Global telecommunications is increasingly run on optical fiber -- thin, flexible strands of glass through which light signals are pulsed to transmit data for everything from voice phone calls to web surfing. And this trend is accelerating thanks to vast improvements (in bandwidth, speed of transmission, and signal integrity) over legacy copper wire.
As recently as 2015, for example, Statista data shows that only 11% of broadband connections in the United States were fiber optic. By 2022, that number had nearly doubled to 20.4%. (Don't get too excited. The U.S. is still far behind such countries as Korea, Japan, Spain, and Sweden, all of which have better than 80% fiber optic penetration.)
Notably, the biggest U.S. maker of glass used in this technology -- Corning (GLW +11.88%) -- is actually only the No. 3 manufacturer of fiber optics globally. Both Switzerland's TE Connectivity (TEL +0.00%) and Japan's Sumitomo Corporation are bigger. Clearly, America could do better -- and the good news is that it's trying.
NYSE: GLW
Key Data Points
Fiber optics in space
This story actually begins about seven years ago, when science fiction novelist Andy Weir penned Artemis, a story about the world's first colony on the Moon. In the novel, this colony's economy is built upon such space age inventions as "Zero Attenuation Fiber Optics" -- a kind of ultra-pure fiber optic cable that, being manufactured in zero gravity, can be made free of imperfections introduced by gravity's effects.
So-called ZAFO is described as being many times superior to Earth-manufactured fiber optic cable, supporting even higher bandwidths and retaining signal integrity over vast distances. Here's the cool part: The story is fictional, but ZAFO may be real.
Science fiction and science fact
On Jan. 25, Northrop Grumman (NOC +0.18%) launched its 20th commercial resupply mission to the International Space Station (ISS), and one of the payloads included on this flight could help confirm the commercial potential of a kind of ZAFO.
This payload, from tiny fiber optics researcher Flawless Photonics, will attempt to manufacture something called "ZBLAN" glass (the acronym refers to the chemical composition of the glass) in the low-gravity environment of Low Earth Orbit.
If successful, ZBLAN made in space could potentially lower signal loss by "10 to 100 times" in comparison to traditional fiber optics manufactured from silicon oxide on Earth, vastly improving the efficiency of internet service around the planet.
What it means for investors
Flawless Photonics may be only a start-up, but it's sufficiently confident in its technology that it's already trademarked a catchy name for when (if) it's commercialized: "SpaceFiber." The trickier question for investors is what would happen after Flawless Photonics proves the concept.
Several pieces need to come into place for SpaceFiber to become a real product with real commercial potential. First and foremost, Flawless Photonics would need a place to manufacture it. The ISS, while a great place to test out the concept today, is slated for retirement after 2030.
Several companies are currently in the running to set up privately operated space stations to replace it -- and some of these may even be big enough to house the kind of manufacturing operations Flawless Photonics would require. But until one of those stations is actually up there and operating, it's probably too early to bet on SpaceFiber becoming a "thing."
A second requirement is a means of transporting manufactured SpaceFiber from orbit, where it's made, down to Earth, where it would be used. Parachuting occasional Soyuz and Dragon capsules down to splash in the ocean doesn't seem to me like an especially reliable way to build a supply chain for glass goods. Probably, we'll need to have something a bit more routine and reliable -- Starships from SpaceX spring to mind, flying regular milk runs to orbit and back -- before products manufactured in orbit for use on Earth become commercially viable.
The third key factor in making SpaceFiber a success would be money. As in, a lot of money, and probably a big company (on the scale of a Corning or TE Connectivity) to pay for setting up factories in orbit and hiring transportation of space glass back down to Earth. Whether as an investor in Flawless Photonics, or as a buyer of the company in its entirety, that's probably the way this would work.
Long story short, this is a neat idea that Flawless Photonics is trying out, and it's great that NASA and the ISS can help to prove the concept. But we're probably still a decade or more away from any chance of SpaceFiber becoming a viable product on Earth.
My best advice in the meantime is to keep an eye on the technology, and an eye out for any mergers and acquisitions activity surrounding companies that say they're developing zero-G optical fiber. Beware, too, of penny stock promotions by companies promising what they (probably) cannot deliver. Your best way to play this technology is probably going to come in the form of owning shares in a much larger company -- such as Corning -- which buys a start-up and commercializes its technology.
