Quantum Bridge Communications Inc. said yesterday that its passive optical networking (PON) gear is being used by AOL Time Warner Inc. (NYSE: AOL) to reach small and medium-sized businesses (SMBs) in its large Tampa Bay, Fla., cable division (see Time Warner Picks Quantum Bridge).

The fact that Time Warner is using Quantum Bridge's equipment is good news for the startup, which has had its share of disappointments in the past year -- notably, having to pull its planned IPO and lay off staff (see Quantum Bridge Withdraws IPO and Boston Area Startups Slash Jobs).

This is Quantum Bridge's second success in the cable market. Its gear is already widely deployed with Comcast Corp. (Nasdaq: CMCSA, CMCSK), which is probably the most aggressive cable operator in the SMB market (see Cable Networks: A Primer). Comcast is using Quantum Bridge equipment in Baltimore, Philadelphia, Detroit, and New Jersey, according to Quantum Bridge.

The cable industry is exploring PON and other approaches as it gets more serious about the commercial marketplace. To date, one of the biggest obstacles to the industry’s efforts has been the costs of reaching the bigger SMBs, which tend to be far away from the residential areas where cable is concentrated. Operators attempting to serve them have generally had to run point-to-point fiber, which is an expensive undertaking.

PON technology cuts costs, according to its supporters. The approach focuses on delivering fiber to a central site near the first customer. Short and relatively inexpensive subsidiary (or "lateral") fibers connect that site to the first and subsequent customers. The absence of active components between the headend and the customer premises, coupled with the ability to share fiber, cuts costs significantly, according to Quantum Bridge.

In the Tampa Bay complex, which serves more than 1 million people, Quantum Bridge has installed equipment in 12 of 72 hubs. The company hopes to have one or more of its QB5000 optical access switches in about half of the company’s hubs by the end of the year, says senior vice president of marketing Jeff Gwynne.

It remains to be seen whether PON will catch on in the cable industry. There are several approaches to this challenge, and a number of startups -- including Narad Networks Inc., Advent Networks Inc., and Jedai Broadband Networks Inc. -- are queuing up for trials with operators.

PON still faces hurdles. This type of isolated trial activity will continue for the near future, says Michael Paxson, an analyst for In-Stat/MDR. He doesn’t, however, envision widespread deployments any time soon, because PON is not likely to ever make sense at the residential level, and because cable has never had tremendous success in the business market.

For more information on PON technology, PON equipment manufacturers, and PON contract awards, check out PON: The Dream Is Alive and PONs: Passive Aggression.

— Carl Weinschenk, Senior Editor, Light Reading
http://www.lightreading.com