Recent sparks of interest in passive optical networking (PON) may justify a reborn faith in this nascent market, despite the impatient cries of naysayers.
PON equipment seeks to lower the cost of access networks by extending optical bandwidth without requiring more expensive "active" components such as lasers or amplifiers (see PONs: Passive Aggression for a primer).
So far, however, there are only about 30 deployments of PON technology worldwide, nearly all of them with small carriers and cable operators seeking to serve small businesses and residential subscribers.
Still, more than $527 million has been invested in private PON companies over the last two years -- at least half of all startups have received new funding this year.
These mixed messages have fueled a growing impatience with the slow realization of PON in carrier networks. While the technology continues to boil away on broadband’s back burner, many are questioning whether the still-tiny market will ever gain its legs.
What's the holdup? Actually, there are several, sources say:
Standards and technologies need work. Roughly half of PON products now on the market support the Full Service Access Networks (FSAN) specifications blessed last year by the International Telecommunication Union (ITU). These are based on asynchronous transfer mode (ATM) technology, so-called ATM PON (APON), and according to many sources are limited in terms of speed and flexibility. To date, just a couple of leading companies, Quantum Bridge Communications Inc. and Terawave Communications, have achieved 622 Mbit/s both upstream and downstream on PONs.
A new series of specs being explored by the First Mile Study Group of the Institute of Electrical and Electronics Engineers Inc. (IEEE) could support faster networks that support more users and are cheaper to deploy, proponents say. But Ethernet PON (EPON) solutions are still proprietary, and standards are far from "carrier ready." What's more, without the blessing of the ITU, it's unlikely large incumbent carriers, especially RBOCs, would be willing to risk big deployments.
Ironically, the best-selling PON is neither APON nor EPON. Optical Solutions has 23 paying customers who've adopted its proprietary radio-frequency PON. The company recently released an APON product called the FiberPath 400, however, and says that while it has just one paying customer for the new gear, the company anticipates most of the others will adopt it in short order.
Carriers are slow. One observer likens getting major ILECs and RBOCs to roll out anything new such as PON to "trying to turn a battleship around in the harbor." Evidence of this can be seen in the SBC trials, which have been "rolling out" for over a year, with the vendor selection announced just this past spring. Others have been in the talking stage for years. While many carriers are considering PON, they're clearly not in any rush.
Carrier projects are on hold. The telecom shakeout eliminated many CLECs that were prospective PON customers. And the key prospects that remain are strapped for cash, such as the RBOCs, ILECs, and MSOs (multiservice operators, such as cable companies that are moving to offer voice, data, and video services on their existing infrastructures). This situation has cut capex expenditures and put many new technology projects on hold.
But PON supporters say the present scarcity of deployments is nothing to worry about. In a report issued this past August by Lehman Brothers, for instance, analysts Andrea B. Green and Steven D. Levy say, "We believe the PON market is currently in its infancy and can record dramatic growth over the coming years. Market studies suggest that the PON market is expected to be $100 million in 2001, growing to approximately $750 million in 2004.”
Another firm recently doubled its projections for the fiber to the home (FTTH) sector of the PON market. CIBC World Markets anticipates FTTH to comprise $455 million, or roughly 45 percent, of what it projects will be a $1 billion PON market in the year 2004. Originally, the firm had said the FTTH figure would be closer to $200 million.
CIBC analyst Alan Bezoza says PONs are slowly but surely building to something big. "The timing may be pushed out, but when it starts, this will be a big market," he asserts. He projects that by 2005, FTTH PON deployments will be a $730 million business.
Source: CIBC World Markets
Proponents say several factors make PON ascendance inevitable:
Present access techniques aren't cutting it. Digital subscriber line (DSL) and other access technologies don't provide what carriers need to roll out a desired mix of data, voice, and video services, PON proponents say. "DSL and cable modems don't provide enough bandwidth and can't be used to create attractive services," says Mark McDonald, VP of product marketing for the Marconi Corp. PLC (Nasdaq/London: MONI) access business. CIBC's Bezoza is more direct: "DSL doesn't offer an economical solution for broadband access."
Replacing copper with fiber will drive PON. For many carriers, the cost of putting in fiber or copper is similar. But the potential payback isn't. The value of fiber to support more services is being augmented by reductions in the cost of singlemode fiber and construction of PONs.
