00-3

Planning 

Report

Economic Impact Assessment:

NIST-EEEL

Laser and Fiberoptic Power and

and Energy Calibration Services

Prepared by:

TASC

for

National Institute of

Standards & Technology

Program Office

Strategic Planning and

Economic Analysis Group

August 2000

U.S Department of Commerce

Technology Administration
FINAL REPORT

ECONOMIC IMPACT ASSESSMENT:

NIST-EEEL

LASER AND FIBEROPTIC POWER AND ENERGY

CALIBRATION SERVICES

August 2000

Prepared for:

The National Institute of Standards and Technology

Program Office

Strategic Planning and Economic Analysis Group

Prepared under:

Contract No. 50SBNB7C1122

Task Order No. 4

Prepared by:

 Michael L. Marx

John T. Scott

 Stephen M. Fry 

Approved by:

 Paul A. Belmont

 

TASC, Inc.

1101 Wilson Boulevard

Suite 1600

Arlington, VA 22209
i

TABLE OF CONTENTS

LIST OF FIGURES ................................................................................................................................................IV

LIST OF TABLES....................................................................................................................................................V

EXECUTIVE SUMMARY ................................................................................................................................ ES-1

1. INTRODUCTION .......................................................................................................................................... 1-1

1.1 The Economic Importance of Measurement Technology.............................................................1-1

1.2 NIST Program in Laser Calibration Services...............................................................................1-3

1.3 Economic Motivation for NIST's Program...................................................................................1-6

1.4 Case Study Overview ...................................................................................................................1-7

2. ASSESSMENT OF PRIMARY CALIBRATION SERVICES................................................................... 2-1

2.1 Economic Importance to Industry ................................................................................................2-1

2.1.1 Technological Advancement and Application of Lasers.......................................................2-1

2.1.2 Laser Power/energy Measurement ........................................................................................2-3

2.2 Industrial Supply Chain................................................................................................................2-6

2.2.1 Laser Power/ Energy Meter Instrumentation Suppliers.........................................................2-6

2.2.2 Fiberoptic and High-speed Instrumentation Suppliers..........................................................2-8

2.2.3 Laser Suppliers......................................................................................................................2-8

2.2.4 Laser Application Systems Suppliers....................................................................................2-9

2.3 Economic Analysis Framework..................................................................................................2-10

2.4 Survey Findings..........................................................................................................................2-11

2.4.1 Suppliers of Laser Power/Energy Meters and Fiberoptic Power Meters.............................2-13

2.4.2 High-speed, Frequency Response Detector Instruments.....................................................2-14

2.4.3 Laser Suppliers....................................................................................................................2-16

2.5 Quantitative Analysis .................................................................................................................2-16

2.5.1 NIST's Costs........................................................................................................................2-16

2.5.2 Industry Benefits.................................................................................................................2-18

2.5.3 Metrics................................................................................................................................2-20

2.5.4 Uncertainty..........................................................................................................................2-20

3. ASSESSMENT OF 248 NM R&D AND CALIBRATION SERVICES..................................................... 3-1

3.1 Economic Importance to Semiconductor Industry .......................................................................3-1

3.1.1 Semiconductor Manufacturing ..............................................................................................3-1

3.1.2 Projection Lithography..........................................................................................................3-3

3.1.3 Optical Power Measurement .................................................................................................3-5

3.2 Industry Supply Chain..................................................................................................................3-7

3.3 Economic Analysis Framework....................................................................................................3-9

3.4 Survey Findings..........................................................................................................................3-12
ii

3.4.1 Semiconductor Lithography................................................................................................3-12

3.4.2 Power Meter and Laser Suppliers .......................................................................................3-14

3.5 Quantitative Analysis .................................................................................................................3-16

3.5.1 NIST's Costs........................................................................................................................3-16

3.5.2 Industry Benefits.................................................................................................................3-17

3.5.3 Metrics................................................................................................................................3-19

3.5.4 Uncertainty..........................................................................................................................3-20

4. ASSESSMENT OF HIGH-SPEED MEASUREMENT R&D AND CALIBRATION SERVICES ......... 4-1

4.1 Economic Importance to Telecommunications Industry ..............................................................4-1

4.1.1 Fiberoptic Communications..................................................................................................4-1

4.1.2 Optical Fiber Power Measurements......................................................................................4-4

4.1.3 High-speed Detector Measurements......................................................................................4-6

4.2 Industry Supply Chain..................................................................................................................4-7

4.3 Economic Analysis Framework....................................................................................................4-9

4.4 Survey Findings..........................................................................................................................4-12

4.5 Quantitative Analysis .................................................................................................................4-16

4.5.1 NIST's Costs........................................................................................................................4-16

4.5.2 Industry Benefits.................................................................................................................4-18

4.5.3 Metrics................................................................................................................................4-20

4.5.4 Uncertainty..........................................................................................................................4-21

5. ASSESSMENT OF MEASUREMENT TECHNOLOGY FOR THE MEDICAL INDUSTRY .............. 5-1

5.1 Economic Importance to the Medical Community.......................................................................5-1

5.1.1 Laser-based Medical Services...............................................................................................5-1

5.1.2 Optical Power Measurement .................................................................................................5-2

5.2 Industry Supply Chain..................................................................................................................5-4

5.3 Economic Analysis Framework....................................................................................................5-8

5.4 Survey Findings..........................................................................................................................5-10

APPENDIX A NIST'S TECHNICAL CONTRIBUTIONS............................................................................... A-1

A.1 Advanced Measurement Technology ..........................................................................................A-1

A-2 Services to Industry.....................................................................................................................A-2

A.2.1. Contributions to Commercialized Products..........................................................................A-5

APPENDIX B LASER TECHNOLOGY .............................................................................................................B-1

B-1 Basic Concepts............................................................................................................................B-1

B.2 Laser Power and Energy Measurements......................................................................................B-2

B.2.1 Laser Power Instruments......................................................................................................B-2

B.2.2 Fiberoptic Measurements.....................................................................................................B-5

B.2.3 Measurement Set-up and Procedure.....................................................................................B-6
iii

B.3 Calibration...................................................................................................................................B-7

B.3.1 Field Instrumentation ...........................................................................................................B-8

B.3.2 Transfer Standards ...............................................................................................................B-8

B.4 Factors Affecting Measurement Accuracy ..................................................................................B-9

B.4.1 Wavelength ..........................................................................................................................B-9

B.4.2 Detector Characteristics.....................................................................................................B-10

B.4.3 Beamsplitter .......................................................................................................................B-10

B.4.4 Fiberoptic Connector..........................................................................................................B-11

B.4.5 Other ..................................................................................................................................B-11

APPENDIX C METRICS .................................................................................................................................... C-1

C.1 Internal Rate Of Return (IRR).....................................................................................................C-1

C.2 Benefit-to-cost ratio.....................................................................................................................C-2

C.3 Net Present Value (NPV)............................................................................................................C-2

APPENDIX D HIGH-SPEED MEASUREMENT TECHNOLOGY................................................................ D-1

APPENDIX E HISTORY OF NIST'S HIGH-SPEED MEASUREMENT PROGRAM .................................E-1
iv

LIST OF FIGURES

Figure

Figure 1. General Approach for Identifying NIST Investments................................................................................1-5

Figure 2. Flow of Measurement Technology for NIST's Radiometry Outputs ........................................................2-6

Figure 3. Schematic of an Excimer Laser Photolithography System .......................................................................3-6

Figure 4. Measurement Technology Flow for Semiconductor Industry...................................................................3-8

Figure 5. General Concept of (a) Short-, (b) Long-Haul Fiberoptic Communications Links....................................4-3

Figure 6. Measurement Technology Flow for Telecommunications Indus try ........................................................4-8

Figure 7. Measurement Technology Flow for Medical Therapeutics ......................................................................5-5

Figure A-1. NIST Calibration Process: (a) Initial calibration, and (b) Six-month recalibration.............................A-3

Figure A-2. Hierarchy of Standards Traceability....................................................................................................A-4

Figure B-1. Examples of Laser Power Meters.........................................................................................................B-3

Figure B-2. Cross Section of a Generic Calorimeter...............................................................................................C-4

Figure B-3. Laser Power Measurement Set-Up ......................................................................................................B-6

Figure B-4. Laser Power Calibration Set-up...........................................................................................................B-7

Figure D-1. Frequency Response of Optical Detectors...........................................................................................D-2
v

LIST OF TABLES

Table

Table ES-1. Estimate Range of Lower-bound Economic Impact for Investments in Primary Calibration 

Services........................................................................................................................................................ES-2

Table ES-2. Estimate Range of Lower-bound Economic Impact for Investments in 248 nm Metrology 

(1990-2009)..................................................................................................................................................ES-4

Table ES-3. Estimate Range of Lower-bound Economic Impact for Investments in High-speed Metrology 

(1992-2009)..................................................................................................................................................ES-6

Table 1. Worldwide Laser Sales, 1999 ....................................................................................................................2-2

Table 2. Economic Framework for Overall Assessment of NIST's Calibration Services ......................................2-10

Table 3. NIST's 1999 Costs for Laser Calibration Services...................................................................................2-17

Table 4. Disaggregated 1999 Benefits (costs avoided) for Calibration Services...................................................2-20

Table 5. Estimate Range of Lower-bound Economic Impact for Investments in Primary Calibration Services....2-21

Table 6. Measures of DRAM Process Improvements..............................................................................................3-2

Table 7. DUV Life Cycle for Semiconductor Lithography.....................................................................................3-4

Table 8. Economic Framework for Assessing 248 nm R&D and Calibration Services.........................................3-10

Table 9. Development costs for NIST's program (current-year dollars) for 248 nm Laser Measurement Technology

.......................................................................................................................................................................3-17

Table 10. Costs for NIST's 248 nm Program (Current and Constant 1999 Dollars)..............................................3-18

Table 11. Semiconductor Supply Chain Benefits (constant 1999 $) from Investments in NIST's 248 nm 

measurement technology ...............................................................................................................................3-19

Table 12. Total Costs and Benefits (constant 1999 dollars) for Investments in NIST's 248 nm Measurement 

Technology....................................................................................................................................................3-21

Table 13. Estimate Range of Lower-bound Economic Impact for Investments in NIST's 248 nm Metrology ......3-21

Table 14. Economic Framework for Assessing High-speed R&D and Calibration Services...................................4-9

Table 15. Development Costs (current dollars) of NIST's High-speed, Frequency-response Measurement 

Technology....................................................................................................................................................4-17

Table 16. Current and Constant (1999 base year) Development Costs of NIST's Program for High-speed, 

Frequency-response Measurement Technology.............................................................................................4-17

Table 17. Telecommunications Supply Chain Benefits from NIST's Investments in High-Speed Measurement 

Technology (constant 1999 dollars)..............................................................................................................4-19

Table 18 brings together the costs and benefits necessary to present evaluation metrics. ......................................4-20

Table 18. NIST's Costs and Telecommunications Industry Benefits for Investments in High-speed Measurement 

Technology (constant 1999 dollars)..............................................................................................................4-20

Table 19. Estimate Range of Lower-bound Economic Impact for NIST's Investments in High-speed 

Metrology......................................................................................................................................................4-21

Table 20. Key Medical Laser System Suppliers and Markets.................................................................................5-7
ES-1

EXECUTIVE SUMMARY

The National Institute of Standards and Technology (NIST) develops techniques and 

standards for characterizing the light emitted from lasers. In particular, NIST conducts research 

and provides metrology services (primary standards and attendant calibration services) for the 

reliable and accurate measurement of laser beam strength (power and energy). Accurate 

measurements of laser power and energy are important for research, engineering, industrial 

processing, quality control, safety, product acceptance, and regulatory compliance. Measurement 

accuracy is a prerequisite for the design, purchase, and operation of laser-based equipment in 

diverse fields such as materials processing, medical diagnostics and surgery, computer data 

storage, barcode scanning, image recording, telecommunications, and entertainment.

This study assesses the economic impact on US industry from NIST's program in laser 

power and energy measurement. NIST has invested in infratechnologies (infrastructure 

technologies) that make laser power/energy measurements practical and efficient for a broad base 

of industry. Case studies are used to examine economic outcomes associated with selected 

outputs from NIST's program. 

ES.1 OVERALL ASSESSMENT OF ANNUAL METROLOGY SERVICES

The provision of primary standards and calibration services affecting all industry sectors 

is the first output under examination. Laser output power/energy is used to specify the 

characteristics of lasers and laser systems, and industry has recognized the importance of accurate 

calibrations of instruments measuring that output with traceability to national (primary) standards 

established and maintained at NIST. NIST calibrates detectors and instruments containing these 

detectors to support three types of laser-based measurements:

(1) The power or energy output of laser light sources used in a broad 

range of industrial applications, 

(2) The power emerging from the ends of optical fibers used typically in 

fiberoptic communications, and 

(3) The frequency response of high-speed detectors that enable greater 

bandwidth (information carrying capacity) in high performance 

communication systems.
ES-2

Economic outcomes (benefits) attributable to NIST's primary calibration services were 

identified through interviews with a sample of firms that obtain calibrations directly from NIST. 

In the counterfactual absence of NIST's outputs, the survey respondents would have incurred 

additional costs for: (1) verifying measurement accuracy for their customers, (2) calibrating and 

maintaining in-house ("golden") measurement standards, and (3) obtaining calibration services 

from foreign laboratories to enable US exports and support general production.

Lower-bound estimates of the economic impact from NIST's investments in primary 

standards and calibration services are shown in Table ES-1. The calculated metrics estimate the 

annual economic impact of the services using the data available for 1999. The metrics are based 

on an appraisal of net economic benefit and expenditure data attributable to the services 

associated with the laser metrology infratechnologies provided by NIST in that year. The 

estimated benefits, based on reports of the survey respondents, are lower-bound estimates 

because they reflect just a portion of the costs avoided by the private sector because of NIST’s 

services. 

Table ES-1. Estimate Range of Lower-bound Economic Impact for Investments in 

Primary Calibration Services

Metric Low Midpoint High

Benefit-to-Cost Ratio 8.1 11.3 14.9

Net Benefits in 1999 17,100,000 23,800,000 30,300,000

Several factors cause the calculated metrics to be conservative estimates of NIST’s 

economic impact on domestic industry. A major source of downward bias is the unquantified 

cost to US industry because of the loss in domestic firms' instrument sales that would result from 

reliance on foreign laboratories as a substitute to NIST for primary calibration services. Domestic 

firms would likely lose sales and market share to foreign firms in the counterfactual scenario 

where NIST is not available as a neutral US authority maintaining standards to which 

measurements could be traced. Unquantified transaction costs avoided in downstream tiers of the 

affected supply chains are another source of conservatism in the estimates. That is, in addition to 

the reported benefits for firms working closely with NIST (primarily laser instrument suppliers)

and the customers of these firms, NIST's measurement technology diffuses to downstream 

segments of the industry supply chain, including end-use applications. Additional costs would 

likely be incurred to verify the accuracy of measurements in these downstream tiers in the 

absence of NIST, and these avoided costs were not estimated in the calculated metrics. 
ES-3

ES.2 ASSESSMENT OF 248 NM R&D AND METROLOGY SERVICES

A specific measurement technology developed by NIST has benefited the chain of 

industrial firms in semiconductor manufacturing. That measurement technology is for lasers 

operating at the 248 nanometer (nm) wavelength used in the current generation of projection 

photolithography, the key process for the progressive miniaturization of semiconductor integrated 

circuits (ICs). This trend in miniaturization has increased the functionality of semiconductor ICs, 

which has been the main reason for the expanded utilization of IC technology in numerous 

applications affecting daily life. 

The particular NIST output under examination is R&D and metrology (standards and 

calibration services) applied to 248 nm excimer lasers. NIST invested in this measurement 

technology in synch with "roadmaps" established by the semiconductor industry for innovations 

in photolithography technology. The NIST measurement technology diffuses through a chain of 

semiconductor equipment and materials firms, and eventually reaches the end-users—the 

semiconductor manufacturers. The ability of NIST to accurately measure the power from 248 nm 

lasers has facilitated the transition to economic fabrication of smaller IC linewidths, which has 

been a key driver for the continued, rapid development of the electronics industry.

Economic outcomes attributable to NIST's R&D efforts and primary calibration services 

were identified through structured interviews with the relevant power meter and laser suppliers. 

In the counterfactual absence of NIST's outputs, the survey respondents would have incurred 

additional costs as follows:

• Transaction costs to verify measurement accuracy for customers

• Purchase, installation, operation, and maintenance of extra 

equipment to establish proprietary metrology capabilities 

• Extra scientists and engineers to establish in-house proprietary 

metrology standards

• Technical and administrative costs to work with foreign laboratories 

rather than NIST 

Interviews conducted with experts in semiconductor photolithography revealed limited 

diffusion of NIST's measurement technology for maintaining process control in high-volume 

semiconductor production. While the power meters used in a photolithography system typically 
ES-4

are calibrated to absolute standards at NIST as a purchase requirement, semiconductor 

manufacturers commonly use relative measurements to maintain process control across multiple 

lithography tools in a fabrication plant as well as across multiple plants within a firm. This 

common practice of using relative measurements, rather than absolute measurements traceable to 

primary standards at NIST, shows the potential for improving process control in high volume 

semiconductor production. The historical experience with experimental, trial-and-error 

semiconductor fabrication has persisted as a proven method even as advancements in metrology 

make possible the use of absolute measures to save materials and time. The established way of 

fabricating semiconductors with trial-and-error applications of laser power has perhaps become a 

barrier inhibiting movement toward the use of absolute measurements.

Yet, the use of power meters calibrated to absolute standards at NIST is intrinsic to 

economical semiconductor production. Such traceability to standards ensures integrity and 

reliability of laser measurement, and the reduced measurement uncertainty lessens the 

dependence on the experimental method of semiconductor process development and production. 

Also, a power meter traceable to NIST's primary standards reduces the time spent troubleshooting photolithography problems because engineers have greater confidence in the accuracy 

of the detector readings. Consequently, when an IC fabrication process goes out of control, the 

power meter is often the last component investigated among the many potential sources of error 

in a lithography system. Typically, the problem for process control is found elsewhere and the 

measurements traceable to NIST reduce the costs of identifying and correcting the problem.

Lower-bound estimates of the economic impact from NIST's investments are shown in 

Table ES-2. The calculated metrics are based on appraisals of net economic benefit and 

expenditure data attributable to the infratechnologies provided by NIST.

Table ES-2. Estimate Range of Lower-bound Economic Impact for Investments in 248 nm 

Metrology (1990-2009)

Metric Low Midpoint High

Real Internal Rate of Return 33.3% 43.1% 52.0%

Benefit-to-Cost Ratio 2.3 3.0 3.8

Net Present Value in 1990 $1,720,000 $2,550,000 $3,380,000

Net Present Value in 1999 $3,170,000 $4,690,000 $6,210,000
ES-5

Benefits from NIST’s measurement technology have been quantified for the suppliers of 

power/energy meters and lasers. The additional transaction costs avoided for the downstream 

customers of these suppliers are also estimated. One source of downward bias in the calculated 

metrics is the unquantified reduction in effort for semiconductor manufacturers to trouble-shoot 

photolithography process problems because of confidence in the accuracy of detector readings 

calibrated to NIST's standards as a prerequisite for purchase. The estimate of NIST's expenditures 

for 248 nm metrology includes joint maintenance costs that also benefit the NIST project in 193 

nm metrology. Hence, associated with the costs for the 248 nm project are unmeasured spillover 

benefits for NIST’s project in 193 nm metrology, and those benefits are not measured in the 

present study.

ES.3 ASSESSMENT OF HIGH-SPEED R&D AND METROLOGY SERVICES

NIST develops and maintains standards as well as provide calibration services for 

specialized optical sources and detectors used in high performance communications systems. 

Significant technical progress in the communications industry has been associated with 

increasing the bandwidth of optical fibers and the associated laser transmitters and receivers 

(detectors). Systems with greater bandwidth increase the volume of telephone calls, cable 

television stations, and computer data content (graphics/audio/video) that can be carried over a 

single fiberoptic communications link. NIST supports industry with methods for characterizing 

the increasing frequency response of high-speed detectors that are essential to enabling higher 

bandwidth systems. Advances in high-speed detector measurement technology have contributed 

to the recent expansion in many areas of the telecommunications industry, including:

• High-speed Internet access despite rapid increases in the number of 

end users

• Optical fiber replacing copper wire for telephone landline systems 

(including hybrid fiber-coax trunk lines)

• Cable TV, local area network, and antenna remoting applications 

with fiberoptic cables (satellite telephone and micro-cellular 

systems)

• High bandwidth, secure military communications links
ES-6

Hewlett Packard (HP), a leading supplier of high-speed instrumentation, and other firms 

have worked cooperatively with NIST since the early 1990s to develop metrology for high-speed 

detectors. Initially, HP was the major conduit for transferring NIST’s standards for high-speed 

measurements to the telecommunications industry. A series of interviews with Hewlett Packard’s 

key expert in metrology for fiberoptic high-speed frequency response provided HP’s perspective 

about the impact of NIST's investments. Consultation with other industry experts allowed 

estimation of industry-wide benefits from NIST’s investments in high-speed metrology. 

The detailed interviews with HP revealed that in the absence of NIST’s investments for 

high-speed metrology, HP would have incurred additional costs in the following categories of 

economic impact: 

• R&D and equipment in the mid-1990s to establish the state-of-theart metrology

• Engineering effort to establish measurement technology standards; 

this entails extra technical staff for participation at standards 

conferences and publication of papers describing the proprietary 

standards

• Continuous effort to maintain the private investments in high-speed 

metrology

• Transaction costs to verify the accuracy of measurement traceability 

because customers would have less trust in calibrations obtained 

through a private, non-neutral source of primary standards

Table ES-3 shows lower-bound estimates of the economic impact from NIST's 

investments by using the information from HP and from other industry experts. The estimated net 

benefits include R&D costs avoided by HP and other direct users of NIST’s high-speed services 

as well as transaction cost savings for the direct users and their customers.

Table ES-3. Estimate Range of Lower-bound Economic Impact for Investments in 

High-speed Metrology (1992-2009)

Metric Low Midpoint High

Real internal rate of return 119% 136% 155%

Benefit-to-cost ratio 7.8 9.1 10.5

Net Present Value in 1992 $10,900,000 $12,300,000 $13,800,000

Net Present Value in 1999 $17,500,000 $19,800,000 $22,100,000
ES-7

Several factors cause the calculated metrics to be conservative estimates of NIST’s 

economic impact on domestic industry. The key source of downward bias is that additional, 

counterfactual investments by industry would have been unable to replace completely the 

measurement technology and services provided by NIST. HP or any other firm attempting to 

replicate the NIST R&D and metrology would have fallen short of complete substitution 

because: (1) the neutrality of a US-national standards organization would be lost, and (2) the 

metrology would be less robust. HP identified instruments that actually embody the NIST 

measurement technology, and the impact on product sales from less than complete substitution of 

NIST's investments was not ascertained. Similarly, the degrading effect of any shortfall in the 

counterfactual proprietary measurement technology on the aforementioned expansions in the 

telecommunications industry was not quantified.

Additional transaction costs to verify the accuracy of measurements in more downstream 

tiers of the telecommunications industry in the absence of NIST are not quantified, and therefore 

are another source of downward bias in the estimate of benefits. Benefits for firms other than HP, 

which have also worked cooperatively with NIST in developing high-speed measurement 

technology, have been quantified in part by using the advice of leading industry experts to 

estimate the benefits based on HP’s detailed report. Nonetheless, the estimates are quite 

conservative for the metrics presented. 

ES.4 MEASUREMENT TECHNOLOGY FOR MEDICAL COMMUNITY

Lasers have been used in medicine for a variety of diagnostic and therapeutic 

applications. The advent in the 1980s of "minimally invasive” laser-based medical procedures 

have increased the cost effectiveness of many types of surgeries and enabled many new types of 

procedures.

The output power/energy level of a laser used in a medical laser application often 

determines the safety and effectiveness of a medical procedure. In particular, severe 

complications can arise from unintentional damage to non-target tissue if the laser power or dose 

(amount of radiation received in a time span) is too high. Precise targeting of the power/energy 

and accurate dosimetry benefits the medical field because they:
ES-8

• Increase the safety and effectiveness of a laser procedure

• Ensure that complications do not occur for the patient

• Provide precise treatment of delicate tissues, such as arteries and the 

cornea

• Meet regulatory requirements of the US Food and Drug 

Administration (FDA) with cost-effective system designs

• Reduce physician liability

The measurement infrastructure provided by NIST (national standards and calibration 

services) provides a consistent frame of reference for the chain of firms supplying medical laser 

systems and the users of these systems. Having agreement on this measurement infrastructure 

reduces disputes and transaction costs among all affected parties, and reduces the cost of 

regulatory compliance for traceability to absolute standards at NIST. For example, all laser 

systems used in a clinical trial can be relied upon to provide the same power/energy for a given 

application, and the subsequent lasers sold commercially can be relied upon to accurately provide 

the same parameters as those systems used during the clinical trial.

