Five Opportunities Emerging From Quantum Networking

This article sets forth five areas where we see five opportunities emerging from the emergence of quantum networking.

Since the 1960s the digitalization of traffic on networks has transformed networking. Digital networking is characterized by information defined as bits (1s and 0s), rather than the waveforms associated with older analog networks. The rise of quantum information theory holds out the possibility of a third way — networking based on “quantum bits.”  Using qubits instead of bits, much larger amounts of information can be processed and transported.

#1 QKD:  An Immediate Opportunity

IQT Research already sees the beginnings of the so-called “Quantum Internet” in quantum key distribution (QKD) for encryption schemes that becoming highly vulnerable as the result of the advent of quantum computers.  Using quantum phenomena QKD transports encryption keys over quantum networks – both terrestrial and satellite – in a manner that intercepting a key between two parties would defy the laws of quantum physics.

IQT Research recently published a report on this topic and according to our analysis QKD will generate about $45 million in revenues in 2017, reaching $885 million by 2022 as the security threat from quantum computers deepens.  Most of the current quantum networking projects around the world are oriented towards security, although we think they will ultimately serve as the platform for the other applications/opportunities profiled below.

These projects include a Euro 1 billion flagship project in Europe announced in May 2016 with both EU and national funding, and a massive ongoing effort to build satellite- and fiber-based quantum networks in China. The recent announcement from AT&T that it has entered the quantum network space also seems to be motivated largely by the secure communications meme.  In Exhibit I we profile the seven companies that IQT Research believes will shape the QKD business going forward.

Although research on quantum mechanics is one reason for building these networks, the need for security is most likely what is generating the big funding.  At a time when hacking and cyber-terrorism is a constant threat to corporate and government communications the value of QKD can hardly be doubted.  In this version QKD is a robust, sophisticated data center network sold into the largest financial institutions, government departments, military facilities, etc.