satellite services users must access remote antennas through microwave links, because earth stations are often located in remote areas.

Linear fiber-optic links can be used to remove some of these limitations, thereby reducing installation, operating, and access costs. Ortel products provide a complete system solution to this mostly U.S. niche market. The approach is to use intermediate frequencies (IF), 940 - 1550 MHz, on the fiber-optic link per transponder. For 12-transponder systems for satellite earth station teleport, TV broadcast frequency bands of 3.6-4.2, 5.8-6.5, 10.9-12.75, and 14 - 14.5 GHz are used. In this new application area of linear fiber optics, Ortel enjoys a near 100% market share in high-frequency satellite communications products (above 3 GHz). At lower frequencies (L-band and IF), it has a dominant market share, but does have competitors. (Ortel also provided systems for broadcasting the Winter Olympics in Norway.)


Approximately 5% of Ortel's operating income (2% of the company's revenues) comes from government contracts. Ortel applies to government programs only if the government allows the company to carry on R&D in an area it is interested in investigating over the next 3 5 years. In 1988, Ortel shifted from being a company dependent on government to being commercially oriented. Its scientific administration likes the TRP program and has high hopes for meaningful collaboration with GTE in such a program. The JTEC team's hosts especially praised the aspect of the TRP program that lets the company build testbeds with operating prototypes with the customer, that is, with a direct tie-in to the market; on balance, however, the company seems to be more critical of the ATP program for investigating areas with time horizons that are too far out and for giving inadequate attention to manufacturing development.


Ortel's product lines are built with proprietary semiconductor laser and photodiodes that are designed and fabricated by the company's scientists and engineers using epitaxial wafer fabrication processes. Ortel's devices are based on InP- and GaAs-based compound semiconductor technology. Ortel has established wafer fabrication capabilities, including epitaxial layer growth, dielectric coating, diffusion, metalization, photolithography, and the formation of submicron gratings for DFB lasers. However, for production Ortel buys its epi-wafer from outside. Thus, Ortel produces its own opto-chips.

In addition, Ortel has its own board design and microelectronic packaging facilities. The boards are, however, assembled outside. The company considers packaging as the critical aspect of linear fiber-optic product performance. Ortel has a patented miniature optical bench consisting of a laser chip, optics, and an arrangement to hold the optical fiber in alignment with one micron tolerance. This optical bench is common to many of the company's products. Ortel's product quality assurance is administered at the vice-president level. Statistical process control is mostly used. Ortel also works very closely with its customers.


Currently Ortel's direct competitors in CATV and TELCO include Mitsubishi, Fujitsu, NEC, AT&T Microelectronics, and Philips. Ortel has opted to remain in the device and subsystems area for CATV applications because of the large investments required for systems-oriented products. However, Ortel does produce systems for satellite communication applications, since it has 99% of the U.S. market and is the only supplier besides SATCO.

A potential competitive disadvantage is that there are alternative network technologies; for example, the PCM digital fiber-optic technology offered by Broadband Technologies or the standard present CATV network. However, Ortel designers seemed confident in the success of their approach. Their philosophy is to be the best in a limited number of markets.

To remain competitive, Ortel sets its development program with a team covering know-how from research all the way to manufacturing. New product ideas are first funneled through the business manager, who transmits them to the strategic committee, which consists of 50% engineers and 50% business people. Then a preliminary project review is carried out for feasibility, and normal engineering reviews are used to carry the project forward. Ortel has, on average, 20 design reviews per year.

Ortel foresees limitations when it comes to its production output; it plans to raise capital to invest in manufacturing and some automation effort. However, the company is not clear how much automation will pay off. The goal is to achieve 1 mm alignment tolerances with 0.1 mm stability. Ortel's management counts on TRP-type government programs and NCSI to build up the manufacturing infrastructure for such capabilities as fiber-positioning automation.

Published: February 1996; WTEC Hyper-Librarian