Investments in laser measurement technology by NIST from as early as the 1960s are still 

applicable to the medical community. In fact, NIST has not conducted any specific research 

activities toward medical applications of lasers in over 20 years. Until recently, this state of 

measurement technology at NIST has been sufficient. 

Suppliers of power and energy meters believe that new investments in metrology at NIST 

could support emerging laser technologies that have evolved beyond those served by the 

capabilities of the current infrastructure. The latest laser applications require doctors to know the 

laser exposure levels before beginning a medical procedure to within ± 1.5 percent accuracy 

traceable to NIST's standards, rather than the historical FDA requirement of ± 20 percent 

measurement accuracy. The latest photodynamic therapy for cancer treatment, for example, uses 

exposure systems rather than cutting or burning technology. Without tight absolute measurement, 

permanent damage can be done to the patient.
ES-9

The more stringent requirement for absolute standards traceability represents a 

requirement for greater measurement accuracy traceable to NIST standards than the current 

metrology at NIST allows. Although a quantitative analysis has not been attempted, the 

qualitative evidence suggests that new investments by NIST and industry could make valuable 

improvements in the infrastructure for laser metrology that supports the medical supply chain.

ES.5 CONCLUSION

The conservative, lower-bound estimates of economic impact show that NIST's 

investments have been socially valuable. NIST's development and diffusion of infratechnologies 

supporting the practical application of laser-based measurements has been a success. Public 

performance of R&D for laser metrology, maintenance of standards, and the provision of 

calibration services has been more effective and efficient than performance by the private sector 

or other national laboratories.
1-1

1. INTRODUCTION

1.1 THE ECONOMIC IMPORTANCE OF MEASUREMENT TECHNOLOGY

Measurement is the application of the principles from metrology (the science of 

measurement) to determine some characteristic or property of products, services, or systems. 

While the importance of measurement is often overlooked or taken for granted, it is essential to 

the nation’s economy. Effective measurement ensures that, for example, clocks at residences and 

workplaces display approximately the same time, a pound of coffee purchased from two different 

stores is approximately of equal weight, and a bolt from Company A fits into a nut made by 

Company B. 

The practice of measurement and the advancement of measurement technology are 

indispensable for innovation, development, production, marketing, and trade. Industrial 

researchers and production managers need to measure the performance of devices or systems for 

a host of reasons, including:

• Controlling manufacturing processes to reliably fabricate products of 

a desired quality

• Evaluating the design of new or improved products

• Testing the conformance to standards of the interfaces among 

different implementations or components to ensure system 

interoperability

• Demonstrating product acceptance with specified performance and 

assuring the proper amount of output to minimize transaction costs 

in markets1

These needs are pervasive, affecting every industrial sector. Thus, the economic impacts of 

measurement tend to be substantial from the perspective of both individual firms and entire 

industry supply chains. Robust measurement capability is especially important and challenging in 

a technology-driven economy. 

 

1 Transaction costs act as "frictions" in the effective operation of an economic system. Types of transaction costs 

include the costs of writing contracts, finding parties with whom to trade, policing agreements, bargaining (before 

and after a sale), assessing the potential and actual performance of purchased goods and services, and haggling to 

correct ex post contractual misalignments.
1-2

Measurement technologies can be developed and implemented efficiently through 

infrastructure technologies (infra-technologies). Infra-technologies are technical “tools” that 

make the R&D, production, and market penetration stages of product cycles more efficient. 

These tools enable industry to efficiently develop applications that are based on both generic and 

proprietary technologies.2 Examples of infra-technologies include measurement methods, 

calibrated artifacts (e.g., standard reference materials) and calibration services that allow efficient 

use of these methods, reference databases, simulation models for design and process control, 

technical bases for interface standards, product performance tests, and quality assurance 

techniques.

Despite the economic benefits from investments in measurement technologies, industries 

tend to under invest in infra-technologies because the tools and techniques:

• Often derive from a generic technology base that differs from the 

core technologies that industry develops and draws on to develop its 

products and processes

• Are used simultaneously by many firms (i.e., as industry protocols or 

standards) 

• Cannot be embodied in products and processes

As a result, the National Institute of Standards and Technology (NIST) develops and transfers 

infra-technologies as a part of its mission supporting US industry.3 NIST invests in tools 

commensurate with the commercialization needs of industry, which have become ever more 

demanding.

 

2 Gregory Tassey, The Economics of R&D Policy (Quorum Books: Westport, CT) 1997. The role of infrastructure 

technology for product development is discussed in Chapter 8.

3 The United States Department of Commerce (DoC) through NIST supports US industry’s efforts to develop and 

acquire new technologies, accelerate commercialization of new products and processes based on these 

technologies, and achieve global market penetration to advance the nation’s economic growth and standard of 

living. NIST's laboratories provide this support in the form of various types of nonproduct standards, testing, and 

laboratory accreditation services that are used by industry in meeting the challenge of keeping pace with rapid 

technological change. NIST is the only federal laboratory with the primary mission of supporting the 

development and commercial application of technology.
1-3

1.2 NIST PROGRAM IN LASER CALIBRATION SERVICES

Over the past few decades, lasers have become increasingly important in industry and the 

laboratory. Laser applications have been developed in diverse fields such as materials processing, 

medical diagnostics and surgery, computer data storage, research and development, construction, 

communications and entertainment. As laser technology expands to meet the needs of new 

applications, so must the instrumentation that assures the laser works properly to meet the needs 

of a specific application. In particular, users demand reliable and accurate measurement of laser 

power and energy as a prerequisite to purchase and operation of their laser system. 

NIST’s activities in developing techniques to measure the output power and energy of 

laser light trace back to the early 1960s when the laser itself was being developed. Such activities 

are organized currently in the Optoelectronics Division of NIST's Electronics and Engineering 

Laboratory (EEEL). The Division’s mission is to provide the optoelectronics industry with 

advanced measurement technology, standards, and traceability to those standards.4 The Sources 

and Detectors Group is one of four groups within NIST’s Optoelectronics Division. Two projects 

within this Group are Laser Radiometry and High-Speed Measurements. 

The Laser Radiometry project develops standards and maintains calibration services for 

both laser and optical fiber detectors. The goal of the laser calibration service is to enable 

accurate determination of the power or energy output of laser light sources used in a broad range 

of applications. The goal of the fiberoptic power calibration services is to enable the accurate 

determination of the light power emerging from the ends of optical fibers used typically in laserbased fiberoptic communications applications such as telephone, cable television and computer 

interconnections (e.g., local area networks and the Internet). NIST supports the achievement of 

both of these calibration services principally by characterizing the performance of both detectors 

and instruments containing these detectors (mainly, laser power/energy meters and optical fiber 

power meters) used to measure the power or energy of laser light. NIST first offered laser 

calibration services in the late-1960s, and fiber power measurement services were added in the 

mid-1980s.

 

4 The subject of optoelectronics deals with the interaction of light and optical processes with electronic processes. 

Such interactions are usually accompanied by an energy conversion. Examples of optoelectronic devices include 

lasers, photodetectors, and light-emitting diodes. The field of optoelectronics has been spurred by the needs of 

light-wave communications systems, optoelectronic computing, instrumentation, and alternate energy systems. 
1-4

The High-Speed Measurements project develops standards and maintains calibration 

services for specialized optical sources and detectors used in high performance communications 

systems. Technical progress has been made in the communications industry by increasing the 

bandwidth (information carrying capacity) of optical fibers and the associated laser transmitters 

and receivers (detectors). Greater bandwidth systems increase the volume of telephone calls, 

cable television stations, and data content (graphics/audio/video) that can be carried over a single 

fiberoptic communications link. NIST supports industry with methods for characterizing the 

increasing frequency response of high-speed detectors that are basic to enabling greater 

bandwidth systems.

NIST has taken an active role in identifying the laser power/energy and fiberoptic 

measurement needs of US industry. As the laser field has developed and the range of technical 

parameters (wavelength, power, pulse length) has expanded, NIST has remained in step by 

developing technologies and metrologies that expand the envelope of laser measurement 

capabilities. Figure 1 illustrates the sources of information flowing into NIST and upon which 

NIST projects have been based to support the growth of the laser industry.

Generally, NIST’s outputs (technical contributions) to industry from the Laser 

Radiometry and High-speed Measurement projects can be categorized as follows:

• Advanced measurement technologies

— Detector characterization techniques

— Source characterization techniques

• Services to industry

— Development and maintenance of primary standards 

— Provision of calibration services

— Measurements (wavelength, power range, pulsewidth, 

modulation frequency) at the technological state-of-the-art 

• Contributions to commercialized products

Appendix A provides a brief description and history of the above outputs from NIST.
1-5

Figure 1. General Approach for Identifying NIST Investments

Standards

Committees

- TIA

- ANSI

- IEC

- ISO Calibration

Customers

- Problems

- Future Needs

Laser

Measurement

Short Course

NIST

Joint

Workshops

Organizations

- NCSL

- SPIE

- OIDA

Company Visits

- NIST to Company

- Company to NIST

- Collect Information

- Market Research

Technical

Conferences

- CLEO

- OFC

Published

Literature

Industry-Funded

R&D

Projects

Industry

Project Review

&

Approval

Budget

Develop Project

Sheets

- Major Task Areas

- Milestones

- Cost

Presentation

to

Division Chief

Defense-Funded

R&D

Projects

- Support

- Impact
1-6

1.3 ECONOMIC MOTIVATION FOR NIST'S PROGRAM

 By developing the technical outputs identified in Section 1.2, NIST-EEEL is providing 

infra-technology to industry.5 As observed in Section 1.1, without public investment in infratechnology, industry left on its own often under invests in such supporting technology 

infrastructure. This "market failure" occurs for several reasons:

Under investment in supporting technology infrastructures—

insufficient infra-technology R&D. Infra-technologies not only have 

common use characteristics (including their use as standards), but 

they often derive from a different science and generic technology 

base than does the core technology being applied by industry through 

its internally funded R&D. The latter fact argues for a strong role by 

government laboratories in the conduct and diffusion of infratechnology research. Government labs can realize economies of 

scale and scope from unique research skills and facilities that can be 

applied to meet the infra-technology needs of a number of industries. 

These labs also can provide neutral third party facilitation of the 

standards process.6

Further, such infra-technology is “non-rivalrous”—non-rivalrous goods are 

consumed collectively: 

Critical for R&D policy is the fact that technology infrastructure and 

other generic technical knowledge fall into the non-rivalous category, 

but excluding additional consumers of this knowledge is not in the 

public interest. Thus, these types of public technology goods are 

funded at least partially by government to compensate for spillovers.7

Following this reasoning, markets would fail to provide, in sufficient amounts, the infratechnologies examined in this study. Further, the costs to the private sector of trying to replace 

NIST’s laser metrology services would exceed NIST’s costs. Therefore, industry benefits from 

NIST-EEEL's investments in the development of laser measurement technology and in the 

provision of calibration services for traceability of industry measurements to national standards. 

 

5 Gregory Tassey, "R&D Trends in the U.S. Economy: Strategies and Policy Implications," Planning Report 99-2, 

Program Office, Strategic Planning and Economic Analysis Group, National Institute of Standards & 

Technology, US Department of Commerce, pp. 24-26, April 1999.

6 Ibid, p.40.

7 Ibid, p.23, footnote 25.
1-7

1.4 CASE STUDY OVERVIEW

This study assesses ex post the economic impacts on US industry from selected NIST 

outputs in laser radiometry and high-speed optical measurement. Case study analyses were 

conducted to better understand the prevailing mechanisms of market failure, and to characterize 

the benefits from NIST's infra-technology investments. NIST’s infra-structural outputs are 

examined in terms of the affected industrial activities, the technical innovation strategy of the 

affected industries, and the competitive performance of these industries. 

The economic impacts are assessed from several perspectives. The first assessment is 

across numerous supply chains that benefit from laser metrology services provided by the entire 

NIST EEEL Sources and Detectors Group. This overall assessment is followed by in-depth 

studies of services for two industry supply chains, semiconductor manufacturing and 

telecommunications. These two studies examine some of the recent R&D efforts of EEEL in 

laser metrology. Such recent NIST R&D in laser metrology helps industry establish new process 

technology that makes possible new products and services, thereby opening new markets. New 

semiconductor lithography techniques and new telecommunications technologies have been 

enabled by NIST’s recent R&D investments in laser measurement technology. In addition to new 

R&D efforts, simply having NIST as the repository for national standards and as the provider of 

primary calibration services—allowing traceability of industrial laser measurements to those 

national standards—provides infra-technology that supports numerous applications of laser 

technology throughout the economy. To illustrate NIST’s role in such applications, and to 

explain the importance of ongoing investments in new laser metrology, the report also assesses 

the economic importance of laser measurements traceable to NIST's standards in medical 

services.

The economic impacts of NIST’s investments as revealed by the case studies are 

discussed in the ensuing chapters as follows: 

• Chapter 2 assesses the overall economic impact of NIST's role in 

providing primary calibration services to a broad range of industries 

• Chapter 3 analyzes the economic impact on the semiconductor 

industry from NIST's investments in R&D and calibration services 

for 248 nanometer (nm) measurement technology

• Chapter 4 analyzes the economic impact on the telecommunications 

industry from NIST's investments in R&D and calibration services 

for high-speed measurement technology
1-8

• Chapter 5 uses the applications of lasers in medical services to 

illustrate the usefulness of having NIST as the repository of national 

standards for laser metrology and to explain the importance of 

ongoing investments at NIST

Additionally, the report contains the following appendices:

• Appendix A provides a brief description and history of the technical 

contributions from NIST in laser metrology

• Appendix B provides a technical overview of lasers as well as the 

techniques and equipment used in laser and fiberoptic power 

measurement

• Appendix C describes the metrics used for calculating economic 

impact

• Appendix D describes the technical importance of high-speed 

frequency response measurements in communications systems
2-1

2. ASSESSMENT OF PRIMARY CALIBRATION SERVICES

As described in Section 1.2, the provision of primary standards and calibration services is 

a major technical output of the entire NIST EEEL Sources and Detectors Group. In this chapter, 

the economic outcomes associated with this output are assessed across all affected industry 

sectors. 

This chapter begins with a brief discussion of the economic importance of lasers and the 

attendant role of accurate measurement technology. The next section characterizes the general 

tiers that form the relevant industry supply chain. The next section presents the methodology 

used for the economic analysis and the industry survey. Subsequent sections provide results of 

the survey and an analysis of the economic impact.

2.1 ECONOMIC IMPORTANCE TO INDUSTRY

2.1.1 Technological Advancement and Application of Lasers

Ted Maiman implemented the first laser at the Hughes Research Laboratories in 1960. 

Throughout the 1960s, lasers were developed primarily for military applications such as laser 

rangefinders and laser gyroscopes. By the 1970s, lasers were used in a broad array of commercial 

applications, from alignment tools used for surveying and saw mill operations to barcode readers 

used for supermarket checkout. Medical applications of lasers were developed at this time, 

including their use in ophthalmology (for retinal photocoagulation), surgical cutting, and 

coagulation.

In the 1980s, military applications of lasers included rangefinders, designators, 

communications links, missile fusing, and countermeasures as well as research on laser weapons. 

Medical applications of lasers expanded greatly in this decade, with growing acceptance of 

surgical and ophthalmic lasers as well as the development of new applications such as laser 

angioplasty (clearing plaque from blood vessels) and refractive surgery (cutting or shaping the 

cornea to correct vision). During this same timeframe, materials processing applications became 

firmly established (e.g., cutting and welding auto bodies and ships as well as heat-treating gears 

and turbines) using very high power (multi-kilowatt) lasers. Image recording applications (laser 

printing and copying) also expanded rapidly during the 1980s, with higher laser output power 

levels and shorter wavelengths being demanded later in the period to enable faster and higher 
2-2

resolution printing. Laser technology developed rapidly in several directions during the 1980s as 

more efficient manufacturing techniques made lasers a cost-effective system component for 

enabling compact disk (CD) and digital video disk (DVD) players in the consumer market. 

Meanwhile, higher-power lasers were developed for more specialized applications such as highend laser printing, optical storage, and vision correction (corneal shaping).

Through the 1990s, laser technology has been accepted in a dozen major application areas 

as shown in Table 1. In 1999, the size of the worldwide laser market was estimated at $4.9 

billion, with the US accounting for approximately 60 percent of these total revenues.8

Table 1. Worldwide Laser Sales, 1999 

In terms of total sales, the top four markets in descending order are:

(1) Telecommunications, accounting for about 45 percent of 1999 

revenues. This market is being driven by worldwide growth in 

fiberoptic telecommunications to handle increasing rates of voice 

and data traffic in developed countries as well as the needs for new 

communications infrastructures in developing countries.

 

8 As reported in the January and February 2000 issues of Laser Focus World. 

 Revenues 

($M)

Units 

(thousands)

Telecommunications 2,179 2,060

Materials Processing 1,113 32

Optical Storage 709 302,500

Medical Therapeutics 461 18

Research 125 5,025

Image Recording 110 14

Other 77 10,646

Instrumentation 60 36,004

Sensing 33 40

Entertainment 15 66

Inspection, Measurement and Control 11 1

Barcode Scanning 8 1,325

Total 4,900 357,731
2-3

(2) Materials processing, which includes lasers for metal processing 

(e.g., cutting and welding auto bodies, and heat-treating turbine 

blades), marking, semiconductor and microelectronic fabrication, 

rapid prototyping, and micromachining. About 24 percent of the $1.1 

billion in the materials processing sector went toward excimer lasers, 

which are being used primarily for manufacturing the most recent 

generation of semiconductor devices.

(3) Optical memory, with large numbers of relatively inexpensive diode 

lasers being used for audio and video CD players as well as computer 

CD-ROMs and DVD-ROMs. 

(4) Medical field, with lasers being used for both therapeutic and 

diagnostic purposes, and products span virtually every medical 

specialty—in many cases allowing the accomplishment of 

procedures that could never have been performed previously. Much 

of the current growth is coming from office-based cosmetic laser 

applications.

2.1.2 Laser Power/energy Measurement

Generally, laser power and fiberoptic power meters are used to measure the radiation 

emitted from lasers used in a wide range of applications. These two families of instrumentation 

are similar technologically, both having a detector that converts optical power or energy into an 

electrical signal for measuring the optical parameter of interest. Laser power meters are used in a 

variety of applications, while fiberoptic power meters are used primarily in telecommunications 

applications to measure optical power transmitted through an optical fiber system. Technical 

concepts of lasers and the general procedure for laser and fiberoptic power measurements are 

described briefly in Appendix B. 

Importance of Accurate Laser Power Measurements. As laser technology has 

developed over the past two decades, the needs for measurement of laser output power and 

energy have expanded in several technical directions:

• Increased power range, from picowatts to kilowatts for continuous 

wave lasers

• Increased wavelength range, from 193 nm in the ultraviolet part of 

the electromagnetic spectrum to 10.6 microns (μm) in the infrared
2-4

• Increased modulation frequency and decreased laser pulsewidth

• Increased accuracy

The relative importance of these expanded power/energy measurement capabilities varies by 

application of the laser technology.

Measurements of laser beam strength (power and energy) are fundamental to nearly all 

applications of lasers, and thus are a high priority across the entire US laser industry.9 Accurate 

laser power and energy measurements are important for research, engineering, industrial 

processing, quality control, safety, product acceptance and compliance. Further, laser 

measurements attain an increasing importance as laser systems are integrated into high-value 

applications.

In many cases, the accuracy of the laser output measurement plays a critical role in the 

safe and effective use of the laser system. For example:

• The technical progression for smaller transistors and denser circuitry 

has forced the semiconductor manufacturing industry to use excimer 

laser (deep ultraviolet) lithography, thereby requiring accurate 

measurements of laser pulse energy to ensure high-yield, low-cost 

chip manufacturing

• The quality of a weld on an auto body may depend on the optical 

power being supplied by a CO2 laser

• In laser surgery, if the laser power is too high, severe complications 

can arise from unintentional damage to target or non-target tissue 

• In the telecommunications field, measuring the optical loss of 

fiberoptic components at microwatt levels is necessary to ensure 

proper transmission of voice and data signals across long-distance 

landlines

Ultimately, the success or failure for many of these applications depends on the accuracy of the 

laser power/energy measurement. Many factors can affect the accuracy of laser and fiberoptic 

power/energy measurements as described in Appendix B. 

 

9 “Measurements for Competitiveness in Electronics,” NISTIR 4583, April, 1993.
2-5

Calibration to National Standards. As laser output power/energy is used to specify 

lasers and laser system characteristics, industry has recognized the importance of maintaining 

accurate calibration of laser power/energy meters based on national standards. A traceable 

calibration to a national (primary) standard through an unbroken chain of comparisons or 

transfers allows purchasers of laser products to utilize a common frame of reference when 

designing lasers into commercial systems. Purchasers of lasers, whether for research or 

integration into original equipment manufactured (OEM) systems, generally have a minimum 

output power requirement to ensure success for their laser applications. Laser manufacturers 

must specify the output power/energy of their products, and product pricing is related closely to 

these output specifications. Therefore, calibrating laser power/energy outputs to national 

standards provides an efficient means for ensuring accurate measurements among detector 

manufacturers, laser manufacturers, laser system integrators, and laser users.

NIST has offered calibration services since the late 1960s to assist the laser community in 

obtaining accurate measurements of laser sources which are traceable to primary standards. 

Generally, calibration involves a two-step process. First, the power/energy output of a laser is 

measured using both the detector under test (DUT) and a NIST standard detector. Second, the 

results of these measurements are compared to determine a correction factor for the DUT 

according to the NIST standard. Appendix A provides additional details on the process of 

calibrating laser power/energy meters between NIST and its customers.

Regulatory Requirements. Since the 1970s, the Center for Devices and Radiological 

Health (CDRH), which is now a part of the Food and Drug Administration (FDA), has been 

regulating the sale of all laser products by ensuring that certain safety features are provided. 

These features include a keyswitch, pilot light, and time delay before the laser operates, and 

various labels showing the laser output location, maximum power, wavelength, and safety class. 

Various safety classes have been defined according to the hazard type (eye safety, skin safety, fire 

hazard, etc.), which are dependent on the laser wavelength and output power/energy. 

As a result of CDRH regulations, laser and laser system manufacturers have been 

required to monitor their laser power and report these measurements and other parameters to the 

CDRH in order to maintain approval for the sale of these lasers and systems. Annual submissions 

are required, and traceability to primary standards at NIST is a requirement.
2-6

2.2 INDUSTRIAL SUPPLY CHAIN

The generalized industrial supply chain for the diffusion of NIST's radiometric 

measurement technology is shown in Figure 2. A similar supply chain for high-speed frequency 

response measurement technology is shown in Section 4.2.

Figure 2. Flow of Measurement Technology for NIST's Radiometry Outputs

2.2.1 Laser Power/ Energy Meter Instrumentation Suppliers

In 1998, over 30 companies (7 are non-domestic) manufactured and sold laser power and 

energy meters.10 Many firms focus exclusively on laser power/energy meters, and some of these 

companies also sell fiberoptic measurement instrumentation. Based on discussions with industry 

representatives, the top producers in the US laser power/energy meter market and their 

approximate market shares include: 

 

10 Laser Focus World Buyers Guide 98, Pennwelll Publications, December 15, 1997.

Laser Application Systems

Lasers

Instruments

Laser power/energy,

fiberoptic power
2-7

• Molectron (20 percent market share)

• Coherent (20 percent share)

• Ophir (20 percent share)

• Scientech (10 percent share)11

Other producers in this field include Gentech (Canada), Fotec, Laser Precision, and OAI. 

Additionally, the optical accessories companies (e.g., Newport Corporation, Ealing ElectroOptics, Edmund Scientific, and Jodon) and the laser suppliers (e.g., Coherent with its subsidiary 

Lambda Physik, Lexel Laser, and Spectra Physics) market OEM power meters from the top 

producers. All the power/energy meter suppliers benefit directly from NIST calibration services, 

and some have incorporated NIST-developed technology into their products.

Approximately 15,000 laser power meters are sold annually in the US. In addition, about 

20,000 laser energy meters (joulemeters) are sold. Assuming an average selling price of $1000, 

the total laser power/energy meter market is approximately $35 million. The lifetime of a laser 

power meter is approximately 6 years (range of 4-10), implying that about 200,000 power/energy 

meters are in use. 

Most products in a laser system supply chain require traceability to NIST as a purchase 

specification. The power meter companies utilize “working” standards to calibrate their 

customers’ meters, while an in-house “gold” standard calibrates the working standards. The gold 

standard is the transfer standard calibrated against the NIST primary standard. Due to the large 

number of different lasers and wavelengths required, power meter companies cannot duplicate 

the metrology systems maintained at NIST. Therefore, typical power meter companies spend 

$30,000 or more per year for NIST calibration fees to maintain their in-house gold standards. A 

portion of the acquisition cost for each power meter usually is ascribed to the calibration costs. 

For the largest customers, NIST calibration can represent 20 percent of the cost of the power 

meter. 

