An increasing proportion of e-business and other network traffic moves over optical networks which provide higher capacity, speed, and security than electrical networks. An all optical network and even optical computing has been envisioned for 20 years, but technical characteristics of optical components have limited applications to the high end of networking, typically for speeds above 2.5 Gbps. While a fundamental advance in physics may be required for the implementation of an all-optical network, optics continues a steady advance into the network infrastructure. This paper describes the technical evolution of optical systems and examines the changing cost structure of optical systems that determines the size of the optical zone of operations (the o-zone).