Some 5 percent of the world's homes will be directly hooked up to a fiber connection by 2012 according to "FTTH Worldwide Technology Update & Market Forecast," a new report from Heavy Reading. And, while the technologies powering this growth will be varied, GPON looks as though it will have the largest role in next-gen access networks over the next few years.

The report's author, Heavy Reading chief analyst Graham Finnie, forecasts that the number of FTTH (fiber to the home) subs in the world will increase to 90 million from the present level of 20 million. When we get there, Finnie expects to see an even mix of three main FTTH technologies -- GPON, GEPON, and active Ethernet.

"To me, that's one of the main messages in this report, in that there will be no dominant technology," says Finnie. While there will be an even mix of technologies five years from now, GPON will likely account for most of the growth.

In Japan, where there have been the most FTTH deployments, GEPON is currently used for single dwelling units, while active Ethernet seems to have worked better for MDUs. But elsewhere in the world, big vendors with heavy influence, such as Alcatel-Lucent (NYSE: ALU), have been pushing GPON as the standard technology. This is especially true in North America.

Several key hurdles remain before FTTH subs can reach this 90 million benchmark. Perhaps most prominent will be costs, regulatory obstacles, and, in the case of GPON deployments, interoperability.

"It's a difficult market to gain dominance in," says Finnie. "The Chinese vendors have a strong track record of low cost, but they don't have the scale in terms of long-term deployment."

Finnie says that one of the less obvious issues still at hand is perhaps the most important one going forward: regulatory hurdles. "There's a long-term regulatory issue that everyone has to address. Given the amount of money that has been spent, what approach makes the most sense? Is it a single infrastructure or is it giving regulatory relief to big incumbents?"

In some regions, telcos are lobbying for regulatory relief so that they can gain access to the incumbent carrier's last mile. But the jury is still out on whether this strategy of unbundling will speed up FTTH deployments or if FTTH would be better served to let one carrier or municipality handle the job. In Europe for example, it is very unlikely that unbundling will occur.

"My reading of the regulatory atmosphere is that they're going to have a hard time getting it in Europe," says Finnie. "It's a gamble in the sense that you're assuming a single infrastructure provider can do that job efficiently and effectively. To me, that's the biggest issue."

Once FTTH deployments become more widespread, 100-Mbit/s bandwidth per home is expected to become the gold standard throughout the world due to the continued prevalence of HDTV. This could pressure cable MSOs and other telcos deploying other fiber strategies such as FTTN (fiber to the node) to make the switch to FTTH.

AT&T Inc. (NYSE: T), perhaps the most famous FTTN installer, already deploys FTTH in greenfields. But that could change. "I think it's a risky strategy," Finnie says. "It's going to be a struggle, except on very short last-mile drops. I would say by 2012, they'll already be deploying fiber in 'brownfield' situations as well."

For more information on this report click here.

— Raymond McConville, Reporter, Light Reading