Power meters sold to the industrial market typically are calibrated annually, but power 

meters used in research applications may not be calibrated as often. On average, industry sources 

estimate that 60 percent of the installed base of power/energy meters are calibrated annually, for 

 

11 The share figures reflect a consensus opinion of industry experts interviewed in this study. Some respondents 

provided somewhat different figures for market shares, but the basic results are not sensitive to those differences.
2-8

a total of 120,000 calibrations per year in the US. Typically, a calibration performed by the 

power/energy meter company costs $200 (range of $100-400), which equates to a total 

calibration market of about $2.4 million annually. Very few firms provide detector calibration 

services other than the firms that supply power/energy meters and laser systems.

2.2.2 Fiberoptic and High-speed Instrumentation Suppliers

More than 30 companies (10 are non-domestic) manufacture and sell fiberoptic power 

meters. Nearly half of these companies also sell laser power/energy meters, as noted above. Other 

fiberoptic instrumentation incorporating detectors include:

 • Attenuation meters: 16 firms (7 non-domestic)

• Bit error rate testers: 5 firms (1 non-domestic)

• Dispersion testers: 8 firms (3 non-domestic)

• Index profilers: 1 firm (non-domestic)

• Numeric aperture testers: 6 firms (2 non-domestic)

Many firms other than the meter suppliers provide calibration services for fiberoptic 

power meters. These firms support the multitude of telephone, cable television (CATV), and 

local area network (LAN) system installers that perform fiber power measurements on a daily 

basis. Calibration service providers for fiber power meters include Noyes, Photecs, and EXFO 

(Canada). Both the meter suppliers and commercial calibration service providers maintain 

transfer standards from NIST, and a large part of the value these companies provide for 

recalibration is NIST traceability.

Suppliers of high-speed instrumentation are described in Chapter 4, which provides a 

more focused assessment of NIST's impact on these suppliers and the telecommunications 

industry. 

2.2.3 Laser Suppliers

Over 120 firms (over 50 are non-domestic) supply lasers in 12 categories of use. As noted 

in Section 2.2.1, many laser manufacturers (Coherent with its subsidiary Lambda Physik, Jodon, 

Lexel, Spectra Physics) also sell laser power/energy meters, many of which are manufactured by 

one of the top power meter manufacturers (Molectron, Coherent, Scientech, and Ophir). All laser 
2-9

manufacturers utilize power meters to characterize the output of their systems for: (1) 

commercial purposes since the price of the laser typically is dependent on the power output, and 

(2) certain regulatory purposes (e.g., requirements of the CDRH, and the FDA in the medical 

laser arena). 

2.2.4 Laser Application Systems Suppliers

Over 150 firms (45 are non-domestic) supply laser application systems just for materials 

processing.12 Many other firms supply laser systems in 15 other product categories. Many of 

these firms are also listed as suppliers of lasers. 

The market for laser application systems is in the tens of billions of dollars. Suppliers 

often base their system designs on the laser output power since the laser is often the most costly 

and least controllable of system components. All suppliers of laser systems utilize laser power 

meters to:

• Conduct incoming inspection of lasers

• Perform R&D and engineering development of new system designs

• Test laser systems

Each of the above uses of power meters requires accurate measurements traceable to NIST’s 

primary standards. Incoming lasers must meet minimum power specifications to be useful in the 

intended system. System design and testing of prototypes in R&D are based on the laser powers 

measured at various points within the system, and laser systems must be tested to ensure proper 

operation for end users. 

 

12 Laser Focus World Buyers Guide 98.
2-10

2.3 ECONOMIC ANALYSIS FRAMEWORK

Table 2 summarizes the framework for assessing the economic impact on US industry of 

NIST's primary calibration services.

Table 2. Economic Framework for Overall Assessment of NIST's Calibration Services

NIST Outputs Hypothesized Outcomes Affected Industrial 

Organizations

Outcome Measure 

and Affected Stage 

of Economic 

Activity

Comparison 

Scenario 

(counterfactual 

replacement of 

NIST outputs)

Time Series of 

NIST Costs (C) 

and Industry Net 

Benefits (B)

Primary 

calibration 

services for 

– Radiometry 

– High-speed 

measurements

Avoidance of:

– Extra equipment and personnel 

costs for in-house metrology

– Extra transaction costs incurred 

in the absence of industry 

agreement on NIST as a 

primary reference for 

calibrated standards in all laser 

wavelengths and high-speed 

measurements

All laser-based 

markets, firms that 

supply:

– power/energy 

meters

– fiberoptic power 

meters

– lasers

– high-speed 

instrumentation 

Increased personnel 

and equipment to 

validate accuracy of 

laser measurements for 

obtaining:

– transfer standards 

from foreign labs or 

proprietary firms

– product acceptance 

with customers

Use of foreign 

laboratories, or

Establishment of 

proprietary 

standards 

(C) 1999 NIST’s 

costs to maintain 

and provide 

calibration services 

(B) 1999 net costs 

avoided by industry 

because of NIST’s 

calibration services

Most of NIST's customers for primary calibration services are suppliers of laser 

power/energy meters, fiberoptic power meters, and high-speed instrumentation. NIST calibrates 

annually about 50 laser power meters, 40 optical fiber power meters, and 20-25 high-speed 

detectors. Customers use these calibrated artifacts as a basis for internal measurement, known as 

“gold standards,” to establish traceability with NIST’s national reference standards. The gold 

standards are used, in turn, as a basis for calibrating downstream instruments to NIST's standards. 

Thus, the relatively few primary calibrations performed at NIST are transfer standards that form 

the basis for consistent measurements among the hundreds of thousands of instruments used in 

industry. 

This overall assessment poses a counterfactual hypothesis whereby NIST's calibration 

services would be unavailable in 1999. For the overall assessment, the annual costs of operating 

and maintaining NIST's laser calibrations services are compared with the net 1999 costs that 

industry would have incurred to cope without NIST's calibration services. Those counterfactual 

costs to industry are avoided because of NIST's laser calibration services, and hence those costs 

avoided are one measure of the benefits from NIST's laser calibration services. 
2-11

Just the single 1999 annual benefits-to-costs metric is provided for the overall assessment 

because the time series showing the history of all of the relevant costs and benefits associated 

with NIST EEEL laser calibration services is not available. In the absence of such a 

comprehensive time series, one hypothetical question is posed: Had NIST not provided the laser 

calibration services in 1999, what would industry have spent to provide quality laser calibrations 

without those services? This scenario assumes that all of the measurement technology has been 

developed and is publicly available, and the change is that NIST ceases to provide its laser 

calibration services.

For the overall assessment, the benefits for industry are the 1999 costs avoided because 

NIST provides laser calibration services. Those benefits for 1999 include any additional costs for 

new equipment and personnel as well as the annual ongoing costs of replacing NIST’s services. 

These initial additional costs do not entail R&D because the state of metrology development is 

assumed. However, absent NIST, some companies would invest in equipment to allow more inhouse metrology work to replace the use of NIST’s services.

The benefits-to-costs ratio developed for the overall assessment of NIST’s laser 

calibration services does not measure the broad set of all benefits from the products supported by 

the traceable laser calibrations. Rather, the benefits measured are just the net costs that industry 

would incur without NIST’s laser calibration services.13 The assumption is that absent NIST’s 

laser calibration services, the affected domestic industry would find or establish substitute means 

for obtaining laser calibrations traceable to standards. The net costs of the effort to establish the 

substitute means (the costs avoided because of NIST’s services) are the measure of industrial 

benefits for this study. 

2.4 SURVEY FINDINGS

For the overall assessment, the population of beneficiaries from NIST's laser calibration 

services includes the laser power and energy meter suppliers, fiber-optics power meter suppliers, 

the suppliers of high-speed frequency-response fiber-optic measurements, and the suppliers of 

lasers and laser systems. The sample, from which information about the benefits of NIST’s laser 

calibrations services were obtained through telephone interviews, covered suppliers of laser 

 

13 The net costs are the additional costs; namely, new costs incurred minus any old costs that would no longer be 

incurred in the counterfactual scenario.
2-12

power and energy meters representing over 70 percent of the market for those meters. Also 

interviewed were two of the leading suppliers of fiber-optics calibrations services and fiber-optic 

power meters, the key supplier of high-speed frequency-response fiber-optic measurements, and 

two of the leading suppliers of lasers and laser systems. 

The interviews show clearly that the provision by NIST of those laser calibration services 

is of great importance to industry. Industry values the calibration services because they are 

grounded in NIST’s laser measurement technology and in NIST’s role as the repository of 

national standards. Respondents were asked to rank the relative importance of NIST’s outputs to 

their company. The NIST outputs to be ranked were: 

• The provision by NIST of the measurement technology for laser 

strength at different wavelengths 

• The provision of standards 

• The provision of calibration services 

• The provision of state-of-the-art measurements for special needs

• Direct contributions to commercialization and production 

The respondents typically ranked the package, or combination, of the measurement technology, 

the standards, and the calibration services as most important, although some respondents would 

emphasize one aspect of the package over others. Further, certainly there are cases where a 

special measurement to meet a particular need has been important, and respondents mentioned 

such cases, but ranked that particular output behind the package of measurement technology, 

standards, and calibration services. Direct contributions to commercialization and production 

ranked last. 

The traceability of laser measurements to standards at NIST is generally seen as a key part 

of the successful use of laser technology in industry. Respondents indicated that they would face 

substantial additional costs for laser metrology if the services of NIST were not available in 

1999. 
2-13

2.4.1 Suppliers of Laser Power/Energy Meters and Fiberoptic Power Meters 

The largest US laser power/energy meter suppliers were interviewed: Molectron, Ophir, 

Coherent, and Scientech. OAI, a company that dominates the market for portable power/energy 

meters used in the semiconductor industry's supply chain, was also interviewed. Coverage of 

fiber-optic power meters included interviews with Hewlett Packard (now Agilent—Hewlett 

Packard’s spin-off of its test and measurement businesses), and EXFO Electro Optical 

Engineering, one of the leading suppliers of fiber-optic power calibration services (including the 

fiber-optic power meters) worldwide. 

Respondents spoke authoritatively about the additional costs that industry would incur if 

NIST's laser calibration services were not available. Those additional costs would result, in part, 

because of the need for extra effort to resolve disputes about measurements with customers. 

Customers would need to be convinced of the validity of measurements in the absence of 

traceability to NIST's standards. Further, additional equipment costs as well as additional costs 

for scientists and engineers to deal with proprietary metrology standards would be required. 

Likewise, obtaining primary calibrations from foreign laboratories would entail extra costs for 

technical and administrative reasons. Respondents did not break out any differences in 

calibration services fees for dealing with foreign labs, but instead gave overall estimates of the 

increase in costs and then listed the sources for the cost increases. Working with foreign labs 

would take more time and resources because of technical issues about ensuring traceability to 

standards for US customers, shipping problems (including dealing with US customs), language 

problems, and problems of dealing with different time zones. As one respondent observed, NIST 

is better for its US customers because they are familiar with NIST, and because some customers 

have contracts that specify traceability to NIST. 

The responding companies identified a mixture of approaches in the absence of NIST. 

Some would build more in-house metrology capability, some would use foreign labs, and some 

would do both. Most firms reported extra costs of dealing with customers absent traceability to 

NIST. The loss of the US standards organization would entail additional transaction costs of 

dealing with customers, even given the use of more in-house metrology and the use of foreign 

labs. Clearly, in 1999 a mixture of approaches would have been used to deal with a loss of 

calibration services from NIST. Respondents did not provide an assessment of what the ultimate 

approach for working without NIST would be, but in the short term they reported that both the 

neutral services of foreign labs and the proprietary services of leading firms would be the sources 

for primary calibrations.
2-14

The additional costs identified reflect the costs for just the fractions of the US laser 

power/energy meter market and of the fiber-optic power meter market represented by the 

companies of the respondents. For each market, the product of the reciprocal of that fraction and 

the additional costs identified was used to estimate the total industry-wide addition to costs for 

the meter suppliers in 1999 in the absence of NIST’s laser calibrations services.

The survey findings include benefits for the customers of the instrument suppliers that 

were interviewed. Respondents indicate that a portion of the cost of doing without NIST's 

calibration services is transaction costs incurred between instrument suppliers and their 

customers. Time is spent in negotiations between the sellers of laser measurement instruments 

and their customers about the accuracy of measurements. The interviews have established an 

estimate of those transaction costs for the firms supplying the US market. The negotiations about 

measurement accuracy are, of course, two-sided. If a power meter company reports spending an 

extra hour discussing or negotiating with customers to resolve measurement disputes, then those 

customers are assumed to spend an hour on the additional discussions. Hence, the estimate of 

transaction costs found for the instrument suppliers has been doubled to estimate a small portion 

of the total transaction costs avoided by industry. 

2.4.2 High-speed, Frequency Response Detector Instruments

In-depth interviews were conducted with Hewlett Packard, the major company that 

obtains high-speed, frequency response detector measurement standards directly from NIST. 

Hewlett Packard and other companies that are direct customers of NIST’s high-speed services 

then transfer the calibrated technology to the rest of the telecommunications industry. Hewlett 

Packard has provided information about the counterfactual costs of replacing the investments that 

NIST made in developing high-speed measurement technology, and the benefits from those 

investments are analyzed separately in Chapter 4. For the purpose of the evaluation in this 

chapter, the benefits from NIST's calibration services are estimated given the current state of 

measurement technology. The additional costs that would have been incurred by industry absent 

NIST's high-speed frequency response investments are addressed in Chapter 4.14

 

14 Counterfactual investments would have been made in 1999 by some of the power meter firms to attain the 

necessary in-house capability. In those cases, if NIST quit providing services, then the companies would invest in 

the requisite equipment. With the high-speed measurements, the recent R&D investments established the 

metrology that HP now has at hand.
2-15

Without NIST and the traceability it provides, Hewlett Packard and other direct 

customers of NIST’s services would incur additional transaction costs of becoming primary 

standards providers. The switch from a neutral standard provided by NIST to a proprietary 

standard provided by HP and others would entail costs. Interviews identified the costs for HP to 

become a proprietary source of primary standards. Those costs entail additional staffing to 

resolve disputes with customers, additional participation at standards conferences, and additional 

efforts for writing papers establishing measurement technology standards. Additional engineers, 

specializing in fiber-optics measurement technology, would be needed.

Under the counterfactual scenario, during the initial years of high-speed metrology 

development HP becomes the primary standards organization and all subsequent measurements 

become traceable to HP's standard. However, beginning in 1997, NIST developed a heterodyne 

system operating at 850 nm to address the needs of the computer interconnect market, and after 

that, HP, previously the main customer for NIST’s high-speed calibrations services, accounted 

for only about 50 percent of NIST’s calibration work load. Therefore, from 1998 onward, the 

counterfactual scenario assumes that other current direct customers of NIST would provide some 

of the proprietary primary standards. Since HP and other direct customers of NIST are working 

with the same R&D base as NIST, the quality of the replacement measurement technology is 

theoretically equivalent. However, Hewlett Packard emphasized that, realistically, industry could 

not be completely replace NIST's services for high-speed frequency response detector 

measurements because there would be no neutral US authority to provide a standard to which all 

calibrations could be traced. Industry values the neutrality of NIST as a non-proprietary agency. 

That neutrality is what cannot be replaced or substituted for even the very best proprietary 

primary standards, and it forms the basis for the additional transaction costs that would be 

incurred. 
2-16

2.4.3 Laser Suppliers

Occasionally, a laser supplier will obtain calibration services directly from NIST to 

ensure the highest possible accuracy of measurements taken on their lasers and laser systems. 

One special case involved the laser suppliers Cymer and Coherent (with its laser supplier 

Lambda Physik as a subsidiary) working cooperatively on a calibration project with NIST. Cymer 

interacted directly with NIST, while Coherent provided some of the project’s funding and some 

sensors used in the project. More generally, laser suppliers need to validate the quality of their 

metrology for the laser power at wavelengths of interest for their lasers and laser systems. For 

that reason, traceability of measurements to NIST is important to laser suppliers.

Cymer, the dominant supplier of 248 nm lasers for the semiconductor industry, was 

interviewed primarily for the in-depth study of the semiconductor chain in Chapter 3. Coherent 

was also interviewed regarding its subsidiary, the laser supplier Lamda Physik. From these 

interviews were obtained estimates of benefits that resulted because NIST’s services address 

special calibrations needs for the laser supplier Cymer. Such benefits were not projected 

industry-wide, but simply counted as benefits for the Cymer alone. The more general benefits 

identified by Cymer and Coherent (for its laser-supplier subsidiary) of traceable measurements, 

including reduced transaction costs with customers and reduced costs for in-house metrology, 

were projected industry-wide using estimates of the respondents’ market shares. 

2.5 QUANTITATIVE ANALYSIS

2.5.1 NIST's Costs 

The NIST-EEEL Sources and Detectors Group is composed of two projects: (1) Laser 

Radiometry, and (2) High-speed Source and Detector Measurement. The Laser Radiometry 

project includes calibration services for laser power and energy as well as for fiber-optic power. 

NIST's estimated costs of the projects for calendar year 1999 are shown in Table 3.
2-17

Table 3. NIST's 1999 Costs for Laser Calibration Services

Expenditure Mix 

(percentage)

NIST Project

Expenditures 

1999 ($K)

Measurement 

Capability

Technology 

Development

Fundamental 

Research

Laser Radiometry 1,703 80 20 0

High-speed 1,036 90 10 0

NIST’s managers observe that the distinction between measurement capability and 

technology development is quite unclear. The estimates are accurate to ± 5 percent, but the band 

of uncertainty could be much larger if the evaluator used different assumptions for the definitions 

of the categories than those used by NIST’s managers. 

Thus, NIST's estimated 1999 annual cost for providing calibrations services for laser 

power and energy meters, fiber-optic power meters, and high-speed frequency response 

measurements is approximately $2.3 million:

(0.80) * ($1,703,000) + (0.90) * ($1,036,000) = $2,294,800

Some of NIST's costs are reimbursed by industry in the form of fees for calibration 

services. However, for the analysis of social economic impact of a NIST program, such 

reimbursed costs are not "negative costs." When calculating the social rate of return to the public 

provision of the infra-technology, all of the costs of the policy should be considered. The social 

cost of a program equals the resource costs for making available the program's services. Then, 

against those social costs are weighed the benefits of the program. Some of those benefits are the 

reason that the private sector is willing to pay for NIST's services. Subtracting the private sector 

payments for these services would incorrectly subtract some of the costs of maintaining the 

program. Those costs exist whether the government pays for them entirely with public funds or 

whether some of the cost is reimbursed by the private sector. Further, such reimbursed costs 
2-18

should not be subtracted from the industry payments for NIST services as "pull costs" in the 

context of the social rate of return analysis.15 Rather, the reimbursed costs are "pecuniary costs" 

that simply redistribute the costs of providing NIST's services. The total social benefits and costs 

of the program are the same, regardless of who pays for the costs.

2.5.2 Industry Benefits

To weigh against NIST's 1999 costs of $2.3 million are the social benefits in the form of 

costs avoided in 1999 by industry because of NIST's laser calibrations services. The benefits of 

NIST’s services would have been lost, and industry would have had to incur costs to replace 

NIST’s lost services. The costs that industry avoided in 1999 are the social benefits from NIST’s 

calibration services, which become the numerator of the benefit-to-cost ratio. 

The computed estimate of the social benefits to industry is conservative. Many of the 

respondents emphasized that even incurring the additional costs to cope with the loss of NIST’s 

services, those services could not be replaced completely. Many respondents said it would be 

impossible for industry to replace completely the essential service of traceability to a US national 

standard provided by the neutral US authority. One respondent with a dominant market position 

in a particular type of meter even quantified the loss of traceability to NIST for his company's 

power and energy meters. He stated that without traceability to NIST, half of his company's sales 

would be lost to foreign competitors. Hence, the benefit-to-cost ratio is an underestimate because 

the industrial costs avoided that are measured do not include all of the costs from the loss of 

traceability to a national US standard provided by a neutral authority. Only partial benefits from 

NIST EEEL laser calibration services are measured. The benefits measured are only the 

additional costs for US industry of trying to replace NIST's calibration services with additional:

 

15 "Pull costs" should indeed be considered in an economic impact evaluation. If a company employs a scientist fulltime on an annual basis in order to use the services of NIST, then the fully burdened cost of the scientist is 

considered—usually in the analysis of the benefits of NIST's program for industry. Typically, such costs are 

(usually implicitly) netted out from the benefit stream. For example, an industrial representative who is asked to 

identify the additional expenditures to replace NIST's services may reply: "we currently have to employ one 

scientist full time to make use of (pull in) NIST's services. Without NIST, we would employ that scientist and 

two others full time to have the same capabilities that we have now." Then, for the benefits accruing to NIST's 

investments in the program, the fully burdened costs of two (not three) scientists are avoided because of NIST's 

program being available.
2-19

• Time spent verifying meter calibrations with customers (transaction 

costs)

• Equipment and labor to calibrate gold standards

• Effort of dealing with foreign laboratories 

The benefits from NIST's services that cannot be replaced by industry's extra efforts are not 

measured. Industry benefits measured are just the additional direct costs that industry would 

incur in attempting to replace NIST's services, and do not include the indirect effects on sales that 

would result according to the respondents. Thus, NIST's role as a neutral US provider of 

traceable standards could never be completely replaced.

Total benefits are estimated as $26,100,000. The benefits are the costs that industry 

avoided in 1999 because NIST did, in fact, provide the services. When the respondents estimated 

benefits for their companies and analogous benefits would accrue to all companies in the 

industry, the reported benefits were multiplied by the reciprocal of the sum of the respondents’ 

market shares to estimate the industry-wide benefits.16

As recounted above, companies differed in the ways they would adjust to a situation 

without NIST’s laser calibration services. Various mixtures of expanded in-house metrology and 

proprietary standards, extra negotiations with customers about measurement accuracy, and use of 

foreign labs would be used. The total benefit figure reflects the mix of counterfactual approaches 

that would occur as reported by the respondents. Companies also differed in the extent to which 

they disaggregated the additional costs that they would face when pursuing those alternatives. For 

example, some respondents broke out additional equipment costs from personnel costs associated 

with new in-house metrology efforts. Other respondents would make a single estimate covering 

both sources of additional costs. Further, the transaction costs from the additional negotiations 

with customers often cannot be separated from additional costs of dealing with foreign 

laboratories. Some of those costs, such as dealing with customs or extra fees or time zones or 

various technical issues could be seen as a separate category of additional costs associated with 

using foreign laboratories for US customers who would prefer traceability to NIST. There are 

 

16 Thus, if respondents with two-thirds of a market estimate benefits totaling $y, the estimate of the industry-wide 

benefits would be $(1.5)*y. 
2-20

associated transaction costs of dealing with those customers, however, which respondents 

typically are unable to separate, instead giving an overall assessment of extra costs from dealing 

with foreign labs from all of the various sources. To the extent possible, given the foregoing 

difficulties when disaggregating costs, the makeup of the additional costs is given in Table 4.

Table 4. Disaggregated 1999 Benefits (costs avoided) for Calibration Services

Expanded in-house metrology—additional 

costs for equipment and personnel

Transaction costs—additional costs of dealing 

with customers, suppliers, and/or foreign 

laboratories

$13,100,000 $13,000,000

2.5.3 Metrics

Dividing the 1999 annual benefits from NIST EEEL laser calibration services by the 1999 

annual costs for the NIST program ($26,100,000/ $2,300,000) provides a point estimate of the 

lower bound for the benefit-to-cost ratio of 11.3. Using the same figures, the 1999 net benefit is 

$23,800,000.

2.5.4 Uncertainty

If respondents gave a range for an answer, the midpoint of the range was used as the 

estimate. Such ranges can vary from one respondent to another, even for the same cost (such as 

additional time, and hence cost, of dealing with customers, or additional equipment costs, or 

additional needs for scientists and engineers). Uncertainty about market shares can vary for 

different products. At times respondents gave an expected value, but did not attempt to provide a 

range of estimates for uncertainty. Studying the various sources of uncertainty, an approximate 

range for the uncertainty was determined based on the stated responses and judgements of those 

close to the technology and the markets. Taken together, the benefits measured are believed to 

have a range of uncertainty of approximately ± 25 percent based on the respondents’ judgements. 

Thus, an estimate of 100 would correspond to a possible range from 75 to 125. NIST has 

estimated its costs with a range of uncertainty of ± 5 percent. Incorporating the uncertainty ranges 

into the calculations, the range of uncertainty for the metrics is shown in Table 5.
2-21

Table 5. Estimate Range of Lower-bound Economic Impact for Investments in Primary 

Calibration Services

Metric Low Midpoint High

Benefit-to-cost ratio 8.1 11.3 14.9

Net Benefits in 1999 17,100,000 23,800,000 30,300,000
3-1

3. ASSESSMENT OF 248 NM R&D AND CALIBRATION SERVICES

This chapter assesses a specific R&D effort and primary calibration services for 

measurement technology applied to 248 nm lasers used in semiconductor manufacturing. The 

first section briefly describes the economic importance of projection lithography within the 

semiconductor manufacturing process and the attendant role of laser measurement technology. 

