Metro WDM seems to be the brightest star in the hazy optical hardware galaxy.

According to Infonetics Research, metro WDM equipment revenue will increase 60% between 2005 and 2008, compared to 16% for the overall optical hardware market. Metro makes up 74% of all optical network hardware revenue while long haul makes up the remaining 26%, according to Infonetics.

The overall optical hardware market fell 10% in the first quarter, to $2.3 billion. But Infonetics expects it to reach $10 billion by 2008, meaning metro will comprise $7.4 billion of that total, up from $4.6 billion in 2005.

One vendor feeling the love is Meriton Networks of Ottawa. Meriton's metro access, edge and core systems integrate optical ADM functionality with wavelength switching, a differentiator the company attributes to its selection as a supplier for BT's $ 19 billion 21st Century Network project (a partnership with big brother Fujitsu didn't hurt much either).

Meriton just landed a third round of funding for $54 million, led by two new investors. The $54 million is more than the company accumulated - $46 million - in the first two rounds combined and gives Meriton an even $100 million to ramp up development, sales and marketing.

According to Meriton CEO Mike Pascoe, metro WDM is hot because it represents the next "choke point" in carrier networks. As businesses and consumers gobble up more broadband bandwidth in the local loop, service providers will have to speed up aggregation, switching and transport at the edge and metro core to maintain service levels.

Meriton hopes the funding will attract more large partners like Fujitsu for European sales, and Siemens for Canadian opportunities. The vendor is currently lining up a U.S. partner that Pascoe declined to name.