Carriers need PON to compete. Today's carriers are going to need PON to stay competitive, particularly in the market for residential broadband services. "On the business side, cable operators are going to start attacking the business markets with a combination of voice, data, and video services," Bezoza says. This is going to force carriers to accelerate their fiber deployments via PON.
Vendors also say carriers will need PON to extend new services, such as storage and backup. Quantum Bridge, for instance, has just begun a program to work with SAN manufacturers on new storage network offerings via PON (see Quantum Bridge Joins SAN Vendors). "This will appeal to a huge amount of businesses that have more storage than a T1 can handle but less than required for Sonet services," says a spokesman for Quantum Bridge.
None of this will happen quickly, however. Vendors and analysts say it's going to be 2003 before the PON market truly materializes. At that time, the installation of more fiber, further development of Ethernet standards, and building demand for access bandwidth should combine to drive the market.
Right now, the vendors say they've got plenty of work to get the ball rolling -- and not just in North America. "We're working with a lot of carriers to get into their labs," says David Montanaro, chairman and CEO of NEC Eluminant. "And we're seeing definite demand, domestically and internationally. Countries where there hasn't been broadband deployment are looking at PON as a compelling way to get services going, even if there has been no copper installed." He cites projects afoot in New Zealand, China, Taiwan, Hong Kong, Singapore, and Latin America.
Mainstream? Ya mean like ISDN? So, who's going to up-root a 100 years plus of installed copper plant? Nothing becomes "main stream" until it needs to be so. Wasn't Beta better than VHS? VHS was cheaper. Staying with copper is cheaper. It's installed! So, go spin your propeller and dream big dreams and talk to the old Picturetel Blow-hards who said every desktop will be video ready. Or, talk to Freddie Wang about paperless offices. Fiber is a good back-bone technology. In my house? Yea, maybe some day, but not today. Remember, it took 10+ years for the founders of LAN City to realize thier cable modem dream, and there was already an installed coax base. Where is all this dark fiber? When are they going to rip up the streets to install it? Probably sometime after I begin wearing depends and just before Massachusetts completes the Big Dig. I laugh at you. I unclog my nose at you........... HA!
The most trivial thing to do the is to put an access router with 802.11b interface at the end of fiber, I am wondering why nobody is doing it ? ________________________________
The spectrum is in the public space. 802.11b is not enough bw. Security sucks. Etc. etc.
A private distribution network, owned by a proprietor is required, in my opinion.
> Many CATV providers already have fiber to the > neighborhood in some areas. Extending to the > curb or premise is not trivial, but possible. > Digital TV and cable modems were the drivers.
The most trivial thing to do the is to put an access router with 802.11b interface at the end of fiber, I am wondering why nobody is doing it ?
Nobody wants their front lawn plowed-up and their driveway ruined. And the cost of plowing new cable (fiber, coax, or tp) is substantial.
However, two points.
1. Outside plant doesn't last forever - it needs to be rehabilitated every 30-50 years. That may sound like a long time but it's not when you consider how long it took to build the current telco and CATV networks.
2. Many CATV providers already have fiber to the neighborhood in some areas. Extending to the curb or premise is not trivial, but possible. Digital TV and cable modems were the drivers.
Conclusion, if the apps and revenue potential are there, then the investment and builds will happen - it's only a matter of time.
The comment was becoming mainstream I did not state the PON is mainstream technology today You are correct on points, -Greenfield applications/New housing developments are the best location to for the initial install and test deployments but, wouldn't you agree that AT&T broadband is a very good example of the phone guy and the cable guy co-existing and sharing the infrastructure and benefiting from the fiber? So who say's the RBOC's are going to be the doing all the digging? Presently in rural America fiber has been buried and hung by the independents and I can not believe that the RBOC's will be able to sit idle indefinitely while someone else deploys an FTTH system in their neighborhoods. It is true that dealing with an RBOC is like "trying to turn a battleship around in the harbor" so convincing them to replace all the copper with glass may be a tall order but as more and more fiber is deployed into the new neighborhoods, and the independents start taking bigger and bigger pieces of older existing copper infrastructure. They are going to take notice. Once the fiber is in the ground and to the home the plant is future proof. The technology at the endpoints will definitely continue but the PON will be in place to take advantage of them.
seems the many underemployed engineers of the PON brigade of startups are busy at work on the LR site again. good grief, how many times does a market have to tank before people get the message? folks, study your history, this sector has bad feng shui...
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Source: CIBC World Markets
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