The second section describes the industry supply chain affected by NIST's 248 nm measurement 

technology. The third section describes the framework for economic analysis of NIST's 248 nm 

investments. This is followed by the findings from an industry survey and an analysis of the 

economic impact.

3.1 ECONOMIC IMPORTANCE TO SEMICONDUCTOR INDUSTRY

3.1.1 Semiconductor Manufacturing

Significant progress in the functionality of semiconductor integrated circuits (ICs) 

achieved over the past three decades has been the key reason for the expanded utilization of this 

technology in numerous computer applications affecting daily life. The impetus for this growth in 

functionality has been the continued shrinkage of transistors, device spacing, and interconnect 

paths formed in the semiconductor manufacturing process.17 Such miniaturization has enabled an 

increase in the transistor density (number of transistors that can fit onto a single chip), which is 

the key driver of product complexity and price in integrated circuits. Making transistors smaller 

is desirable since:

• The microcircuits operate faster

• Interconnections are smaller

• System reliability increases because more functions are integrated 

into a single space

• Less power is consumed

• Manufacturing yields increase, thus reducing production costs 

 

17 Transistors are the basic building blocks of integrated circuits. Transistors are gates that open and close at highspeeds to direct electrons around electronic circuitry. Making transistors and the attendant circuitry smaller gives 

electrons less distance to travel, which makes them faster. Transistor devices are microscopic in scale, allowing 

millions of these devices to be packed onto individual chips. 
3-2

In other words, all performance and cost metrics improve, and no engineering tradeoffs are 

required. 

Making transistors smaller depends on the minimum printable linewidth (the feature size 

of the thinnest circuit line or transistor element) that can be fabricated cost effectively. Table 6 

illustrates the trend toward reduction in linewidth and increased functionality for the Dynamic 

Random Access Memory (DRAM), the largest category of memory chips. For example, in 1980 

DRAM devices containing 64,000 bits-per-device (64Kb) were produced using “design rules” 

having 2.5 μm (2.5 microns) feature sizes.18 By 1996, 256Mb DRAMS—a 4,000-fold increase in 

capacity—were being produced using 0.25 μm feature sizes. This trend, largely unprecedented in 

industrial history, is fundamental in the semiconductor business. The technical progression has 

been described as “Moore’s Law”: the power and complexity of the silicon chip doubles every 18 

months with a proportionate decrease in costs.19

Table 6. Measures of DRAM Process Improvements

1975 1980 1985 1990 1992 1995 1998

Minimum line widths (microns) 6 2.5 1.5 0.5 .035 0.25 0.18

DRAM (# bits) 4K 64K 1M 16M 64M 256M 1G

Defect Density/cm2

8 6 2 1 <1 <1 <1

DRAM Yield (%) 25 40 60 80 85 90 90+

Wafer Size (mm) 75 100 125 150 200 200 300

Asset Utilization (%) 30 40 45 55 80 >90

Fab Cost (20K wafer starts/month) 100M 150M 250M 500M 750M 1B 2B

Cost of good die ($/cm2) 8 7.5 6 5.5 4 3.9 3.8

Source: James Freedman, Semiconductor Research Corporation

 

18 The semiconductor industry has been organized around design rules that specify the minimum feature size of 

each device generation. 

19 Gordon Moore, currently chairman emeritus and founder of Intel, observed in 1965 that transistor logic density of 

silicon integrated circuits closely followed the following relationship: bits per square inch = 2^(t-1962), where t 

is time in years. In other words, the amount of information storable on a given amount of silicon had doubled 

roughly every year since the year (1962) that planar IC technology was invented. Moore posited that this trend 

would continue into the future, and computing power would rise exponentially over a relatively brief period of 

time. The relation held until the late 1970s when the technical pace slowed to the point where the doubling period 

occurred every 18 months, the current definition of Moore’s Law which Moore himself accepts. This trend 

continues and is the basis for the planning forecasts of many firms in the semiconductor industry.
3-3

3.1.2 Projection Lithography

Producing semiconductors on pace with the rapid technological continuum of Moore’s 

Law over the past twenty years has required advances in projection photolithography. 

Lithography is the dominant cost element in wafer processing, representing about 35 percent of 

the total cost of a processed wafer. Conceptually, imaging a circuit pattern with photolithography 

is analogous to the process used in traditional photography:

• The “flashbulb” illumination source is either a high-power arc lamp 

or, more recently, a laser

• The camera “lens” is near-perfect projection optics

• The “scenery” to be imaged is a set of carefully designed circuit 

patterns on a mask or reticle

• The photographic “emulsion” is a high-resolution photoresist

• The “film” is a wafer, usually made of silicon 

• The film “advance mechanism” is a step-and-repeat stage for 

imaging numerous chips on a single silicon wafer

However, this conceptual simplicity belies the great complexity involved with photolithography. 

In particular, the lithography tool must provide a sharp aerial image of a minute feature size 

while maintaining a comfortable margin for process repeatability.20

Following the laws of optics, the most practical way to reduce the smallest elements on 

the chip while maintaining acceptable levels of process margin has been to reduce the 

wavelength of the illumination source.21 Mercury arc lamps have been the primary lithographic 

illumination sources for integrated circuit (IC) manufacturing for more than 30 years. The 

 

20 Mordechi Rothschild, et. al., “Photolithography at 193 nm,” MIT Lincoln Laboratory Journal, Volume 10, 

Number 1, 1997.

21 Depth of focus (DOF) is the most critical parameter in determining the process margin for photolithography. 

Generally, DOF represents the range of focus errors that a process can tolerate while giving acceptable 

lithographic results. The DOF must be larger than any variation in the flatness of the photoresist surface. Such 

variations in flatness are unavoidable due to: (1) surface deviations of the wafer, and (2) the topography added to 

the wafer through the deposition and etching of various thin films in the course of fabricating the semiconductor 

device.
3-4

semiconductor industry has made the transition from a wavelength of 436 nm (the so-called "Gline" of mercury arc lamps) to 365 nm (the "I-line" of mercury arc lamps), and is now in the 

transition to 248 nm using the krypton-flouride (KrF) excimer laser. A future transition is being 

planned to a wavelength of 193 nm using the argon-flouride (ArF) excimer laser. Both the 248 

nm and 193 nm excimer lasers are referred to as deep ultraviolet (DUV) sources.22

The 1997 technology roadmap of the Semiconductor Industry Association (SIA), as 

shown in Table 7, forecasts that DUV laser technology will be used to fabricate the smallest 

elements in semiconductor production for the next 10 years (through the 130 nm IC device 

generation). As the table shows, the useful life of the DUV lithography tools extends beyond 

leading-edge fabrications. These tools can continue to be used for patterning the majority of noncritical level wafer levels in succeeding IC generations. 

Table 7. DUV Life Cycle for Semiconductor Lithography

 

22 Excimer lasers provide powerful pulses of ultraviolet light. Their high brightness (energy density) makes them 

capable of exposing 10 wafers per hour, versus 1 wafer per hour using a 248 nm incoherent light source (lamp). 

This energy-intensive procedure is repeated 1000 times a second or nearly five to 10 million times a day for 

months at a time in synchronization with the stepper.
3-5

3.1.3 Optical Power Measurement

The exposure of photoresist to DUV laser light is based on the total energy deposited in 

the photoresist. The standardization of the photoresist and the accurate measurement of excimer 

laser pulse energy—process tolerances of about 1 percent are common—have been required to 

obtain consistency in wafer results. Accurate power/energy meters for excimer lasers have been 

required to make these lasers practical in a high-yield, high-volume manufacturing environments 

as the energy level must be adjusted to achieve the proper exposure time for the corresponding 

photoresist and circuit pattern. 

The optical path for a generic excimer laser lithography tool is shown in Figure 3. The 

figure shows two built-in power meters for process control. One power meter is internal to the 

laser system for gauging the laser power supply voltage to ensure a constant pulse intensity 

output. The other, more critical power meter is the exposure power meter. This power meter is 

used for measurement and control of the laser pulse energy. A third power meter is used to 

transfer power meter measurements portably from one lithography tool to multiple tools in a 

semiconductor fabrication plant

The lithography process requires a precise amount of laser dose when exposing the 

photoresist.23 Delivering the correct amount of dose depends highly on the ability to accurately 

measure each pulse of energy. A simple power meter that averages or samples the pulses is 

insufficient since the energy in a typical pulsed laser varies from pulse-to-pulse. Every pulse has 

to be accounted for, or the process is not repeatable. Reproducing the exact dose continuously is 

a key challenge facing lithography companies. Thus, two key parameters of the laser are the pulse 

repetition rate and the pulse-to-pulse energy stability. These parameters have an important effect 

on the energy dose accuracy. Such accuracy can translate into:

 

23 Dose is a set of laser pulses, where the energy in consecutive pulses accumulates to produce a total amount of 

energy in a given area. Power meters infer dose by measuring the total pulse energy in millijoules per square 

centimeter.
3-6

Figure 3. Schematic of an Excimer Laser Photolithography System
3-7

• Higher wafer throughput

• Reduced numbers of test wafers24

• Extended lifetime of the optics on the lithography tool

Laser power at the wafer level (i.e., exposing the photoresist) is only one of many 

parameters that affect chip manufacturing. Resist consistency, laser wavelength, wavelength 

stability, spectral width, and the optical system utilized all have an impact on the resolution 

(minimum linewidth) and the manufacturing yield that can be achieved. Taking these other 

factors into account, laser power at the wafer level must be measured to ± 1 percent accuracy 

with respect to a primary standard to satisfy the needs of semiconductor manufacturers. 

3.2 INDUSTRY SUPPLY CHAIN

The general supply chain for semiconductor manufacturing is shown in Figure 4. 

Molectron has been the largest supplier of wafer plane power meters for 248 nm power meters, 

and other key domestic suppliers include OAI, Scientech, and Ophir. Power meters are used with 

laser illumination sources, which are produced by only a few companies: 

• Cymer, Inc., based in the US 

• Lambda-Physik R&D, a German-based subsidiary of Coherent, Inc., 

a US firm

• Komatsu, based in Japan

 

24 In-process metrology in semiconductor manufacturing requires test wafers that are processed together with 

production wafers. The test wafers are removed from the fab line at selected steps in the process for measuring 

conformance to the process. If deviations or defects are observed during this routine inspection, then detailed 

inspections are undertaken to determine the source and occurrence of the problems. Both routine and detailed 

inspections frequently include measurements of key parameters. Thus, test wafers are essential to produce good 

products consistently.
3-8

Figure 4. Measurement Technology Flow for Semiconductor Industry

Cymer has controlled about 80 percent of the world-wide market for DUV laser sources 

since 1995, when the market for 248 nm production systems began to develop. Through 

December 1997, Cymer has sold over 600 lasers systems that have been incorporated into the 

photolithography tools manufactured by the following five firms:25

• ASM Lithography

• Canon

• Nikon

• SVG Lithography

• Ultratech Stepper 

Sales to the three foreign lithography suppliers (ASM Lithography, Netherlands; Canon and 

Nikon, Japan) accounted for 69, 81 and 89 percent, respectively, of Cymer’s total product sales 

in 1995 ($15.6M), 1996 ($62.5M) and 1997 ($201M). Cymer spent seven years developing its 

 

25 Cymer, Inc. 1997 Annual Report on Securities and Exchange Commission form 10-K. 

- Intel

- AMD

- IBM

- Motorola

- Texas Instruments

- Micron Technology

- National Semiconductor

- Others

Semiconductor Manufacturing

$140B*

Lithography Stepper Equipment

$2.8B*

Excimer Lasers

$70B*

Power Meters

- Ultratech Stepper

- SVG Lithography

- CymerLaser

- Molectron

- OAI

- Scientech

- Ophir

* 1997 World Market Revenues
3-9

248 nm laser before the product design and performance were acceptable to wafer fab 

managers.26Their laser systems sell for about $500K each, including the power meter monitoring 

subsystem. Altogether, Cymer’s lasers have been incorporated into the lithography tools used by 

the 15 largest semiconductor manufacturers worldwide and by 17 US entities.

In 1997, the world market for lithography systems, in which average selling prices are 

about $10 million apiece, was approximately $2.8 billion. According to Dataquest, about 100 

total DUV lithography systems were sold worldwide from 1992-1996.27 The DUV market began 

to take off in 1997 with about 300 units shipped. Sales are expected to rise steadily and reach 800 

units per year by 2000. 

3.3 ECONOMIC ANALYSIS FRAMEWORK

Table 8 summarizes the framework for assessing the economic impact on the US 

industrial supply chain from NIST's investments in 248 nm measurement technology.

SEMATECH, the industrial consortium whose members work together in precompetitive 

technology areas of semiconductor manufacturing, initiated a joint project with NIST in 1990 to 

study metrology requirements of light intensity measurements for 248 nm excimer and I-line 

photolithography systems. The joint SEMATECH/NIST project addressed these needs by 

developing hardware, standards, and the implementation of calibration procedures for the 

metrology. This project was motivated by earlier studies at SEMATECH which revealed that Iline power meters supplied from the primary domestic source, Optical Associates Incorporated 

(OAI), and OAI's primary competitor (Ushio, a Japanese firm) read 20 percent below and above, 

respectively, from a NIST test reference. This significant difference in power meter readings 

created difficulty for SEMATECH member companies in making accurate comparisons of 

lithography tool performance among alternative suppliers of the tools. In fact, an unexpected 

benefit of the joint NIST-SEMATECH project was that the I-line stepper tool produced at the 

time by GCA, then the leading domestic supplier for such tools, compared better in terms of dose 

energy performance against its foreign competition than had been thought previously.

 

26 Design issues included narrowing the bandwidth of the laser output, shaping the output beam, and controlling the 

pulse-repetition rates through a feedback loop. A significant part of the development time involved ramping up 

Cymer’s manufacturing capabilities to a level that could meet volume demands.

27 As reported in “Lithography Market Challenges Manufacturers,” Laser Focus World, October 1997.
3-10

Table 8. Economic Framework for Assessing 248 nm R&D and Calibration Services

NIST

Outputs

Hypothesized 

Outcomes

Affected 

Industrial 

Organizations

Outcome Measures and 

Affected Stage of 

Economic Activity 

Absent NIST

Comparison 

Scenarios 

(counterfactual 

replacement of NIST 

outputs)

Time Series of 

NIST Costs and 

Industry Net 

Benefits

R&D to 

establish 

248nm 

metrology 

Primary 

calibration 

services for 

248nm 

excimer 

lasers

More efficient R&D 

or reduced R&D 

replication to 

establish metrology 

services 

Avoidance of extra 

transaction costs due 

to industry agreement 

on NIST as a primary 

reference for 

calibrated standards 

at 248nm excimer 

wavelength

Improved laser-based 

products and 

processes from more 

accurate standards)

Affected 

semiconductor 

supply chain: 

– power/energy 

meters

– lasers

– lithography tools

– semiconductor 

manufacturers

Increased personnel and 

equipment to establish 

metrology services prior to 

industry adoption of 248nm 

lithography systems 

Increased personnel and 

equipment to validate 

accuracy of laser 

measurements for 

obtaining:

– transfer standards from 

foreign labs or 

proprietary firms

– product acceptance with 

customers

Lower product/ process 

quality and performance 

leading to decreased sales

Reduced fab IC yield for 

semiconductor 

manufacturers

Use of foreign 

laboratories

Establishment of 

proprietary standards 

(C) research, 

develop, maintain, 

and provide 

calibration services 

from1990-2009

(B) 1994-2009 

As a part of the SEMATECH-NIST project, NIST built and delivered two 248 nm 

calorimeters for GCA. GCA closed its semiconductor lithography division in 1993 and returned 

the two calorimeters to NIST, which has been using them as a basis for primary standards since 

1994. One of the early NIST contributions was the development of suitable materials within the 

cavity of the calorimeter and power meters to absorb the 248 nm wavelength and withstand the 

high peak power of excimer laser pulses.28 Prior commercial work by Questec and Scientech had 

relied on using conventional laser power meters and correcting for the absorption of the cavity at 

ultraviolet versus visible wavelengths.29 Since the completion of the joint NIST/SEMATECH 

 

28 NIST developed and characterized highly absorptive materials for use at the ultraviolet wavelengths of these 

lasers. Calorimeters depend on the absorptivity of the cavity at the optical wavelengths being measured. In the 

visible and at infrared wavelengths, very high absorption can be obtained (i.e., the cavity can be made to look 

very “black”). However, absorption becomes more difficult at ultraviolet wavelengths.

29 Originally, the approach to power measurement at 248 nm (the initial excimer laser wavelength used in these 

systems) involved indirect methods of calibration. These methods were based on reflectivity or absorption 

measurements of the 248 nm energy by a conventional (visible wavelength) power meter. The measurements 

were then corrected to ultraviolet wavelengths based on the presumed absorption/reflection curve of the power 

meter detector surface. 
3-11

project, NIST has developed technology and procedures for improving the power measurement 

accuracy at 248 nm from 2 percent to 1 percent for the standard against which transfer meters 

(and then field meters) are calibrated. 

As the technical push for denser and faster circuits shrinks linewidths to 0.15 μm and 

below, the semiconductor industry has shifted to 193 nm excimer laser technology. Lincoln 

Laboratory requested measurement support from NIST at this wavelength in 1996, and 

SEMATECH has been funding NIST for the development of an absolute standard at 193 nm. The 

193 nm excimer laser output characteristics require improved calorimeter technology to establish 

193 nm metrology.30 Due to the nascent nature of this infra-technology at the time of evaluation, 

the NIST investments in 193 nm technology are not included in the scope of this assessment.

NIST has provided calibration services for the suppliers and users of optical power meters 

for 248 nm excimer lasers. NIST has developed the calibration system, including both hardware 

and software. Since the mid-1990s, NIST has provided numerous calibrations of excimer laser 

power and energy meters at 248 nm. Until recently, power meters used in the field (primarily for 

research) were only able to measure excimer laser pulse energy to about 10-15 percent accuracy, 

a range that is insufficient to controlling wafer plane exposure for high yield chip manufacturing. 

Through research at NIST, accuracy of 1 percent can now be achieved at 248 nm. 

In summary, NIST has developed improved excimer laser calorimeter designs to establish 

DUV metrology. This measurement technology diffuses through a chain of semiconductor 

equipment and materials firms, and eventually leads to the end-users, semiconductor 

manufacturers. The ability to measure laser power, and thus photoresist exposure, made possible 

by NIST has facilitated the transition to fabricate smaller IC linewidths—0.25 μm in the case of 

the 248 nm excimer systems, and 0.15 μm with 193 nm systems. The ability to reduce linewidth 

makes possible denser circuits, faster circuits, cooler-running circuits, more reliable 

manufacturing and higher yield, and lower cost chips. This, in turn, has fueled the continued 

rapid development of the electronics industry.

 

30 For example, new volume absorbing materials and detector surface materials have to be developed. Additionally, 

the cavity of the calorimeter has to be evacuated to prevent absorption by air and creation of ozone by the high 

beam energy, and the optics material has been changed from quartz to calcium fluoride, which is more 

transmissive in the 193 nm region of the spectrum.
3-12

3.4 SURVEY FINDINGS

To assess the economic outcomes from NIST's technical outputs, interviews were held 

with industrial representatives from different tiers of the semiconductor supply chain.

3.4.1 Semiconductor Lithography

The first set of interviews involved experts in semiconductor lithography from the 

following organizations: SEMATECH, Ultratech Stepper, Dominion Semiconductor (a 

collaboration of IBM, Siemens, and Toshiba for fabricating memory ICs), and MIT Lincoln 

Laboratory (leading developer of 193 nm photolithography process technology). These 

interviews were intended to understand economic benefits of NIST's measurement program 

primarily from the view of the semiconductor manufacturer. 

The allocation of SEMATECH funding through NIST to develop the outputs is widely 

believed to have been more efficient and effective than alternative investment strategies. That is, 

likely counterfactual investments in the absence of NIST would have had higher R&D 

expenditures and not carried the imprimatur of a neutral organization. Additionally, the timely 

availability of NIST’s outputs reduced collectively the private and public expenditures of various 

domestic semiconductor organizations involved with developing 248 nm manufacturing process 

technology.

The diffusion of a common measurement technology through NIST calibration services 

has decreased transaction costs among all firms in the affected supply chain (suppliers of 

detectors, power meters, laser systems, lithography tools, and photoresist, as well as 

semiconductor manufacturers). Since the availability of absolute radiometric standards at NIST 

for I-line and KrF lasers, semiconductor manufacturers typically have been specifying calibration 

of the power meters to NIST standards in acquisitions of lithography tools. Such traceability 

provides semiconductor manufacturers with: (1) a common basis for evaluating competing 

lithography systems with respect to the performance of dose control, and (2) assurance that the 

power meters in the lithography tool function within acceptable limits (i.e., to ensure "no 

surprises” such as a power meter reading 10 watts when the laser is actually emitting 20 watts by 

NIST standards). Generally, a semiconductor manufacturer relies on the lithography tool supplier 

to warrant the technical characteristics of the power meter. Additionally, the set-up and 

maintenance of precision calorimeters for excimer laser metrology is quite expensive, precluding 

most commercial suppliers from developing and maintaining their own standards.
3-13

A particular area of investigation for the study team was to understand the extent of the 

economic impact from the NIST measurement technology for maintaining process control in 

high-volume semiconductor production. According to all the organizations interviewed, 

conventional process control of dose settings for multiple lithography tools in a semiconductor 

manufacturing plant relies on an open-loop system of “send-ahead” wafers. The objective of this 

procedure is to obtain a relative measurement that matches the settings to an empirically 

optimized dose. The procedure begins by exposing various field areas of a send-ahead wafer on a 

single lithography tool to graduated dose levels, and measuring these dose levels with the internal 

power meter, which is compared periodically to a portable power meter. The dose level and 

detector reading corresponding to the appropriate image quality (processing of the photoresist) is 

selected for the production setting. The detector's measurement is then used to calibrate the dose 

levels of other lithography tools used in parallel with the first tool. Thus, while the power meters 

on lithography tools are typically calibrated to absolute standards at NIST as a purchase 

requirement of the tool, semiconductor manufacturers commonly use relative radiometric 

measurements to maintain process control across multiple lithography tools. As a result, the 

measurement technology developed at NIST is not a factor in cost-of-ownership modeling used 

by semiconductor manufacturers.31 The common practice for calibrating the laser output of the 

lithography process on a relative basis using the “send-ahead” system of wafers, rather than on an 

absolute basis traceable to primary standards at NIST, shows that there is even more, as yet 

untapped, potential for use of NIST’s 248 nm outputs for dose energy control in high-volume 

semiconductor production.

Theoretically, process control based on absolute radiometric standards at NIST could 

yield several productivity advantages:

• Obviate the “dose knob” to reduce the need (and the expense) of 

send-ahead wafers

• Facilitate an automated, closed-loop system to reduce the overall 

complexity of process control

 

31 Cost-of-ownership (COO) models have been used by semiconductor manufacturers for making investment 

decisions in lithography tools and other equipment. COO modeling considers acquisition and operational costs, 

and particularly focuses on the scrap value of work in progress due to the yield-intensive nature of IC

manufacturing.
3-14

• Provide a more efficient linkage between lithography computer 

modeling and manufacturing R&D32

However, absolute radiometry has been impractical generally in today’s semiconductor 

fabrication plants because of the experimental ("recipe") nature of semiconductor manufacturing. 

Moreover, dose control is only one of about 10 other key process variables, most of which do not 

have NIST standards or result from contributing processes. 

This does not imply that semiconductor manufacturers currently obtain no economic 

value beyond transaction cost savings from purchasing power meters calibrated to absolute 

standards at NIST. In fact, all respondents stated that the use of instruments traceable to NIST 

standards is intrinsic to economical semiconductor production. Such traceability imparts integrity 

and reliability of laser measurements which economizes the experimental method of 

semiconductor process development and the send-ahead wafer calibration method for 

semiconductor production. Utilizing a power meter traceable to NIST's primary standards 

reduces the time to trouble-shoot lithography process problems because lithography engineers 

have confidence that the detector readings are accurate. When the IC fabrication process goes out 

of control, the power meter is often the last source of error investigated among the other 

lithography system components to determine the error source.

3.4.2 Power Meter and Laser Suppliers

Firms in the stages of the domestic semiconductor supply chain that are closest to NIST 

were surveyed. The firms interviewed in the survey were the power meter and detector suppliers 

Molectron, OAI, Coherent, and Ophir, as well as the excimer laser supplier, Cymer. Additionally, 

a separate interview was held with Coherent regarding its foreign subsidiary, Lambda Physik, 

which also is an excimer laser supplier. These firms represent the main suppliers of excimer laser 

technology to the semiconductor supply chain.

