Optical filters separate wavelengths of light using the principle of optical interference. For 25 years, filter technology has enabled products such as missile guidance and target recognition, medical diagnostic tools, analytical instruments, satellite power and pointing systems, and color measurement and projection systems. The combined growth rate for these types of products is quite flat. On the other hand, the growth rate in demand for filters for dense WDM components exceeds 40 percent per year. Producing filters for communications markets requires a high level of expertise plus significant investments in people and machinery. These factors have created a worldwide shortage of filters, which in turn has encouraged the optical coating industry to place a technical and economic priority on communications products. The outlook for communications filters is rapidly evolving. Demand and sophistication continue to grow, extending the limits of physics and coating technology. Current technology places 16 channels in the available telecommunication wavelength region, with wavelengths spaced by about 0.8 nm. There is significant pressure to reduce the spacings to squeeze up to 64 channels per fiber within the same range. Optical filter manufacturers are using advanced, proprietary deposition techniques and sophisticated monitoring and feedback systems to manufacture the optical filters to meet today's bandwidth needs. Future filters will require even more diligence.