For the metrics to be presented, the benefits measured are a well-defined set of costs 

avoided because of NIST’s 248 nm investments and services. Namely, the benefits are the costs 

that the semiconductor industry would incur from replacing NIST’s excimer laser metrology 

investments and services. The working assumption is that absent NIST’s investments and 

 

32 Christopher Cromer, et al, “Improved Dose Metrology in Optical Lithography,” Solid State Technology, April 

1998. 
3-15

services, the semiconductor industry would find other means for establishing the excimer laser 

metrology that NIST has provided. Based on the interviews, the most likely counterfactual 

scenario entails a mixture of additional investments in equipment as well as scientific and 

engineering personnel for expanded in-house metrology for proprietary standards, along with 

increased use of foreign laboratories and the extra costs they would cause. Additionally, there 

would be new transaction costs in resolving measurement disputes with customers and suppliers 

without a US standards organization to which measurements could be traced.

Traceability of measurements to NIST standards is important for businesses using 248 nm 

measurements as described in the paraphrased comments of several respondents:

"Our customers audit our measurements, and traceability of our 

measurements to NIST's standards reduces transaction costs incurred 

in the audits. Customers are satisfied when they see the comparisons 

to NIST's standards, and having those standards at the wavelengths 

of interest to the customers is valuable. NIST's measurement service 

at particular wavelengths allows validation of our company’s inhouse metrology and reduces the time spent with customers 

resolving measurement issues. The availability of NIST's services 

also reduces the need for specialized measurement equipment."

"NIST’s calibration services and standards offer a comfort level to 

all involved in the use of laser metrology in the semiconductor 

supply chain. Having reliable standards month after month is 

important so that we can get on with the business at hand. 

Traceability to NIST is important to the semiconductor equipment 

integrators because it removes one of many elements of uncertainty."

"Our company’s relationship with NIST is extremely important. 

There has to be a neutral authority to judge our company’s work. 

NIST's services are an indispensable part of the calibration and 

traceability effort. The key role of NIST is to ensure the correctness 

of our company's measurements. We maintain two gold standards for 

rotation every six months to give NIST enough time to turn them 

around for recalibration. I reiterate that NIST is indispensable for our 

company, because without NIST it would be our word against our 

customers in measurement disputes, and such a situation would be 

very difficult if there were no standard to follow. If that final link of 

traceability is taken away, who is to say my standard is better than 

my competitors’ standards? There would be extra costs of dealing 

with measurement disputes and extra costs of trying to use foreign 

labs for traceable standards. We’re dead in the water without NIST.”
3-16

"The relationship between our company and NIST is important 

because it helps us [the company] provide our customers with the 

most accurate, repeatable measurement possible. Traceability is 

important for the sale of products, and it is a tough sell without 

NIST. Without NIST, our company would need to make substantial 

investments in additional equipment and additional personnel to 

develop in-house standards."

"Having NIST’s services has been very important for both costs and 

sales. Without NIST, our company would incur higher costs for inhouse metrology efforts to maintain our gold standard. Even with 

that extra effort, extra costs would be incurred in explaining to 

customers that the measurements of our instruments would not shift. 

With NIST providing calibration services and standards, our 

company does not need to prove to our customers that the 

measurement values from the power meters would not shift over 

time. All we have to do now is show that our calibrations are 

traceable to NIST. Even with the extra efforts, NIST could not be 

replaced. NIST is very important to us. Without NIST, the accuracy 

of our meters would not be as good and our sales would suffer. I 

expect we would likely lose half of our sales to foreign competitors."

3.5 QUANTITATIVE ANALYSIS

3.5.1 NIST's Costs

Expenditures by NIST and SEMATECH for developing the 248 nm excimer laser 

measurement technologies at NIST are shown in Table 9. The table shows that some joint costs 

exist for developing both the 248 and the 193 nm measurement technologies. For the purpose of 

evaluation, the total joint costs for 248 nm and 193 nm maintenance are included in the estimate 

of 248 nm investments. That imparts a downward bias in the metrics because those costs have 

generated unmeasured benefits for 193 nm metrology as well as the measured benefits for 248 

nm metrology.

In addition to the development costs, NIST incurred the costs of maintaining 248 nm 

calibration services. NIST estimates conservatively that the useful lifetime of this measurement 

technology should extend for a decade beyond 1999. The annual EEEL costs to provide and 

maintain calibration services from calendar year 1994 though 2009 is estimated to be $46.5K per 

year in 1999 dollars. The figure includes $36.5K for salary and $10K for equipment. Converting 

the total costs to constant 1999 dollars using the Gross Domestic Product Price Index (chain-
3-17

type), Table 10 presents the time series for the total costs of NIST's 248 nm measurement 

technology program through 1999.

Table 9. Development costs for NIST's program (current-year dollars) for 248 nm Laser 

Measurement Technology

NIST SEMATECH

Year 248 nm 

Development

Equipment Joint 

maintenance 

(248,193 nm)

248 nm 

Development

 Equipment

1990 26,000 0 0 100,000 0

1991 81,000 0 0 100,000 0

1992 0 0 0 0 0

1993 211,000 60,000 0 0 80,000

1994 0 0 42,000 0 0

1995 0 0 44,000 0 0

1996 0 0 50,000 0 0

1997 0 0 0 0 0

1998 0 0 0 0 140,000

1999 0 0 0 0 100,000

3.5.2 Industry Benefits 

The survey respondents (power meter and laser suppliers) have described the additional 

costs that they would have incurred if NIST had not invested in 248 nm measurement technology 

and if NIST did not provide 248 nm calibration services. The reasons for those additional costs 

include:

• Transaction costs of dealing with customers without having 

traceability to standards at NIST 

• Costs of additional equipment and its maintenance to provide 

additional in-house proprietary metrology capabilities 

• Costs of additional scientists and engineers to establish de facto 

standards in the absence of NIST

• Technical and administrative costs of dealing with foreign 

laboratories rather than NIST 
3-18

Table 10. Costs for NIST's 248 nm Program (Current and Constant 1999 Dollars)

Year Development 

Costs (current $)

Services Costs 

(1999 $)

Price Index 

(chain type, base 

year 1999)

Total Cost 

(constant 1999 $)

1990 126,000 -------- 0.819 154,000

1991 181,000 -------- 0.851 213,000

1992 0 -------- 0.874 0

1993 351,000 -------- 0.897 391,000

1994 42,000 46,500 0.919 92,000

1995 44,000 46,500 0.940 93,000

1996 50,000 46,500 0.958 99,000

1997 0 46,500 0.975 46,500

1998 140,000 46,500 0.985 189,000

1999 100,000 46,500 1.000 146,500

The benefits here are just partial benefits because, despite the best efforts of industry to establish 

or find substitutes for NIST's services, according to the respondents, problems would remain 

because there would be no neutral US national standards organization to which measurements 

could be traced.

The benefits of the respondents are simply summed to have the total benefits for primary 

beneficiaries. No attempt has been made to quantify additional benefits for the downstream users 

of the power meters and laser systems—the domestic suppliers of lithography systems (Ultratech 

and SVGL) and semiconductor manufacturers (Intel, AMD, IBM, TI Motorola, National 

Semiconductor, Micron Technology, and others).

The respondents report that a conservative estimate of the remaining life of the 248 nm 

technology in the semiconductor supply chain is 10 years. Therefore, whenever the respondents 

provided annual benefits that they said would last in perpetuity, the benefits were conservatively 

truncated after ten years. During the initial years of the technology some of the leading firms 

reported that without NIST’s investments there would have been combined equipment and 

personnel costs to develop in-house metrology. After those initial investments, respondents 

reported additional transaction costs in the absence of NIST for dealing with customers or 

suppliers or with foreign laboratories. Table 11 shows the estimates of the costs avoided by 

industry.
3-19

Table 11. Semiconductor Supply Chain Benefits (constant 1999 $) from Investments in 

NIST's 248 nm measurement technology

 

Year

Expanded In-house 

Metrology 

(equipment and 

personnel costs 

avoided)

 

Transaction 

Cost Avoidance

 

Total Benefits

1994 780,000 --------- 780,000

1995 590,000 --------- 590,000

1996 590,000 --------- 590,000

1997 610,000 210,000 820,000

1998 595,000 210,000 805,000

1999 95,000 210,000 305,000

2000 210,000 217,000 427,000

2001 100,000 217,000 317,000

2002 100,000 217,000 317,000

2003 100,000 217,000 317,000

2004 100,000 217,000 317,000

2005 100,000 217,000 317,000

2006 100,000 217,000 317,000

2007 100,000 217,000 317,000

2008 100,000 217,000 317,000

2009 100,000 217,000 317,000

3.5.3 Metrics

Bringing together the costs of developing the 248 nm measurement technology and 

providing calibrations services with the industrial benefits, Table 12 presents the time series for 

costs and benefits.

Appendix C provides a detailed explanation of the metrics that are used to evaluate the 

economic impact of NIST’s investments in infratechnology. Using the time series above yields 

the following metrics for the NIST investments in 248 nm metrology:

• Real internal rate of return = 43.1% (using constant 1999 dollars)

• Present value in 1990 of costs = $1,271,000 (discounting, at the real 

discount rate of 7%, the stream of costs in constant 1999 dollars)
3-20

• Present value in 1990 of benefits = $3,821,000 (discounting, at the real 

discount rate of 7%, the stream of benefits in constant 1999 dollars) 

• Benefit-to-cost ratio = 3.0

• Net Present Value in 1990 = $2,550,000

• Net Present Value in 1999 = $4,688,000 [investing the NPV in 1990 at 

the real rate of 7%, and growing it for nine years (NPV1990 * 1.07 

1999-1990

 )]

3.5.4 Uncertainty

The range of uncertainty for the 248 nm benefits series is estimated to be ± 20 percent, 

and the range for the costs is ± 5 percent. Calculating the metrics using the lower estimate for the 

costs and the upper estimate for the benefits yields high estimates for the metrics describing the 

lower bound returns to NIST’s investments. Using the upper estimate for the costs and the lower 

estimate for the benefits yields a set of low estimates for the metrics. This technique yields the 

ranges for the metrics as shown in Table 13.
3-21

Table 12. Total Costs and Benefits (constant 1999 dollars) for Investments in NIST's 248 

nm Measurement Technology 

 

Year

Costs for NIST's 

248 nm Program 

Benefits for 

Semiconductor Supply 

Chain

1990 154,000 ----------

1991 213,000 ----------

1992 0 ----------

1993 391,000 ----------

1994 92,000 780,000

1995 93,000 590,000

1996 99,000 590,000

1997 46,500 820,000

1998 189,000 805,000

1999 146,500 305,000

2000 46,500 427,000

2001 46,500 317,000

2002 46,500 317,000

2003 46,500 317,000

2004 46,500 317,000

2005 46,500 317,000

2006 46,500 317,000

2007 46,500 317,000

2008 46,500 317,000 

2009 46,500 317,000

Table 13. Estimate Range of Lower-bound Economic Impact for Investments in NIST's 

248 nm Metrology

Metric Low Midpoint High

Real internal rate of return 33.3% 43.1% 52.0%

Benefit-to-cost ratio 2.3 3.0 3.8

Net Present Value in 1990 $1,720,000 $2,550,000 $3,380,000

Net Present Value in 1999 $3,170,000 $4,688,000 $6,210,000
4-1

4. ASSESSMENT OF HIGH-SPEED MEASUREMENT R&D AND 

CALIBRATION SERVICES

This chapter assesses a specific R&D effort and primary calibration services for 

measurement technology applied to high-speed detectors used in fiberoptic communication 

systems. The first section describes fiberoptic communications and the economic importance of 

accuracy in both laser power and high-speed measurement technologies. The second section 

identifies the industry supply chain affected by NIST's measurement technologies. The third 

section describes the framework for economic analysis of NIST's investments only in high-speed 

measurement technology. This is followed by the findings from an industrial survey and an 

analysis of the economic impact.

4.1 ECONOMIC IMPORTANCE TO TELECOMMUNICATIONS INDUSTRY

4.1.1 Fiberoptic Communications

The use of silica-based (glass) optical fibers to transmit data was proposed in 1966. 

Although optical fiber bundles had been used earlier to transmit light and images, with the 

development of low-loss optical fibers from high-purity glass materials during the 1970s, optical 

fiber communication rapidly became an important form of telecommunications. “Low-loss” 

refers to a minimal loss of light as signals pass through the glass material.

By the 1980s, applications for optical fiber communication systems began to expand. A 

major application was the installation of fiberoptics for new telephone system landlines as a 

replacement for copper wire cables. Other applications included undersea transcontinental 

communications, cable television distribution systems, telephone wide area networks (WANs), 

computer local area networks (LANs), and secure military communications systems. 

In the past decade, fiberoptic communications has grown into one of the two major media 

for long distance voice and data communications. Generally, fiberoptics competes with wire and 

communications satellites, although these technologies can be complementary. 
4-2

Light-wave communications via optical fibers has the advantage of high bandwidth 

(information carrying capacity). A single fiber has the potential to carry hundreds of television 

channels or thousands of telephone conversations simultaneously. Bandwidth is often expressed 

in terms of signal (modulation) frequency, which is related to data rates, the number of 

transmitted bits per second. If a very high data rate is desired, then a very high signal frequency is 

required. 

Increasing the bandwidth of fiberoptic cables has been a major technical trend in the 

telecommunications industry. From 1985 to 1995, bandwidth for fiberoptic communication 

increased from 50 MHz to 20 GHz.33 Today, some systems have bandwidths approaching 60 

GHz. As the bandwidth of the transmitted signal increases, the requirements on the fiberoptic 

link become more stringent. The demands are especially stringent for the detectors in this 

linkage, which typically have a lower response as the frequency of modulation on the laser light 

source increases.

Technical progress for increasing system bandwidth has been made along two paths: (1) 

expanding the limits of signal frequency, and (2) new techniques for multiplexing multiple 

carrier wavelengths into a single fiber. This economic impact assessment focuses on NIST’s 

contributions to expanding the signal frequency of a single beam by accurately testing the 

detectors used in fiberoptic receivers. The scope of this assessment does not include NIST 

measurement technologies associated with multiple wavelength systems, such as Wavelength 

Division Multiplexing. 

The concept of a fiberoptic communications link is shown in Figure 5. Generally, a 

fiberoptic link involves a transmitter (modulator and laser diode), the fiber itself, and a receiver 

(optical detector and/or demodulator). In a long-distance link where optical losses occur through 

attenuation within the fiber core material, many “repeaters” may be required to regenerate the 

light power. Repeaters comprise receivers and transmitters that are spliced into the fiber at 

specified intervals to boost the signal strength back to nominal values. Repeaters are complex 

and expensive components that, ideally, are minimized in a communications system design. 

 

33 The trend for increased bandwidth necessitated the utilization of “single-mode” fibers, where the core diameter 

was reduced to support a single optical path to decrease dispersion. Dispersion is the separation of a beam into its 

various wavelength components. In an optical fiber, dispersion occurs because the differing wavelengths 

propagate at differing speeds. The use of single-mode fibers necessitated smaller fiber connectors, which made 

power measurement more difficult due to problems with aligning the fiber to the detector.
4-3

Figure 5. General Concept of (a) Short-, (b) Long-Haul Fiberoptic Communications Links
4-4

The key parameters in the design of a fiberoptic telecommunications system are 

bandwidth and the spacing of repeaters or amplifiers. Attenuation (optical loss) and dispersion 

are the main determinants for these parameters.34 Additional key determinants of system 

performance are the power of the laser and the bandwidth of the detector. For this report, two 

different types of detector measurements are important in fiberoptic communication systems: 

optical fiber power and high-speed detector measurements. The next two subsections provide a 

brief overview of these two types of detector measurements to explain the role of NIST’s laser 

calibration services for the telecommunications industry. The economic benefits of NIST’s fiberoptic power measurement technology have been included in the overall assessment of NIST’s 

primary calibration services in Chapter 2, while this chapter assesses the benefits from NIST’s 

high-speed frequency response measurement technology. 

4.1.2 Optical Fiber Power Measurements

Designers of communications systems must measure the optical loss of the fiber to 

determine whether the signal strength at the receiver is sufficiently high. In lengthy fiber runs, the 

light gets absorbed and/or scattered by the fiber along its length, and the light intensity decreases 

continuously. To ensure enough light intensity for the detector (receiver) to pick up the signal 

with a high signal-to-noise ratio along a given length of fiber, the fiber is measured for its optical 

loss (attenuation). This is done by measuring the power going both into and out from the fiber 

with a fiberoptic power meter, and the loss is characterized in decibels per kilometer (dB/km). 

This ensures low “bit error rates” or the possibility that a “0” or “1” will be mistaken for the 

other in a digital system. When the optical loss of the fiber exceeds a certain specification, then a 

repeater (receiver/transmitter) may have to be placed midway in the fiber link.

Fiberoptic power meters are used to measure optical losses in the development and 

production of communications systems. Each fiber, connector, laser, and receiver may introduce 

losses that must be taken into account when a fiberoptic communications network is assembled. 

Thus, fiberoptic power meters are used routinely to determine optical losses. Power 

measurements of both long and short lengths of fiber are compared to determine the optical loss 

of the fiber per unit length. 

 

34 Attenuation refers to the loss of average optical power (optical loss). Dispersion refers to the natural tendency of 

a light beam to lose intensity as distance increases, similar to the way a beam of light emitted from a flashlight 

widens with distance.
4-5

The telecommunications field provides a challenge for power measurement. Detectors 

must be capable of measuring minute amounts of light emitted from a long optical fiber at 

precise wavelengths. Some receivers can detect a signal with only 1 percent received of the 

power going into the fiber. Although no significant technical breakthroughs have been required 

for these measurements, the reduction of fiber loss to a small fraction of a dB/km has required 

great accuracy in the power measurements. 

NIST began addressing the calibration needs of the telecommunications industry in laser 

power measurement during the mid-1980s. NIST had established optical fiber power 

measurement services for the primary carrier wavelengths (850 nm, 1300 nm, and 1550 nm) by 

FY 1989, and added other wavelengths (670 nm and 780 nm) by FY 1992. NIST is now 

developing an all-wavelength fiber power measurement system that will be applicable to the 

variety of laser diodes and wavelengths used in systems from telephone and television 

transmission to local area networks. Therefore, NIST has established these measurement systems 

and services as new laser wavelengths and lower-loss fibers have been developed by the 

telecommunications industry.

NIST’s calibration services are used to calibrate virtually all in-house gold standards used 

by suppliers of fiberoptic power meters and commercial calibration service providers. These 

firms, in turn, provide NIST-traceable standards to the broader set of communications service 

providers (e.g., the telephone companies and data service providers) that use fiberoptic power 

meters. This system of transfer standards provides an economical means for downstream firms to 

obtain measurement traceability to NIST standards. A representative from a commercial 

fiberoptic calibration service provider noted that a fiber calibration from his company costs $100-

150 versus about $2,500 for a fiber calibration from NIST.
4-6

4.1.3 High-speed Detector Measurements

Measurements of high-speed detectors are necessary to support high-performance systems 

that take advantage of the potential bandwidth of optical fibers. High-speed detectors are generalpurpose laboratory devices that are useful in a wide variety of high bandwidth applications. The 

most well known application is in the fiberoptic receiver portion of a communications system, 

where a high-speed detector used to receive the high bandwidth data signal must be characterized 

in terms of important technical parameters such as modulation frequency response, relative noise 

intensity, and “eye diagrams.”35

AT&T, IBM, Hewlett Packard, and others became interested in characterizing high-speed 

detectors in the 1988-1990 timeframe as advances in short-pulse lasers and other 

communications technologies began to dramatically increase the bandwidth of fiberoptic 

communications systems. Since the early 1990s, measurement technology to characterize the 

bandwidth of high frequency optical detectors has been important for the telecommunications 

industry, and a major developmental focus for NIST.

In telecommunication systems, product performance is often measured in bandwidth 

(which should be maximized) and bit error rate (which should be minimized). As bandwidth 

increased progressively from 50 MHz to 50 GHz over a decade of time, the accurate 

measurement of fiber power at high modulation frequencies became more difficult. Determining 

the bandwidth of detectors accurately in the early-1990s required the telecommunications 

industry to over-specify the components of a system, which increased the cost of the 

communication system. Therefore, if a test receiver does not have sufficient accuracy to ensure 

confidence in testing with a low bit error rate, then too many transmitters (laser diodes) would be 

rejected, thereby decreasing the yield and increasing the cost of the communication system. Since

bandwidth is a key determinant of communications system cost, accurate high-speed detector 

measurement results in reduced cost of the system.

 

35 Andrew Davidson and Kathy LiDessau, “High-Speed Detectors: Faster Measurements for Today’s Laboratory,” 

Photonics Spectra, September 1998. 
4-7

Although not regulated by a governmental entity, telecommunications equipment 

manufacturers must meet SONET/SDH worldwide standards for market acceptance.36 As the 

accuracy of fiber measurements improves to meet SONET/SDH standards, component and 

system suppliers can reduce the design margin for uncertainty in their products. Minimizing this 

margin translates into improved system performance factors, including additional bandwidth, 

lower bit error rate, and reduced system cost. 

4.2 INDUSTRY SUPPLY CHAIN

Figure 6 shows the ripple effect of measurement technologies in the telecommunications 

supply chain. Several major companies are listed in each industry tier. NIST’s outputs in laser 

fiber power measurement directly affect the fiberoptic instrumentation suppliers, which were 

described in Section 2.2.2. Other parties affected more indirectly include the suppliers of 

fiberoptic components, such as:

• Fiberoptic cables/fibers: 84 firms (20 are non-domestic)

• Digital transmitters: 17 firms (7 are non-domestic)

• Digital receivers: 21 firms (4 are non-domestic)

The worldwide fiberoptics industry purchased $6.3 billion of fiberoptic cabling for 

communications applications in 1996, according to the Fiber Optic Cable Global Market 

Forecast (1996-2006) produced by ElectroniCast Corp. (San Mateo, CA). The study predicts that 

global use of fiberoptic cabling will increase at about 19% per year over the next five years, to 

$14.9 billion in 2001 (in current dollars). The general distribution of cabling consumption by 

specific applications is telecommunications (76 percent), private data local- and wide-area 

networks (11 percent), and cable TV (9 percent).

 

36 Synchronous Optical Network (SONET) is a high-speed fiber-optic transmission standard originally used on 

backbone networks, which is now making its way onto local links. SONET was proposed by Bellcore in the

middle 1980s and is now an ANSI/ISO standard. The SONET standard defines a hierarchy of interface rates that 

allow data streams at different rates to be multiplexed. Prior rate standards used by different countries specified 

rates that were not compatible for multiplexing. With the implementation of SONET, communication carriers 

throughout the world can interconnect their existing digital carrier and fiber optic systems.

The international equivalent of SONET, standardized by the ITU (International Telecommunication Union), is 

called SDH (Synchronous Digital Hierarchy).
4-8

Figure 6. Measurement Technology Flow for Telecommunications Indus try

NIST’s infrastructure outputs for high-speed detector measurements directly affect the 

instrument companies (e.g., Hewlett Packard and Tektronix) that supply the test equipment for 

measuring detector (or receiver) speed. These instruments are used, in turn, by the downstream 

tiers of the telecommunications supply chain.

- ATT

- GTE

- Bell Atlantic

- Laser Diode

- Scientific Atlanta

- Honeywell

- Lightwave Communications

Teleophone/ CATV / LAN

Service Providers

System Integrators

Fiberoptic Component

Suppliers

Instrument Suppliers

- Newport

- Fiberguide

- Many Others

- Hewlett Packard

- Tektronix

- Big Sky

-Software Noves

- ILXLightwave
4-9

4.3 ECONOMIC ANALYSIS FRAMEWORK

Table 14 summarizes the framework for assessing the economic impact on the US 

industrial supply chain from NIST's investments in high-speed frequency response measurement 

technology. The economic impact for NIST's investments supporting optical fiber power 

measurements was included in the overall assessment of NIST's calibration services in Chapter 2.

Table 14. Economic Framework for Assessing High-speed R&D and Calibration Services

NIST Outputs Hypothesized 

Outcomes

Affected 

Industrial 

Organizations

Outcome Measures and 

Affected Stage of Economic 

Activity, Absent NIST

Comparison 

Scenario 

(counterfactual 

replacement of 

NIST outputs)

Time Series of 

NIST Costs and 

Industry Net 

Benefits

R&D to 

establish highspeed metrology 

Primary 

calibration 

services for 

high-speed 

measurements

Enabling of highbandwidth 

communications 

systems

More efficient R&D 

or reduced R&D 

replication to 

establish metrology 

services 

Avoidance of extra 

transaction costs 

because of industry 

agreement on NIST as 

a primary reference 

for calibrated 

standards for highspeed measurements

Improved laser-based 

telecommunications 

products and services 

from better technical 

accuracy 

Affected 

telecommunicatio

ns supply chain :

– Hewlett 

Packard

– HP's customers 

and 

competitors

Lag in technical innovation for 

enabling higher bandwidth 

communications systems

Lag in enabling of new informationbased applications in a wide variety 

of end-use markets

Lag in achieving reduced capital 

costs for telecommunications service 

providers to establish information 

system capacity since NIST 

investments enabled more data, 

voice and video can be carried in 

each optical fiber

Increased personnel and equipment 

to establish metrology services prior 

to industry need for high bandwidth 

communications systems 

Increased personnel and equipment 

to validate accuracy of laser 

measurements for obtaining:

– transfer standards from foreign 

labs or proprietary firms

– product acceptance with 

customers

Lower product /process quality and 

performance leading to decreased 

sales

R&D conducted by 

HP

Establishment of 

proprietary 

standards at HP

(C) research, 

develop, maintain, 

and provide 

calibration 

services 

from1992-200 9

(B) 1994-2009 

In 1990, NIST participated with various international laboratories in a "round-robin" of 

high-speed detector measurements at the 1300 nm (1.3 μm) wavelength. The measurements 

among the participating laboratories exhibited a spread (uncertainty) of 3.3 dB at 20 GHz, such 

that "the 3-dB cut-off point" varied from 15.1 to 19.8 GHz. As a result, the "3-dB point" in a 

telecommunications system could not be determined with suitable accuracy. (The technical 

significance of the 3-dB cut-off point is explained in Appendix D.)
4-10

The 3-dB point is an important parameter for determining the bandwidth of a detector. 

Measuring the laser power accurately allows a more accurate determination of the cut-off 

frequency that partially characterizes the bandwidth of fiberoptic communication system. If a 

power measurement shows a high frequency cut-off, then the detector can be used in a 

communications system with high bandwidth. Otherwise, if the power measurement shows a 

lower frequency cut-off, then the device must be used in a lower-bandwidth system to maintain 

low error rates (i.e., the chance of a “0” or “1” being confused in a digital communication 

system). A high error rate in a communication system produces static in telephone conversations, 

“snow” in television reception, or digital errors in computer communications (e.g., over a local 

area network or through the Internet). Although error correction methods are used in data 

transmission, a large number of errors will slow the data rate. In a computer application, a single 

error could be disastrous.

Resulting measurements from the 1990 round-robin would require the system bandwidth 

be limited to about 15 GHz. If the system was specified at a higher frequency, the detector could 

produce a low output resulting in a single bit error (e.g., a digital system erroneously receiving a 

“0” instead of a “1”). The more often this bit error occurs, the higher the “bit error rate” of the 

communication system.

Measurements of both the 3-dB point and the smoothness of the detector "roll-off" at 

frequencies higher than the 3-dB point using “eye diagrams” are required to fully characterize the 

bandwidth of a telecommunications system. Both types of measurements depend on accurate 

optical power measurement techniques at high modulation frequencies, which are the techniques 

that NIST has been developing.

The 1990 round robin highlighted the need to improve detector response measurements. 

From 1992-1994, NIST received funding from the US Navy for advancing measurement 

technology for high-speed detectors. After improvements attributable to NIST research, another 

round-robin was conducted in 1994 between NIST and the UK National Physical Laboratory 

(NPL) for measurements at 20 GHz. This intercomparison demonstrated a 0.12 dB spread; that 

is, the interlab comparison difference was reduced from 10-15 percent down to 1-1.5 percent. 

NIST now has the capability of measuring detector output at 20 GHz with an accuracy of 0.06 

dB. This high accuracy in power measurement translates into very accurate measurement of the 

3-dB point of the detector, and allows the detector to be utilized safely at its full bandwidth—20 

GHz in this case. NIST extended the range of high-speed measurements up to 50 GHz by 1995, 

and most recently, the range is being extended still further, up to 100 GHz. 
4-11

Since 1994, NIST has offered Special Tests for frequency response measurements at high 

accuracy at modulation frequencies from 300 kHz to 50 GHz. NIST has calibrated about 50 

detectors using its current capabilities. About a dozen of these detectors were calibrated for 

Hewlett Packard for use in its service centers. An additional 15 – 20 detectors have been 

calibrated for Hewlett-Packard and resold to Philips (US and Netherlands), Scientific Atlanta, 

and Lucent Technologies. 

NIST began developing technology for high-speed optical measurements in a program 

with Hewlett Packard and other instrument companies (e.g., Tektronix) in the early 1990s to 

develop optical analyzers that are calibrated using NIST-developed transfer standards for 

detectors used in fiberoptic receivers. In order to test the frequency response of a detector 

accurately, two single-frequency laser outputs can be combined to form a “beat” frequency with a 

known modulation depth. NIST developed such a system in parallel with similar developments at 

Hewlett Packard.37 These systems have now been commercialized as communications analyzers 

(detector and oscilloscope), component analyzers (network analyzers), and signal analyzers 

(detector and spectrum analyzer). An example of direct use for the NIST technology was an 

instrument built by Lightwave for Hewlett Packard, based on the NIST approach to detector 

frequency response measurement. NIST capabilities in measuring detector bandwidth now 

extend up to 58 GHz, and developmental activities are approaching 100 GHz frequencies.

NIST’s technology developments and services have provided the telecommunications 

industry with improved measurement accuracy of detectors based on SONET/SDH standards. A 

detailed account of the history of these developments from NIST/ITL is provided in Appendix E. 

The improved accuracy based on SONET/SDH standards accelerated the development of 

higher system performance (in terms of lower bit error rates and higher speed) at lower cost for a 

given specification. These developments form the basis for the current expansion in the 

telecommunications industry, including:

• High-speed Internet access despite rapid increases in number of users

• Optical fiber replacing copper wire for telephone landline systems 

(including hybrid fiber-coax trunk lines)

 

37 The NIST system uses two lasers and a phase-locked loop, based on an acousto-optic modulator, while the 

Hewlett Packard system is based on three lasers and two phase-locked loops.
4-12

• Cable TV, LAN, and antenna remoting with fiberoptic cables 

(satellite telephone and micro-cellular systems)

• High bandwidth, secure military communications links

4.4 SURVEY FINDINGS

Hewlett Packard (now Agilent, Hewlett Packard’s subsidiary for test and measurement 

businesses) has been a major conduit for transferring NIST’s high-speed frequency-response 

fiber-optics metrology to the telecommunications industry. In addition to its key role in the 

process of technology transfer, Hewlett Packard was a key firm that worked closely with NIST to 

develop the measurement technology. The Hewlett Packard experience provides a window on the 

evolution of NIST’s laser metrology from the perspective of industry. The counterfactual 

adjustments that industry would have made to replace NIST’s investments and services for highspeed metrology were identified in a series of interviews with Hewlett Packard’s key expert in 

fiber-optic high-speed frequency-response metrology and in discussions with other industry 

experts.

HP and several other firms have worked with NIST at Boulder on high-speed 

photoreceiver measurements for the telecommunications industry. The flow of technology 

transfer is from NIST as the source of agreed upon national standards, through instrument 

manufacturers such as HP, and then to the companies that use those products needing high-speed 

measurement technology. Among the downstream customers are companies providing cable TV 

services, companies providing data communications services, and telecommunications hardware 

and service providers.

In the case of HP, high-speed measurement technology is not licensed to other firms. 

Instead the other firms buy HP’s instruments. The other firms specify measurement technology 

for particular bandwidths, and then ask HP to verify the measurements of the instruments. In 

response, HP provides their traceability path to NIST.

To illustrate NIST’s interaction with industry, HP’s perspective, as developed in 

interviews with TASC, is instructive. NIST’s broader perspective of its interaction with several 

firms is provided in Appendix E. The development of high-speed measurement technology was 

an interactive process between HP and NIST. HP would have a need for technology, and then it 

would explain that need to NIST. HP would develop some initial capability in the needed 

measurement technology, and then HP would show the technology to NIST, discussing and 
4-13

explaining it. NIST would then develop its own capability in the measurement technology to 

support industry's needs. HP and NIST worked together as measurement needs evolved, and with 

the interaction the measurement capability has evolved over time as well.

HP reports that in the early 1990s it needed high-speed measurement standards that were 

unavailable anywhere; even NIST did not have the capability for the measurement technology 

needed for the frequencies used with high-speed fiber optic receivers. At the time, existing 

measurement technology went up to 20 GHz at the high end. There was not much concern about 

the low end, and there was little concern about resolution. Thus, the first generation of 

technology was at a high end of 20 GHz. By the mid-1990s, the bandwidths were up to 50 GHz, 

and that required new equipment and new technological knowledge. Earlier generations of 

equipment simply would not work. Initial measurement technology was developed in-house by 

HP, but the technology lacked the credibility that would be provided by traceability to national 

standards. In the technology where it focused effort, HP was the industry leader, developing a 

temporary solution, doing the necessary measurement technology in-house at HP. The most 

commercially viable solution, however, required the validity of a national standard and a process 

for traceability to that standard. HP began an interactive development process with NIST at 

Boulder, and that interaction helped bring about the current high-speed measurement technology 

at NIST.

Once NIST’s system was in place, HP relied on NIST for primary standards. HP reports 

that NIST’s measurements are very accurate with low uncertainty. The new measurement 

technology, at 50 GHz at the high end, that has been developed in NIST’s interaction with 

industry and transferred to industry through companies like HP is used heavily to this day and 

will continue to be used.

NIST and HP have cooperated on three generations of R&D and technology. The first 

generation was the technology at HP at 20 GHz, and the second generation is the technology at 

NIST with the 50 GHz system. The latest work, now that high-speed measurement needs are well 

covered, is the third generation, and is at HP again with 50 GHz plus new measurement 

technology with high resolution at low frequencies.38 Just as with the high-speed measurements, 

 

38 Resolution refers to the spacing of the measurement points that are made. Thus, in measuring from 1 GHz to 10 

GHz, the resolution is how fine of a step that you can take between these measurements. For example, if 

measuring from 1 GHz to 3 GHz, with a resolution of 500 MHz, then the steps are 1 GHz, 1.5 GHz, 2 GHz, 2.5 

GHz, 3 GHz. Resolution is the finest of the steps that can be taken when measuring in a given range. So, the third 
4-14

there has been an interactive process with NIST’s Boulder facilities. In 1997 HP needed the new 

measurement technology for high resolution at low frequencies. The high-speed measurement 

needs were well covered. HP needed new measurement technology at lower speed, but with 

higher resolution. So, again HP built a new system. And again, in the interactive manner used to 

develop the high-speed measurement technology, NIST built a system. The interactive work here 

continues with hand-in-hand development of measurement technology and traceability to a 

national standard in response to industry's needs.

In a few years HP expects that once again there will be pressure for new measurement 

technology at the high end—up to 80 to 100 GHz. Looking now at the research papers, only a 

few are currently developing high-speed capability in that high frequency range. Only a few are 

exploring technology that looks promising in that frequency range. HP expects the development 

there will come in the next two to five years.

HP believes that the improved measurement technology has a positive impact on the 

business dynamics among the players in the telecommunications supply chain. Since HP is a key 

fulcrum for the development and the technology transfer to industry, the new measurement 

technology allows greater performance throughout the supply chain. Instruments are better, and 

so products and services are better. As NIST, together with companies like HP, improve the 

measurement technology, the accuracy is better and the uncertainty is lower for the 

measurements. By reducing measurement uncertainty, companies can adjust their instruments to 

allow a fiber optics system to perform closer to the maximum performance capability because the 

confidence factor for its measurements is higher. A wide "guardband” is then not needed. 

Using HP as an example, there are many different HP instruments that incorporate the 

high-speed measurement technology. All have in common the fact that they are photoreceivers. 

That is, they are instruments that take the modulated light beam and then produce an electronic 

signal as output. A laser beam travels along a fiber optic line; the light beam has superimposed 

on it the information (TV, telephone voice, computer data). Photoreceivers take away the light 

beam and leave the information. The process is analogous to a big truck coming to a loading 

dock. The truck (the light beam) delivers a box (the information for TV, for telephone voice, or 

for computer data). The box (the information) is taken away from the truck (the light beam). The 

photoreceivers leave the information with the least distortion possible. The users of HP 

 

generation technology has an impressive low end capability that HP had not anticipated, plus it has high 

resolution. If resolution is too coarse, then fine features are not seen with the photoreceivers.
4-15

photoreceivers want to send information faster. They want to send more telephone calls, more 

data for financial transactions, and so forth over the same line in the same time. The 

photoreceivers have the capability to recover the information traveling along the light wave 

carrier and pass it along as electronic communications information without distortion. If a 

photoreceiver does not have enough bandwidth, it distorts the digital electronic representation of 

the information—the ones and zeros that describe the information. If the bandwidth is too low, 

the photoreceivers worsen the bit errors. The errors would be reflected in garbled streams of data 

(for financial transactions for example), or for cable TV, the picture would not be crisp if the 

bandwidth were too low.

The TASC team posed the following two hypotheses about the effects of NIST’s highspeed measurement investments and services: 

• High-speed measurement technology transferred to domestic 

instrument firms has resulted in new product technologies, enhanced 

competitiveness, and increased sales for these firms

• The allocation of US Navy resources through NIST to develop the 

high-speed measurement outputs has been more efficient and 

effective than alternative investment strategies. That is, it is likely 

that had NIST not been present, the investments that would have 

occurred to replace NIST technology and services would have fallen 

short of complete replacement, would have been more costly, and 

would not have carried the imprimatur of a neutral organization.

The foregoing hypotheses are correct and clearly true from the perspective of HP. 

The HP83440D DC-30 GHz Lightwave Converter, which is an optical to electric 

converter, is an example of a product enabled by the NIST measurement technology. Information 

carried via laser light enters a fiberoptic port of the converter, which then strips off the light and 

extracts the electrical signal. Doing this at so high a frequency as 30 GHz is a real challenge, and 

the NIST technology made this product possible. This product, in turn, is an essential part of a 

fiberoptics communications system for transmitting a telephone conversation, computer data, or a 

video. The customer base for HP’s instruments is global, so the users of the measurement 

technology are not isolated in the US. There is a great deal of world-wide interaction, and NIST 

is, therefore, contributing to world-wide standards and enabling world-wide commerce. HP 

cannot obtain the quality of measurement technology that NIST provides for high-speed 

frequency response measurements from any of the other national standards laboratories. 
4-16

One reason HP approached NIST for research on improved measurement technology was 

for traceability to a national standard, but that is just the obvious reason. With NIST, industry can 

trace measurements back to a world-recognized national laboratory. Also very important as a 

reason for HP to approach NIST about measurement technology was that HP wanted to share 

with NIST its technology and allow an interaction that was mutually helpful for developing the 

measurement technology. The technology development and transfer side of the process is a key 

reason for the interactive work that HP has undertaken with NIST.

The alternative to collaborative effort by HP with NIST would have been for HP to 

develop its own in-house metrology and standards alone. Before NIST developed its capabilities, 

HP did use its own resources for high-speed metrology. HP would have continued with its inhouse methods in the counterfactual absence of NIST. “But there would have been limitations to 

what we could do. We did not have a traceable path to an agreed upon standards association. Our 

customers know that NIST can be trusted; they know that NIST will be unbiased. A company 

manufacturing and marketing the instruments of course could not be perceived as unbiased or 

neutral in its evaluations.” Without NIST, the development and transfer of the technology would 

have taken longer and the resulting technology would probably not have been as robust.

4.5 QUANTITATIVE ANALYSIS

For the metrics here, the benefits do not measure the frequency response metrology 

benefits in the broad sense of all benefits from the products supported by the metrology. Rather, 

the benefits measured are just the costs that industry would have had to incur if it had not had the 

benefit of NIST’s frequency response metrology investments and services. The assumption is that 

absent NIST’s investments and services, industry would find or establish other means for 

obtaining the frequency response metrology that NIST has provided.

4.5.1 NIST's Costs

NIST has provided the development costs for the program in high-speed metrology used 

in telecommunications. Table 15 reports those costs in current dollars.39

 

39 “Current dollars” here show expenditures in the dollars of the year in which the expenditure occurred.
4-17

Table 15. Development Costs (current dollars) of NIST's High-speed, Frequency-response 

Measurement Technology

Year NIST Development 

Costs 

Equipment DoD 

Development Costs 

1992 97,000 0 50,000

1993 165,000 0 0

1994 183,000 0 0

1995 193,000 0 0

1996 217,000 0 0

1997 120,000 20,000 50,000

1998 109,000 40,000 75,000

1999 30,000 40,000 71,000

2000 30,000 0 50,000

The current cost data in Table 15 are converted to constant 1999 dollars using the Gross 

Domestic Product Price Index (chain type), as shown in Table 16.

The foregoing costs provided by NIST are the development costs and equipment costs 

only. NIST also provided estimates of the annual costs of providing calibration services using the 

technology. NIST estimates that the annual EEEL costs in constant 1999 dollars to provide and 

maintain calibration services for frequency response measurements for calendar years 1994 

through 2009 are $27.7K/year. The total includes $22.7K for salary and $5K for equipment.

Table 16. Current and Constant (1999 base year) Development Costs of NIST's Program 

for High-speed, Frequency-response Measurement Technology 

Year Costs 

(current-year dollars)

Price Index 

(chain type, 

base year 1999)

 Costs 

(constant 1999 dollars)

1992 147,000 0.874 168,000

1993 165,000 0.897 184,000

1994 183,000 0.919 199,000

1995 193,000 0.940 205,000

1996 217,000 0.958 227,000

1997 190,000 0.975 195,000

1998 224,000 0.985 227,000

1999 141,000 1.000 141,000

2000 80,000 1.021 78,000
4-18

4.5.2 Industry Benefits

HP initially had a unique position as the major conduit for technology transfer from NIST 

to the telecommunications industry. The interviews with HP have, therefore, provided key 

information about the additional costs that industry would have had to incur, and would continue 

to incur, in the counterfactual absence of NIST's presence in high-speed measurements. 

However, NIST estimates that since the development of its 850 nm heterodyne system, HP 

accounts for about 50 percent of NIST’s calibration work load. The development of the 

heterodyne system began in March 1997, and from 1998 onward, industry benefits the direct 

users of NIST’s high-speed calibration services are estimated as twice the benefits estimated for 

HP. NIST’s experts believe that each of the direct customers would have benefits similar to 

those estimated for HP. 

Hewlett Packard identified several sorts of additional cost that it would have incurred in 

the absence of NIST's investments in high-speed measurement technology. Those costs include 

additional research costs and additional equipment costs in the mid-1990s along with continuing 

annual costs to maintain the investment in measurement technology. Also, Hewlett Packard 

identified additional transaction costs that it would have incurred when dealing with its 

customers if NIST's services and traceability to NIST standards as a neutral authority had not 

been available. Those costs would entail additional staffing, plus additional participation at TIA 

standards conferences, and additional effort writing papers establishing measurement technology 

standards. Additional engineers specializing in fiber optics measurement technology would be 

needed. Following the procedure described above when discussing the transaction costs for 

power/energy meter suppliers, the transaction costs identified by a company acting as an 

intermediary that transfers instruments traceable to NIST standards into the supply chain are 

doubled. Each extra hour that Hewlett Packard must spend resolving measurement issues with 

customers will presumably entail about an hour of customers' time as well. 

Based on discussions with experts in industry and at NIST, the useful life of the highspeed measurement technology as it now exists would conservatively be another ten years. Table 

17 shows the total benefits and the breakdown of these benefits between additional in-house 

metrology costs for personnel and equipment and the transaction costs avoided in dealing with 

customers or suppliers.
4-19

Table 17. Telecommunications Supply Chain Benefits from NIST's Investments in HighSpeed Measurement Technology (constant 1999 dollars)

 

Year

Expanded In-house 

Metrology Costs 

Avoided 

Transaction Costs 

Avoided

Total 

Benefits 

1994 200,000 800,000 1,000,000

1995 200,000 800,000 1,000,000

1996 150,000 800,000 950,000

1997 150,000 800,000 950,000

1998 300,000 1,600,000 1,900,000

1999 300,000 1,600,000 1,900,000

2000 300,000 1,600,000 1,900,000

2001 300,000 1,600,000 1,900,000

2002 300,000 1,600,000 1,900,000

2003 300,000 1,600,000 1,900,000

2004 300,000 1,600,000 1,900,000

2005 300,000 1,600,000 1,900,000

2006 300,000 1,600,000 1,900,000

2007 300,000 1,600,000 1,900,000

2008 300,000 1,600,000 1,900,000

2009 300,000 1,600,000 1,900,000

The benefits quantified by the TASC team represent a subset of the benefits attributable 

to NIST's investments in high-speed measurement technology. Based on the interviews, NIST’s 

investments have enabled new products such as the HP 30 GHz lightwave converter, which, in 

turn, are essential to enabling high bandwidth fiberoptic communication systems. No information 

was available from the interviews to quantify how the economic impacts of such products would 

have changed if industry had needed to provide the necessary measurement technology without 

NIST’s help and also had operated without traceability to NIST.
4-20

4.5.3 Metrics

Table 18 brings together the costs and benefits necessary to present evaluation metrics. 

Table 18. NIST's Costs and Telecommunications Industry Benefits for Investments in 

High-speed Measurement Technology (constant 1999 dollars)

Year

Total Costs of NIST's 

Program in High-speed 

Measurement 

(development and calibration 

services)

Benefits for the 

Telecommunications 

Industry

1992 168,000 -----------

1993 184,000 -----------

1994 226,700 1,000,000

1995 232,700 1,000,000

1996 254,700 950,000

1997 222,700 950,000

1998 254,700 1,900,000

1999 168,700 1,900,000

2000 105,700 1,900,000

2001 27,700 1,900,000

2002 27,700 1,900,000

2003 27,700 1,900,000

2004 27,700 1,900,000

2005 27,700 1,900,000

2006 27,700 1,900,000

2007 27,700 1,900,000

2008 27,700 1,900,000

2009 27,700 1,900,000

Appendix C provides a detailed explanation of the metrics that are used to evaluate the 

economic impact of NIST’s investments in infratechnology. Using the time series of costs and 

benefits yields the following metrics for the NIST investments in high-speed measurement 

technology:
4-21

• Real internal rate of return = 136.2% (using constant 1999 dollars)

• Present value in 1992 of costs = $1,522,000 (discounting, at the real 

discount rate of 7%, the stream of costs in constant 1999 dollars)

• Present value in 1992 of benefits = $13,850,000 (discounting, at the real 

discount rate of 7%, the stream of benefits in constant 1999 dollars) 

 • Benefit-to-cost ratio = 9.1

• NPV in 1992 = $12,300,000

• NPV1999 = $19,800,000 [investing the NPV in 1992 at the real rate of 

7%, and letting it grow for seven years (NPV1992 * 1.07 

1999-1992

 )]

4.5.4 Uncertainty

The range of uncertainty for the high-speed frequency-response benefits series is 

estimated to be ± 10 percent, while the range for the costs is ± 5 percent. Calculating the metrics 

using the lower estimate for the costs and the upper estimate for the benefits yields high 

estimates for the metrics describing the lower bound returns to NIST’s investments. Using the 

upper estimate for the costs and the lower estimate for the benefits yields a set of low estimates 

for the metrics. This technique yields the ranges for the metrics as shown in Table 19.

Table 19. Estimate Range of Lower-bound Economic Impact for NIST's Investments in 

High-speed Metrology

Metric Low Midpoint High

Real internal rate of return 119% 136% 155%

Benefit-to-cost ratio 7.8 9.1 10.5

NPV in 1992 $10,900,000 $12,300,000 $13,800,000

NPV in 1999 $17,500,000 $19,800,000 $22,100,000
5-1

5. ASSESSMENT OF MEASUREMENT TECHNOLOGY FOR THE 

MEDICAL INDUSTRY

The two preceding chapters provided quantitative studies of NIST’s laser metrology used 

in the manufacturing technology of the semiconductor industry and in the provision of fiber-optic 

telecommunications services. In this chapter, the evolving applications of lasers in medical 

services are used to provide another illustration of the economic importance of having NIST as 

the repository of national standards for laser metrology. 

The TASC team reviewed the economic importance of lasers and accurate measurements 

in medical applications, identified NIST's technical contributions, identified the relevant industry 

structure, and developed hypothesized outcomes for economic impact. The scope of the study did 

not permit a formal survey of the medical supply chain’s downstream users of laser metrology, so 

an analysis of outcomes was not undertaken. However, interviews with the suppliers of power 

meter firms to the laser medical community yielded the identification of future investment 

opportunities for NIST. 

5.1 ECONOMIC IMPORTANCE TO THE MEDICAL COMMUNITY

5.1.1 Laser-based Medical Services

Lasers have been used in medicine for a variety of diagnostic and therapeutic 

applications. Diagnostic applications include cell counting (e.g., for blood tests) and laser 

induced fluorescence for detection of various types of tissues. Therapeutic applications include 

ophthalmic laser treatments and surgical procedures to cut or vaporize tissue.40

During the 1960s, a few medical applications were explored, such as the use of the ruby 

laser for retinal welding. As new types of lasers were developed and refined through the 1970s, 

successful medical applications of these newer lasers followed. Examples include the use of 

argon lasers in ophthalmology (for retinal photocoagulation), the CO2 laser for surgical cutting, 

and the Nd-YAG laser for coagulation.

 

40 Examples of ophthalmic laser treatments include photocoagulation of the retina for age-related macular 

degeneration, the leading cause of blindness, and diabetic retinopathy. Examples of surgical procedures include: 

removal of a cancerous or pre-cancerous lesion using a CO2 laser, tissue coagulation such as Nd-YAG laser 

treatment of bladder cancer, selective interaction with tissue such as using a dye laser for port wine stains, or 

tissue disruption such as using a pulsed dye laser for fracturing kidney and ureteral stones.
5-2

Medical applications of lasers exploded in the 1980s. Surgical and ophthalmic lasers 

became widely accepted, and new applications were developed, such as laser angioplasty 

(removal of plaque from coronary arteries via a fiberoptic catheter), laser lithotripsy (breaking 

kidney and ureteral stones), laser tissue welding and refractive eye surgery (cutting/lathing of the 

cornea to correct vision). These new applications utilize lasers to remove tissue very precisely 

(e.g., removing a 0.5 mm layer of plaque inside a 3 mm diameter artery; or a 0.3 mm layer of 

cornea to correct vision). Further, these “minimally invasive” laser-based procedures began to 

replace traditional, more invasive, surgical applications.

A major trend in medicine has been the reduction in cost of patient outcomes. A key cost 

driver in medical economics is the length-of-stay in the hospital for the patient. The less invasive 

procedures enabled through laser technology have been a significant factor in reducing the 

average patient length-of-stay in comparison to traditional, more invasive procedures. Laserbased procedures have also contributed to recent reductions in the rate of medical inflation that 

was running rampant during the early 1990s.

5.1.2 Optical Power Measurement

The power monitoring equipment used in surgical laser systems must ensure the delivery 

of accurate and consistent laser power to the patient. Generally, accurate laser power 

measurements in the medical field provide the following benefits:

• Increased safety and effectiveness of a laser procedure

• Ability to provide precise treatment of delicate tissues, such as 

arteries and the cornea

• Ability to meet regulatory requirements with cost-effective system 

designs

• Reduced physician liability

In medical laser applications, the laser output power often determines the safety and 

effectiveness of a procedure. Precise targeting of the power (or energy, in the case of pulsed 

lasers) and accurate dosimetry are required to ensure that complications do not occur for the 

patient. In particular, severe complications can arise from unintentional damage to non-target 

tissue if the laser power or dose is too high. For example, excessive power applied during 

angioplasty can lead to a punctured artery (possibly requiring correction by open-heart surgery), 

or cause blindness in a patient undergoing refractive eye surgery by cutting through the entire 
5-3

cornea. Excessive power delivered from a Nd-YAG laser while coagulating a tumor in the 

esophagus can potentially lead to a rupture of the aorta—and death of the patient—several days 

after the surgery.

Laser power levels for medical applications range from very low (milliwatts for tissue 

welding) to quite high (kilowatt pulses for drilling holes in the heart for laser transmyocardial 

revascularization, a potentially less invasive alternative to coronary artery bypass surgery). Laser 

wavelengths run the gamut from ultraviolet (193 nm) to far infrared (10.6 μm), and both 

continuous wave and pulsed systems are utilized. 

Correct dosimetry for laser procedures requires an accurate measurement of the 

power/energy of the laser output. Manufacturers of medical laser systems usually incorporate 

power meters as a means to measure the power/energy. These power meters may be purchased as 

OEM subsystems or commercially available detectors used in a custom designed power 

monitoring system. In either case, calibration of the system power meter to national standards is 

crucial for both system performance and regulatory purposes. 

In addition to the CDRH requirements for all laser and laser systems manufacturers, 

medical laser companies must obtain clearance or approval from the FDA prior to marketing new 

products in the US. Clearance may be granted for new systems that are substantially equivalent to 

systems already marketed in the US, while full approval based on clinical trials may be required 

for new types of medical laser systems (new wavelengths, power levels, applications, etc.). All of 

these systems must incorporate a power monitoring capability that measures the laser 

power/energy that the physician applies to the patient. Further, the power meters must be 

calibrated to national standards to help ensure that patients are treated as safely and effectively 

with “production” systems as those involved in the clinical trials (testing) of the system.

A hierarchy of standards traceability is used to meet regulatory requirements efficiently. 

The FDA requires that the physician know the laser output power delivered to tissue at the start 

of a procedure to within ± 20 percent of absolute standards at NIST, including all possible errors 

and variations. Most lasers have a drift (CW) or pulse-to-pulse variation (pulsed) on the order of 

10 percent, so the measurement system must be accurate to within ± 10 percent. Since the 

measurement system includes optical elements as well as the calibrated detector, the detector 

must be calibrated typically to better than ± 5 percent. And since each calibration (national 

standard, to transfer/gold standard, to working standard, to meter in the equipment) results in a 

loss of about 1 percent accuracy, the traceable standard must be accurate to 1-2 percent. In 
5-4

submitting laser products for FDA approval or clearance, suppliers are required to provide not 

only power measurements, but also an analysis showing how the accuracy of their measurements 

fits within the error budget allowed by the FDA.

The power meter built into a medical laser system is often calibrated not to the actual 

laser output, but to the output of the beam delivery system (i.e., the power that will impinge on 

the patient’s tissue). The power measurement presented to the physician must take into account 

losses in optical systems, articulated arms (for delivering CO2 laser energy flexibly to the 

surgical site) and fiberoptic catheters. Therefore, medical laser manufacturers often use 

uncalibrated detectors, and then calibrate their system using an external power meter that 

measures the light emitted from the delivery system. These external power meters must be 

calibrated accurately, and are usually traceable to the NIST standard.

Laser power is often monitored and recorded during a medical procedure as a policy of 

the medical service provider. If the results of a procedure are not favorable, this documentation 

could be instrumental in litigation between the patient and physician or hospital, as well as their 

insurance companies. Such liability concerns may also apply to biomedical engineers who are 

responsible for regular service and calibration of the laser system.

For decades, measurement accuracy down to 0.01 percent (relative to standards) has been 

attainable for lasers operating with visible and near-infrared wavelengths. Attainment of better 

than 2 percent accuracy has not always been possible for laser power measurement in the far 

infrared and ultraviolet wavelengths as well as for pulsed lasers. Historically, obtaining accurate 

measurements over these ranges of power and wavelength has not been a great technical 

challenge for the medical equipment industry. That is, neither industry nor NIST has had to make 

significant investments in measurement technology to obtain the required accuracy pertinent to 

medical applications. However, a representative of a power meter supplier who works with the 

new medical applications reports that picture is changing. New challenges for measurement 

technology in the medical applications of lasers are now emerging. This chapter concludes with a 

description of those challenges.

5.2 INDUSTRY SUPPLY CHAIN

Figure 7 shows the ripple effect of measurement technology in the supply chain for 

medical therapeutics. In 1998, at least 70 companies that supplied lasers for medical therapeutic 

laser systems. 
5-5

• Biomedical instrumentation: 11 firms (1 is non-domestic)

• Biostimulation: 8 firms (4 are nondomestic)

• Dental: 9 firms (2 are nondomestic)

• Dermatology: 19 firms (4 are nondomestic)

• Ophthalmology: 14 firms (3 are nondomestic)

• Other: 9 firms (3 nondomestic)41

Figure 7. Measurement Technology Flow for Medical Therapeutics

 

41 Laser Focus World Buyers Guide 98.

Medical Service Providers

(Hospitals, Surgicenters,

HMOs, Private Practices, etc.)

Medical Laser

Equipment

$1.4B*

Lasers

$340M*

Power

Meters * 1997 World

Market Sales
5-6

Sales of lasers to medical laser systems manufacturers totaled $340 million in 1997.42 The 

worldwide market for medical laser systems approached $1.2 billion, a small segment of the 

$140 billion market for all medical systems. The medical laser systems market consists of several 

key segments:

• Surgical laser systems, $500 million 

• Ophthalmic systems, $350 million

• Accessories and services, $350 million; this segment includes 

revenues for power meters purchased by end users and power meter 

calibration services

Table 20 lists many of the medical laser systems companies (i.e., those supplying medical 

laser systems to hospitals or physicians) and key market areas on which each company is 

focusing. This list is not complete, but most of the important companies are included. Also, many 

of these companies address several market segments (e.g., surgical, aesthetic, ophthalmic), and 

some may be leaders in one segment, and minor players in another. Some companies are in the 

development phase only, and have essentially no sales, yet.

The US has about 6,000 hospitals and 1,000 surgicenters. Most, if not all, of the hospitals 

use medical lasers in one or another specialty (e.g., ophthalmology, urology, neurosurgery).

Many of the surgicenters also use lasers. In addition, a large number of private practices use 

lasers—primarily in ophthalmology and in dermatology. The US has about 12,000 

ophthalmologists (many of whom practice at hospitals), roughly 3,000 ophthalmic practices, and 

another 3,000 dermatology practices.

 

42 Spectrum Consulting, Medical & Healthcare Marketplace Guide, 13th ed., (Dorland), 1997-98.
5-7

Table 20. Key Medical Laser System Suppliers and Markets43

 

Company

 

Market Area

Market 

Leader

Largest 

Suppliers

Niche 

Market 

Leader

Niche 

Market, 

Secondary

Aesculap/Meditec Ophthalmic/Surgical X

Allergan Medical Optics Ophthalmic X

American Dental Laser Dental X

Biolase Dental X

Candela Surgical X

Coherent Medical Ophthalmic/Surgical X

Continuum Biomedical Aesthetic

Cynosure Aesthetic X

Eclipse Surgical Technologies Surgical/Cardiovascular X

ESC/Laser Industries Surgical/Aesthetic X

HGM Ophthalmic/Surgical X

LaserLite Aesthetic

Laserscope/Heraeus Surgical Surgical X

LaserSight Ophthalmic X

Laser Vision Ophthalmic

Mehl/Biophile Aesthetic

Palomar Surgical/Aesthetic X

PLC Systems Cardiovascular (TMR) X

Premier Laser Surgical/Aesthetic X

Spectranetics Cardiovascular X

Summit Technologies Ophthalmic X

Surgical Laser Technologies Surgical X

Thermolase Aesthetic

Trimedyne Surgical X

VISX Ophthalmic X

 

43 Ophthalmic: Retinal photocoagulation (argon/krypton dye lasers); refractive surgery (excimer laser); 

capsulotomy (Nd-YAG pulsed laser)

Surgical: Cutting/vaporizing tissue in general surgery, gynecology, neurosurgery, ENT, urology, 

gastroenterology, etc. (CO2 laser, Nd-YAG laser, KTP laser, Holmium laser)

Aesthetic: Skin resurfacing, hair removal (CO2 laser, Er-YAG laser, Nd-YAG laser, Holmium laser, Alexandrite 

laser, pulsed dye laser, ruby laser, diode laser)

Cardiovascular: Laser angioplasty, transmyocardial revascularization (Excimer laser, high power pulsed CO2

laser, Holmium laser)
5-8

5.3 ECONOMIC ANALYSIS FRAMEWORK

Several of NIST’s early advancements in measurement technology have been 

incorporated in commercialized medical laser products. Early calorimeter designs developed at 

NIST were spun-off by a new startup company, Scientech, in 1973. Scientech’s power meters 

were used in a large percentage of early medical laser applications, particularly those using the 

early CO2 and Nd-YAG surgical lasers. Additionally, as the surgical laser field was developing in 

the 1970s, NIST developed the electrically-calibrated pyroelectric radiometer. In this system, the 

pyroelectric element is alternately heated using optical and electrical energies that are then 

matched. The electrical energy can then be measured accurately using conventional technology 

(e.g., voltmeters, and ammeters) for an absolute calibration to electrical standards—without 

optical calibration. Some medical laser systems suppliers have incorporated this power meter 

technology into their surgical laser products.

Work on calorimeters developed more recently by NIST for the semiconductor 

lithography area has also played a role in characterizing excimer lasers used for refractive eye 

surgery and angioplasty. These medical applications of excimer lasers utilize 308 nm and 193 nm 

wavelengths, not the 248 nm wavelength targeted by NIST and SEMATECH. Yet, the accuracy 

of pulse energy measurements for the 308 nm excimer laser benefited from research derived from 

the 248 nm work at NIST.

The measurement infrastructure provided by NIST (national standards and calibration 

services) provides a consistent frame of reference for both the chain of firms supplying medical 

laser systems and the users of these systems. Having agreement on this measurement 

infrastructure reduces disputes and transaction costs among all affected parties, and reduces the 

cost of regulatory compliance for traceability to absolute standards. For example, all of the laser 

systems used in a clinical trial can be relied upon to provide the same power/energy for a given 

application, and the subsequent lasers sold commercially can be relied upon to accurately provide 

the same parameters as those systems used during the clinical trial.

As newer surgical laser applications develop and proliferate, industry will continue to 

obtain measurement support from NIST. NIST provides the measurement foundation for 

developing these less-traumatic and more cost-effective medical procedures through its 

development and maintenance of primary standards and the assistance provided to power meter 

companies and laser companies in calibrating their transfer standards. 
5-9

Hypotheses regarding the types of economic outcomes and the affected parties include the 

following:

• High measurement accuracy and standards traceability through NIST 

ensures that consistent and safe laser power/energy levels are used at 

the start of laser surgery to maximize procedure effectiveness and 

reduce patient complications.

NIST’s measurement technology effects patient (end-user) outcomes 

of laser surgical procedures since the FDA requires the physician’s 

choice of starting power for the beam delivery system be guided by a 

power meter that is calibrated to within 20 percent of absolute 

standards at NIST. Yet, analogous to the situation with 

semiconductor lithography, NIST’s measurement technology 

historically did not extend directly to the actual operating procedure 

because the physician adjusts the output power of the beam delivery 

system based on observation of laser effects on particular tissue for 

each patient. However, as noted in the concluding section of this 

chapter, the need for direct use of absolute measurement is now 

emerging in the latest medical applications of “exposure” lasers.

• The diffusion of the measurement technology through NIST’s 

calibration services has decreased transaction costs among firms in 

the affected supply chain (laser manufacturers and medical laser 

equipment suppliers) as well as physician staffs (hospitals, 

surgicenters, private practices, etc.). 

• The diffusion of the measurement technology through calibration 

services provides an efficient vehicle for medical equipment 

suppliers and physician staffs to meet FDA regulatory requirements

for power meter accuracy to absolute standards.

• NIST’s measurement infrastructure has provided a common 

reference for calibration and a foundation for incremental 

advancements in medical laser technology that has benefited the 

entire medical community.
5-10

5.4 SURVEY FINDINGS44

Suppliers of power and energy meters believe that with the latest medical applications of 

lasers, new investments in metrology at NIST could support emerging laser technologies that 

have evolved beyond those served by the capabilities of the current infrastructure. The latest 

medical lasers are less forgiving to the doctor applying the laser procedure. These are exposure 

lasers, and require doctors to know the exposure level before using them. The historical FDA 

requirement of ± 20 percent measurement accuracy is often no longer sufficient. Now, the 

doctors need measurement accuracy within ± 1.5 percent, which represents a requirement for 

greater measurement accuracy traceable to NIST standards than the current metrology 

infratechnology allows. The latest PDT (photo-dynamic therapy) for cancer treatment, for 

example, uses exposure systems rather than cutting or burning technology. Without tight absolute 

measurement, permanent damage can be done to the patient. For skin resurfacing as well, 

physicians now need to know absolute power. In the past, physicians could experiment with 

power levels because they were just cutting and increase the laser power until they obtained the 

desired effect. But they now need to know the absolute power before exposing the skin. Although 

a quantitative analysis has not been attempted, the qualitative evidence suggests that new 

investments by NIST and industry could make valuable improvements in the infrastructure for 

laser metrology that supports the medical supply chain.

The new lasers being used in medicine are in great demand. Customers are on waiting 

lists to get them. NIST typically needs to get the lasers to be able to provide a measurement 

assurance program or standard. One knowledgeable expert stated that demand is so great in 

medical applications, that NIST is not able to get the newly developed lasers; the customers are 

waiting for them and the doctors cannot wait for NIST to develop calibration metrology using the 

particular new laser that is in great demand. Further, the same expert believes that industry 

would benefit if NIST could undertake investments to develop measurement standards 

independent of measurement parameters. Such standards could be shipped to the power meter 

manufacturers for calibrating the rapidly evolving new lasers. The power meter suppliers provide 

the calibrations, and work together with the medical laser system manufacturers to establish a de 

facto agreement on a particular measurement. NIST could help a great deal by renting a suitable 

standard that could be carried by the power meter supplier to the laser manufacturer. But the 

 

44 A formal survey of the affected medical supply chain was not conducted for this study. Qualitative results from 

in-depth interviews are reported.
5-11

current standards are not general enough, and NIST actually needs the new laser to develop the 

appropriate standard. One approach would be to have NIST certify an industry laser calibration 

laboratory as a nationally recognized standards lab. Some envision a network of national certified 

standards labs in industry where NIST does the certification and recertifies annually with an 

auditing process. Such an approach might be useful for many applications of laser metrology 

throughout the economy. 
A-1

Appendix A 

NIST's TECHNICAL CONTRIBUTIONS

A.1 ADVANCED MEASUREMENT TECHNOLOGY 

As the laser industry developed during the 1960s, NIST (then NBS) became involved in 

laser power measurement and established a measurement infrastructure to serve this emerging 

industry. In the early-mid 1960s, NIST invented a liquid-cell calorimeter that could measure the 

energy of high peak power laser pulses. By the late 1960s, NIST was providing laser power 

calibration services to the public and the military. In the early 1970s, Dale West and other 

researchers at NIST designed and constructed laser calorimeters for the measurement of low 

power, high power, and pulse energy. At the time, the use of calorimeters to relate optical power 

and energy to electrical power and energy was a novel concept. 

As the laser markets expanded, power meter suppliers began to emerge. Two of these 

suppliers, Scientech and Calorimetrics, were founded by former NIST employees in the early 

1970s. During the 1970s and 1980s, several large optics companies (Newport Corporation, 

Ealing Electro-Optics, and Edmund Scientific) provided laser power meters as did many of the 

laser manufacturers (Spectra Physics, Coherent, Jodon, Lambda Physik, and Lexel). 

In the mid-1970s, NIST researchers developed the concept of the electrically-calibrated 

pyroelectric detector. Here, the optical signal is applied to the detector alternately with an 

electrical signal. When the response from these two signals is matched, the power of the 

electrical input can be measured and related directly to the optical power. These detectors were 

commercialized during the 1970s for application with CW lasers by Laser Precision, now called 

Laser Probe.

During the mid-1980s, NIST developed a laser power measurement capability for high 

power lasers (e.g., up to 1 kilowatt for 10.6 μm lasers). In the late 1980s, NIST developed a 

parallel beam measurement capability for fiber power measurements with diode laser sources 

(850, 1300, 1550 nm wavelengths) that could provide measurements down to the 100 μW power 

level. A "connectorized fiber" capability was soon added to meet customer demand. 
A-2

In the early 1990s, NIST initiated a project to develop spectral response measurements for 

optical power meters. NIST now provides specialized tests to industrial and research customers 

using a spectral response measurement system, and is currently developing a tunable laser system 

for spectral response measurements. In the mid-1990s, NIST developed a detector linearity 

measurement system and a tunable laser system for fiber power meter measurements.

A cryogenic radiometer was added to NIST's suite of primary standards during the mid1990s. NIST also developed prototype secondary (transfer) standards that are traceable to the 

cryogenic radiometer. Currently, NIST is developing improved cryogenic radiometer designs, 

with faster response time and improved dynamic range. 

Also during the 1990s, NIST developed an impulse response measurement capability for 

characterizing detectors used to measure ultrashort (100 femtosecond) pulses; developed 

techniques for measuring optoelectronic noise in laser diodes; and developed low-level 

radiometers for measurements of pulsed lasers used in target designators, rangefinders, lidar, and 

remote sensing applications. The low-level pulsed laser radiometer work has been conducted by 

NIST primarily to support the military in the use of laser target designators and laser 

rangefinders, devices that operate typically at 1.06 μm and 1.55 μm wavelengths.

NIST conducted other important work in the 1990s to support the product development 

strategies of U.S. industry. NIST’s efforts on excimer laser energy measurements to support the 

domestic semiconductor industry are described in Section 4.3. NIST’s work on high-speed 

detector measurement technology to meet the needs of the telecommunications industry is 

described in Section 5.2. 

A-2 SERVICES TO INDUSTRY

NIST has developed and maintained primary standards for optical power and energy 

measurements. Generally, the metrology (hardware, software, techniques, etc.) associated with 

these standards has been based on the advancements described in the previous section. NIST has 

also developed measurement and calibration procedures to ensure traceability of other 

power/energy meter systems to the primary standards.

Once a laser power/energy measurement instrument is purchased or built, the accuracy of 

measurements made with the instrument has to be documented as a part of the standards 

traceability process. NIST has developed a laser Measurement Assurance Program (MAP) that 
A-3

assists those calibrating power meters in establishing the calibration relative to primary standards 

and in documenting the precision and accuracy of the measurement process. A participant goes 

through a MAP process as shown schematically in Figure A-1.

Figure A-1. NIST Calibration Process: (a) Initial calibration, and (b) Six-month 

recalibration

The MAP is based on transfer standard power meters calibrated by NIST. These power 

meters compare measurements made in industry against national standards maintained at NIST. 

When a participant joins the NIST laser MAP program, a transfer standard is forwarded for 

comparison with the participant’s power meters. The participant calibrates its in-house standard 

against the transfer standard. The participant then sends the measured artifact back to NIST, 

which then repeats the calibration and analyzes data from the calibrations. NIST then forwards to 

the participant documented results showing how the participant’s calibration constant compares 

with standards maintained at NIST. These results provide the participant with a new calibration 

constant for accurate calibration of internal power meters relative to NIST. NIST’s 

documentation becomes a record of the participant’s measurement capability and traceability to 

the NIST primary standard.

As shown on Figure A-2, standards traceability is achieved through a hierarchy of 

calibration levels. Traceability begins with the NIST primary standard, then to the transfer 

standards, and down the chain from the laser and power meter companies to the OEM 

manufacturers that incorporate this equipment, and ultimately to the end users of the systems.

National

Reference

Standard

From NIST to Company

Calibrated

Transfer

Standard

NIST

In-House

Power

Meter

Standard

Calibration to NIST 

Transfer Standard

Repeat 

Calibration

NIST

Analysis of

Measurement

Return to NIST NIST and Customer

Results 

Submitted 

to 

Customer

Comparison

Customer

(a) (b)
A-4

Figure A-2. Hierarchy of Standards Traceability 

The NIST measurement services provide about 50 laser power meter calibrations per 

year, 40 optical fiber power meter calibrations per year, and about 20-25 high-speed detector 

measurements per year. While this represents a small fraction of the tens of thousands of power 

meters used in the field, it accounts for most of the transfer standards used to provide NIST 

traceability. MAP participants mainly include power meter suppliers, laser suppliers, and 

commercial calibration service providers—all of which provide calibrations of their customer’s 

instrumentation to the transfer standard, and therefore ultimately to the NIST primary standard.

NIST’s calibration services are relevant to virtually 100 percent of all laser power 

instrumentation. Typically, end-users of laser equipment purchase power meters that are 

calibrated by the power meter supplier. Most end-users perform calibrations in-house, and send 

their meters back to the power meter supplier once every 6-12 months for recalibration. The 

supplier, in turn, will check its in-house meters regularly with NIST to ensure traceability. Power 

meter suppliers, laser suppliers, and large organizations with metrology departments seek NIST’s 

calibration services most often. Thus, the market for NIST’s calibration services is substantially 

smaller than the unit market for laser power meters. Virtually every power meter sold is 

ultimately traceable to NIST, at least when purchased, although some end-users may elect not to 

maintain traceability through regular calibrations depending on the criticality of their specific 

application.

NIST’s calibration services are also relevant to virtually 100 percent of the fiberoptic 

power calibration instrumentation. Users of optical fiber (e.g., telephone companies, cable 

television companies, and LAN system installers) often utilize commercial calibration service 

providers that base their transfer standards on calibrations by NIST. As an example of the 

difference in cost between a commercial fiberoptic calibration service and the NIST calibration 

service, a secondary fiberoptic calibration from Bell Technologies costs $100-150 while a 

primary calibration from NIST’s fiber measurement services costs approximately $2,500.
A-5

NIST’s services also target high accuracy measurements (i.e., better accuracy than 

transfer standard instrumentation) and measurements that are at the leading edge of the 

technological envelope. These include measurements at short wavelengths (excimer laser), 

measurements at the extremes of power ranges, measurements of extremely short pulsewidths, 

and measurements involving high modulation frequencies. In each of these areas, NIST has 

“pushed the envelope” for measurement capabilities as industry and the military have developed 

laser and fiberoptic technologies having output parameters at the edge of the envelope. 

A service that NIST provides when appropriate is a “round robin” of measurements 

among various national laboratories and research laboratories. A round robin demonstrates the 

level of accuracy that can be attained among the best laboratories, and these intercomparisons 

highlight the need for improved measurement systems and techniques in specific areas. During 

the mid-1990s, NIST conducted a round robin for beam width and other beam property 

measurements which led to the development of an improved beam profile standard. The new 

standard was used in another round robin with industry in 1998.

A.2.1. Contributions to Commercialized Products

Measurement technology developed at NIST has been transferred to industry as in the 

aforementioned cases of Scientech and Calorimetrics. Additionally, the electrically-calibrated 

pyroelectric radiometer developed by NIST staff was produced as a commercial product in the 

early 1970s by Laser Precision, a company later purchased by Laser Probe. More recently, highspeed measurement technology developed at NIST has been spun-off to companies such as 

Hewlett-Packard as described in Section 5.2.
B-1

Appendix B

LASER TECHNOLOGY

B-1 BASIC CONCEPTS

The word laser is an acronym that stands for “Light Amplification by Stimulated 

Emission of Radiation.” Generally, laser energy is distinguished from other forms of light by 

three characteristics: narrowness of the beam (directionality), single color (monochromaticity),

and phase consistency (coherence). Directionality is the key property for creating intense light 

levels in a particular direction. For example, this property allows lasers to:

• Read minute, encoded information on a stereo CD

• Create the precise patterns of a laser printer

• Send electrical signals over long distances

• Focus for the cutting or welding of metal with relatively little power

The monochromatic property of the beam provides the spectral purity required for certain 

chemical and physical reactions. For example:

• In medical applications, certain wavelengths of laser light are used to 

interact with blood (green light from Argon lasers), water in tissue 

(such as infrared light from the CO2 laser), or tissue colors (such as 

birthmarks and tattoos)

• In the telecommunications field, lasers are designed to have 

wavelengths that match the transmission window (spectral region of 

lowest loss) of glass optical fibers

• For integrated circuit fabrication, the short wavelengths (ultraviolet) 

from lasers provide better resolution than the longer wavelengths 

(visible light) from mercury lamps

Finally, the phase consistency, or coherence, of laser light allows the fabrication of threedimensional holograms and creation of ultra-short pulses of light.

Laser calibration relates to the branch of science known as radiometry, which deals with 

the measurement and detection of radiant energy and power. The radiant energy is the quantity of 

photons transported in an electromagnetic wave. The radiant power is the intensity of the light, 

and is proportional to the number of photons propagated in the laser beam each second. The 
B-2

fundamental units of measure for energy and power are the joule (J) and watt (W), respectively. 

One watt is equal to one joule per second. Consequently, the energy of a laser beam equals the 

power of the beam times the duration (exposure time) on a detector. Further, radiance (power 

density) and fluence (energy density) represent the power and energy, respectively, impinging on 

a unit area. Radiance and fluence are measured in watts/cm

2 

and joules/cm

2

, respectively.

Lasers are capable of generating light in the form of either a continuous delivery of 

energy, referred to as continuous wave (CW) lasers, or discrete pulses, referred to as pulsed 

lasers. Generally, the range of peak power obtained from CW lasers is much lower (0.001 to 

1,000 watts) than for pulsed lasers (10

6

 to 10

10

 watts). Also, the typical exposure time for CW 

lasers is about 0.01 - 10 seconds depending on the field of application, while the pulse duration 

for a pulsed laser is much lower—typically 10

-11

 to 10

-6

 seconds.

Unique effects (e.g., biophysical effect of laser light on tissue) can be achieved through 

careful selection of the power and energy characteristics of the light source as well as the 

exposure time. The laser power is the most important parameter for some applications, while the 

laser energy is the key parameter for other applications.

B.2 LASER POWER AND ENERGY MEASUREMENTS

The measurement of laser output power is important to all laser manufacturers and users, 

but is especially critical for specific applications requiring precise power levels. Examples 

include medical applications (due to both the optimization of procedure efficacy and the 

regulatory requirements imposed by the FDA), materials processing (where precise powers are 

required to weld or heat-treat metallic structures) and telecommunications applications.

B.2.1 Laser Power Instruments

Laser power meters generally are of two types: those with thermal detectors, and those 

with solid-state (e.g., silicon) detectors, also known as photodiodes. Thermal detectors have the 

advantage of a flat response over a broad spectral range,45 but are more difficult to use because of 

 

45 Radiometric detectors filter the incoming light to even out the responsivity, producing a “flat response.” This is 

important for accurate radiometric measurements, because the spectrum of a light source may be unknown or 

dependent on operating conditions such as input voltage. The frequency range of spectral flatness is important 

since this specification indicates the area of predictable performance. 
B-3

their low sensitivity. Laser power meters are available that measure from 10-9 - 102 watts. Figure 

B-1 shows several examples of commercially-available laser power meters. These systems range 

from calorimeters that incorporate large heat-sinks, to miniature meters that provide sophisticated 

functions in a pocket size. For laser energy measurement, integrating radiometers are available 

with response times in the nanosecond range. High-speed radiometers, however, have problems 

with detector current saturation caused by high peak power at low energies. 

Figure B-1. Examples of Laser Power Meters

Generally, power/energy measurements of laser sources are accomplished using 

calorimeters or photodiodes. The concept of a calorimeter—developed by NIST in the 1960s—is 

shown on Figure B-2. A calorimeter absorbs the optical energy inside a meter cavity for 

conversion to thermal energy, which is measured using a thermopile (an array of thermocouples 

connected in series) or other temperature-electrical conversion device. Thermopiles detect heat 

differences to allow electrical calibration (i.e., difference between heat input from optical signal 

 

Most sources are continuums, emitting over a broad band of the spectrum. Incandescent lamps are a good 

example. The color temperature and output of these lamps vary significantly with input voltage. Flat response 

detectors measure only output power in watts, taking into consideration light at every wavelength.
B-4

vs. heat input from known electrical parameters). Photodiodes are solid-state detectors that 

produce a direct electrical response to an optical input.

Figure B-2. Cross Section of a Generic Calorimeter

Another method of measuring laser light with a thermal detector is to use a pyroelectric 

material. This material changes electrical properties in proportion to optical power input, but is 

only useful when the optical beam is chopped (gated or shuttered repeatedly) to produce 

alternating light and no-light conditions. Many internal power meters of medical laser equipment 

(e.g., CO2 surgical lasers) utilize pyroelectric detectors.

The techniques for measuring pulsed laser energy are basically the same as those for 

measuring the power of CW sources. However, instead of relatively slow thermal calorimeters, 

photodiode detectors are utilized which have very fast response times (light input to electrical 

output, or “risetimes”) of nanoseconds or less. The electrical signal from the photodiode can be 

integrated to determine the laser output energy (i.e., the area under the pulse power vs. time 

curve).
B-5

B.2.2 Fiberoptic Measurements

Fiberoptic power meters are used primarily for telecommunications applications to 

measure optical power transmitted through an optical fiber system. Although power is measured 

in these tests—often in the microwatt range—the output parameter is typically expressed in 

decibels (dBs).46 For example, AT&T may check a fiber in the telephone system to ensure that 

the optical loss of the fiber is less than 1 dB per kilometer. Most fiberoptic power meters use 

silicon, germanium, and indium-gallium-arsenide photodetectors, and are equipped with adapters 

that connect to the fiber terminations (connectors) to measure all the light that exits the fiber. 

While the instruments for laser power and fiberoptic power are similar, the two types of 

instrumentation differ in terms of: 

• The use of relative dB measurement parameters 

• Fiber/connector input

• Beam shape

• Dynamic range

• Wavelengths

As the use of optical fibers in telecommunications has grown, so has the need for 

fiberoptic power measurements. Fiberoptic power meters (radiometers) differ from the typical 

laser power meter in both wavelength range and measurement units. Spectrally, such radiometers 

operate in two ranges: from 800-900 nm using silicon detectors, and 1300-1600 nm with 

germanium or indium gallium arsenide (InGaAs) detectors. These ranges are utilized most 

frequently in fiberoptic communication since they are the “windows” where the fiberoptic 

material absorbs the least amount of light. Semiconductor diode lasers have been developed at 

specific wavelengths in these ranges, and measurements can be standardized in terms of the 

wavelength range of interest.

 

46 The unit of fiberoptic transmission measurement is the decibel (dB), defined as: dB = 10 * log (power out / 

power in). Decibel units are useful in compressing power measurement data that has a wide dynamic range. 

Fiberoptic radiometers can measure up to 80 dB of loss, using an input power in the range of microwatts to 

milliwatts.
B-6

B.2.3 Measurement Set-up and Procedure

A typical set-up for laser power measurement is shown in Figure B-3. The laser beam is 

directed onto the detector surface of the power meter either directly or with focusing optics. The 

power meter is attached to an electronic readout that provides appropriate units (e.g., W, mW or 

μW).

Figure B-3. Laser Power Measurement Set-Up

The measurement procedure is quite simple. First, the laser beam is blocked. The meter 

is turned on, adjusted to the appropriate power scale, and then zeroed—perhaps with the room 

lighting off, if that is a factor. The laser is then unblocked. The detector comes to an equilibrium 

temperature in a short time period (typically less than one second), and the readout shows the 

calibrated reading in optical power. Measurement of average power can be attained with the 

same procedure. Also, measurement of peak power is dependent on using a silicon (or other 

solid-state) photodiode with appropriate instrumentation. Sources of error in laser power 

measurement include:

• Geometric variations in detector sensitivity

• Alignment errors

• Environmental influences (e.g., temperature, air currents)

• Procedures
B-7

B.3 CALIBRATION 

Laser power meters are calibrated routinely to ensure accurate power measurements. 

Typically, calibration involves a comparison of the subject power meter to a transfer standard, 

another power meter that has been referenced to national standards at NIST. Two basic 

techniques include: 

(1) Reading the power of a calibrated source (e.g., mercury lamp) 

sequentially using the two meters and correcting the subject meter to 

correspond with the transfer standard meter.

5. Using a beamsplitter to input the same laser power to the two power 

meters, which make the readings simultaneously as shown in Figure B-4. 

In the sequential case, the calibrated source provides a reference that is assumed not to change 

between measurements. In the simultaneous case, the beamsplitter creates two equal beams that 

are directed into the separate detectors.

Figure B-4. Laser Power Calibration Set-up 
B-8

Laser power meters must be calibrated regularly to ensure the desired level of accuracy. 

Some of the factors that determine the frequency of calibration include:

• The amount of use the meter endures

• The amount of abuse the meter endures (e.g., on a manufacturing line 

or in harsh environmental conditions in the field)

• The level of accuracy required for the application

For traceability to standards at NIST, two general levels of calibration that must be considered: 

field instrumentation and transfer standards. 

B.3.1 Field Instrumentation

The manufacturer calibrates all power meters that are sold commercially. The 

manufacturer measures a source using both the test meter and a transfer standard meter, and 

adjusts the test meter (or provides a calibration curve or correction factors) to match the transfer 

standard.

Most manufacturers recommend an annual calibration of the power meters used by their 

end users (e.g., the physician or biomedical engineer in the case of a medical laser application, or 

a fiberoptic local area network (LAN) installer). In practice, the average time between 

calibrations for many power meters in use may be closer to 2-3 years. In extremely critical 

applications, the power meter may be calibrated biannually.

Most often, the power meter manufacturers recalibrate their customers’ laser power 

meters. This process typically costs $100-400. In the case of power meters internal to 

specialized equipment, such as semiconductor processing equipment or surgical lasers, the 

manufacturer of the equipment generally calibrates the power meter on-site. For on-site 

calibrations, the power meter manufacturers uses the same calibration techniques as described 

above.

B.3.2 Transfer Standards

A calibration is considered traceable to a primary standard when it can be related to an 

unbroken chain of transfer standards. NIST maintains absolute primary standards at a national 

laboratory. The use of transfer standards calibrated regularly by NIST enables power meter 
B-9

manufacturers and users to achieve high measurement accuracy that can be transferred to the 

field instrumentation. 

Manufacturers, research labs, and other organizations usually have their transfer standard 

power meters calibrated through calibration services provided by NIST. NIST provides a 

reference meter to the customer to which his power meter under test is compared. The 

comparison is sent to NIST, which calculates the appropriate correction factors for the customer 

to apply to its transfer standard meter. The reference meter sent by NIST is decalibrated so that 

the customer has no knowledge of whether the transfer standard meter is reading low or high 

relative to NIST’s primary standard. In this way, the calibration is “blinded.” The cost of a NIST 

power meter calibration is approximately $1,600. While many power meter manufacturers have 

used “self-declared traceability,” more recently companies are utilizing calibration laboratories or 

the services of NIST directly, to ensure compliance with the ISO/ANSI guidelines for quality 

assurance.

B.4 FACTORS AFFECTING MEASUREMENT ACCURACY

B.4.1 Wavelength

Generally, optical detectors are sensitive over a relatively narrow range of wavelengths. 

Some detectors are sensitive over the entire visible wavelength range, but their sensitivity varies 

dramatically over this range. 

Calorimeters are used over a wider range of wavelengths, including the infrared (e.g., 

from 2-12 μm, that covers the CO2 laser, the CO laser, the Erbium laser, and the Holmium laser 

as well as other lasers used in military and research applications, such as hydrogen fluoride.

Specialized applications that require great accuracy may utilize detectors calibrated to 

precise wavelengths. For example, the fiberoptic transmission loss measurement in 

telecommunications is performed at “carrier” frequencies of 1300 and 1550 nm. Other power 

meters and detectors, however, may cover a wide spectral range. In this latter case, some method 

must be used to compensate for the wavelength dependence of the detector sensitivity.
B-10

B.4.2 Detector Characteristics

In addition to the spectral response curve, detectors have other characteristics that may 

affect the accuracy of power measurements. For example, large diameter detectors often have 

variability of response across the detector surface. Therefore, if a small diameter laser beam 

(e.g., 2 mm HeNe beam) illuminates a portion of a large diameter (e.g., 1 cm) detector surface, a 

movement of the beam to a different position on the detector surface might cause a change in the 

power reading. Detectors can be characterized by scanning a laser beam across them and plotting 

the output, but this variability can usually be minimized by filling the detector entirely (e.g., 

defocusing the beam, if necessary).

Another important parameter for pulsed laser energy meters is the speed of the detector. 

If the response time of the detector (light input to electrical output) is not a very small fraction of 

the laser pulsewidth, then the peak signal from the detector will be less than if the detector were 

ideal (i.e., have an infinitely fast risetime), whereby the energy will read inaccurately. Detector 

speed has been increasing, but errors are still caused by the laser energy reading being a function 

of the response time of the detector. 

Detector linearity relates to the electrical output of the detector being linearly proportional 

to the optical power on the detector surface. However, detectors can saturate at high power 

levels. For example, photodiodes saturate at powers of a few milliwatts. By using attenuators 

(e.g., filters) or integrating spheres, which provide an average attenuated signal to the detector, 

the detector saturation problem can be minimized.

Temperature can affect the response time of a detector. For example, with germanium 

detectors, the variation in responsivity with temperature becomes important near 1500 nm, which 

is the band edge for the detector. Therefore, temperature control equipment is required to 

stabilize the photodetector temperature in order to make accurate power readings at this 

important wavelength for telecommunications.

B.4.3 Beamsplitter

In the case of the simultaneous measurement of power from a single source by two meters

to allow calibration of one meter by the other, a beamsplitter is commonly used to direct power 

into each of the meters. The beamsplitter does not have to produce exactly 50 percent power in 

each beam; however, the percentage reflected and transmitted must be known accurately. Should 
B-11

the beamsplitter ratio be in error, a systematic error in calibrating power meters from a single 

transfer standard will occur.

A laser power measurement set-up must be used to measure the beamsplitter ratio. 

Therefore, a close connection exists between the measurement system used to test the 

beamsplitter and the measurement system that uses the beamsplitter. In both cases (beamsplitter 

manufacturer and beamsplitter customer), calibration to a transfer standard is possible.

B.4.4 Fiberoptic Connector

The insertion loss of fiber optic interconnecting devices, such as connectors, couplers, 

and splices, is an important system design parameter. Special techniques for measuring 

connectors and interconnect loss have been developed; these techniques are described in the EIA 

Fiber Optic Test Procedures (FOTP). 

Significant variations in transmission losses can occur through differing fiberoptic 

connectors, splices and couplers. The telecommunications industry has standardized on several 

specific types of connectors for fiberoptic cables. Not only can the transmission loss differ 

between connector types, but also among connectors of the same type due to the variability in the 

process of assembling the fiber and connector. Moreover, if the connector used during calibration 

is different than the connector actually used, then an error will occur in determining the 

transmission loss of the system.

B.4.5 Other

Other factors include accuracy of detector/meter electronics, test procedures, environmental 

influences, and operator differences.
C-1

Appendix C

METRICS

Two evaluation metrics used customarily by NIST's Program Office are the internal 

(social) rate of return and the ratio of benefits-to-costs. A third metric, net present value, is 

readily derived from the information developed for the benefit-to-cost ratio.

The metrics in this report are calculated from a time series of costs and benefits in 

constant dollars. Therefore, "real" rates of return are presented based on this time series of 

constant dollars. In contrast, previous economic impact assessments conducted by TASC for 

NIST's Program Office presented "nominal" rates of return that were based on time series of 

current dollars (the dollars of the year in which the benefits were realized or the costs were 

incurred). 

C.1 INTERNAL RATE OF RETURN (IRR)47 

The IRR is the value of the discount rate, i, that equates the net present value (NPV) of a 

stream of net benefits associated with a research project to zero. The time series runs from the 

beginning of the research project, t = 0, to a milestone terminal point, t = n. Net benefits refer to 

total benefits (B) less total costs (C) in each time period. Mathematically,

(1) NPV = [(B0- C0) / (1 + i)

0

] + ... + [(Bn- Cn) / (1 + i)

n

] = 0 

where (Bt- Ct) represents the net benefits associated with the project in year t, and n represents 

the number of time periods (years in most cases) being considered in the evaluation. For unique 

solutions of i, from equation (1), the IRR can be compared to a value, r, that represents the 

opportunity cost of funds invested by the technology-based public institution. Thus, if the 

opportunity cost of funds is less than the internal rate of return, the project was worthwhile from 

an ex post social perspective.

 

47 The characterization of the three metrics follows Chapter 4 of Albert N. Link and John T. Scott, Public 

Accountability: Evaluating Technology-Based Institutions (Boston: Kluwer Academic Publishers) 1998.
C-2

C.2 BENEFIT-TO-COST RATIO 

The ratio of benefits-to-costs is precisely that, the ratio of the present value of all measured 

benefits to the present value of all costs. Both benefits and costs are referenced to the initial time period, 

t = 0, as:

B / C = [? t=0 to t=n Bt / (1 + r)t] / [? t=0 to t=n Ct / (1 + r)t]

A benefit-to-cost ratio of 1 implies a break-even project. Any project with B / C > 1 is a 

relatively successful project. 

Fundamental to implementing the ratio of benefits-to-costs is a value for the discount 

rate, r. While the discount rate representing the opportunity cost for public funds could differ 

across a portfolio of public investments, the calculated metrics in this report follow the 

guidelines set forth by the Office of Management and Budget:

Constant-dollar benefit-cost analyses of proposed investments and 

regulations should report net present value and other outcomes 

determined using a real discount rate of 7 percent.48

C.3 NET PRESENT VALUE (NPV)

The information developed to determine the benefit-to-cost ratio can be used to determine net 

prevent value as:

NPV = B - C 

Note that NPV allows in principle one means of prioritizing among several projects ex post.

 

48 “Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs,” Office of Management and 

Budget (OMB), Circular No. A-94, 29 October 1992.
D-1

APPENDIX D

HIGH-SPEED MEASUREMENT TECHNOLOGY

Frequency response is an important figure of merit for high-speed detectors used in a 

fiberoptic receiver (detector and associated electronics). Frequency response is determined by 

measuring the optical power at a precise wavelength.49 A “perfect” frequency response extending 

to infinite frequency is portrayed in Figure D-1(a). In Figure D-1(b), a finite frequency response 

is shown for an idealized detector. The amplitude (detector electrical response to the optical 

signal shown on a logarithmic scale) “rolls off” as the modulation frequency is increased. The 

bandwidth at which a detector can reliably be used is determined by the modulation frequency at 

which the detector output is reduced by one half. This frequency is commonly referred to as the 

“half-power” point, the “3-dB point,” or the “cut-off frequency.” To determine the 3-dB point, a 

modulated optical signal is applied to the input of the detector, and the electrical output is 

observed. As the modulation frequency is increased, the electrical signal amplitude from the 

detector will decrease; when the detector output is down by a factor of two, the frequency is 

noted, and this is the 3-dB point.

In actual practice, due to mismatches in impedance between the optical detector and the 

electrical circuitry, reflections of the signal occur which lead to a multitude of phase-shifted, 

attenuated signals. The resulting measured frequency response is shown on Figure D-1(c). The 

ripples seen on this frequency response curve result in “ringing” in the time domain; that is, a 

single optical pulse input to the system will result in several electronic pulses at the output (at 

various levels of attenuation). These additional pulses may be detected in a digital system as a 

“one” where the input signal was a “zero,” thus leading to intersymbol interference, which 

increases the bit error rate of the system. Thus, measurement of both the 3-dB point and the 

smoothness of the detector roll-off at frequencies higher than the 3-dB point using “eye 

diagrams” are required to fully characterize the bandwidth of a telecommunications system. Both 

of these measurements depend on accurate optical power measurement techniques at high 

modulation frequencies, which are the techniques that NIST has been developing.

 

49 In practice, fiberoptic communication requires the laser (carrier) wavelength to be within one of the transmission 

“windows” (typically wavelengths around 800 nm, 1300 nm, or 1550 nm) where the fiberoptic core material 

absorbs the least amount of light.
D-2

Figure D-1. Frequency Response of Optical Detectors
E-1

Appendix E

History of NIST's High-Speed Measurement Program

NIST frequency response Calibration Services were developed as a result of the NPL 

round robin, Navy interest, and general industry interests. HP was not the sole requesting entity. 

Later work developing certain transfer standards to specifically address the manufacturability of 

certain SONET/SDH reference receivers was in close collaboration with HP

Development of the heterodyne method used at NIST was done by first conducting a 

careful review of pertinent literature and industry experience, including work at NTT (Japan), 

NPL (UK), Tektronix, New Focus, and HP. We had direct conversations with personnel from 

Tektronix, NPL, New Focus, and HP. From this review, NIST found several things which could 

be improved over previous implementations, including those at HP. These improvements and 

innovations include:

• A novel and previously undiscovered method for normalization. The 

new NIST developed method make measurements insensitive to 

fluctuations in laser power, simplifies the measurement setup, 

reduces measurement time by as much as a factor of 10, and 

eliminates arbitrary normalization factors commonly used elsewhere. 

The NIST normalization method has never been implemented 

anywhere else, although a similar version was implemented at HP in 

their second generation system (see below).

• The use of open beams for combining the lasers, followed by a single 

polarized and normal single-mode fiber. This modification 

simplifies alignment and makes errors due to power and polarization 

matching negligible.

• Use of an electrical power sensor for power measurement rather than 

an electrical spectrum analyzer. Correction for mismatch error has 

only been implemented at HP in the past year, if at all. Mismatch

errors have been corrected at NIST for several years.

• Use of a frequency counter for measuring frequency, instead of an 

electrical spectrum analyzer, giving greatly improved frequency 

accuracy.

• Use of Kernel smoothing to interpolate swept heterodyne data.
E-2

In about 1995 the HP heterodyne system was failing and could not provide the accuracy 

that the NIST system had achieved, so it was scrapped. Soon after this NIST was furloughed and 

could not provide calibrations for a short period of time. The combination of these occurrences 

made HP realize that they needed to build a new heterodyne system for in house measurements, 

using NIST only for “Golden Standards”. They decided that they required higher resolution 

(about 0.1 MHz) than their old system could achieve. NIST could already achieve about 0.5 

MHz resolution. From a manufacturing point of view, it would be advantageous for the higher 

resolution measurement to e made with a phase-locked loop. For various technical reasons they 

decided to build a system that used 3 lasers to achieve phase-lacked loop operation over the range 

of about 0.3 MHz to 1 GHz.

Because of the new requirements that HP supplied, NIST upgraded its system to provide 

phase-locked loop operation from 0.3 MHz to beyond 1 GHz. However, the NIST solution used 

NIST developed phase-locked loop circuitry, used only two lasers, and achieved the same 

performance at significantly less cost. Hence, the NIST system was improved because of 

customer demand, and was done without help from HP or other customers.

The open beam design of the new HP heterodyne system was a direct result of seeing the 

ease of operation that the NIST design offered. The previous HP design used awkward 

polarization maintaining fibers to maintain polarization alignment, making the old system very 

difficult to align.

Because of anticipated customer demand, and requests for HP and the Navy, NIST built a 

heterodyne system operating at 850 nm to address the needs of the computer interconnect market. 

The only other 850 nm heterodyne system publicly documented as being specifically for 

measuring detector frequency is at New Focus. The new NIST 850 nm system far outperforms 

the New Focus system in terms of accuracy and frequency resolution. It was built with Navy and 

NIST funding and without help from HP or other commercial customers.

HP is not the only customer of NIST frequency response measurement services. HP was 

the main customer of 1319 nm calibrations, with occasional calibration requests from component 

vendors. However, with the addition of the 850 nm systems, HP only accounts for about 50% of 

NISTs calibration work load.

Development of the 850 nm heterodyne system was started in March 1997, and now 

accounts for the majority of NISTs measurements.