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RBOCs Hungry for Fiber

Light Reading
Supercomm News Analysis
Light Reading
5/29/2003
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Three of the top U.S. carriers say they're serious about fiber to the premises (FTTP) and plan to issue big new RFPs for equipment deployments in "2004 and beyond."

Late this afternoon, BellSouth Corp. (NYSE: BLS), SBC Communications Inc. (NYSE: SBC), and Verizon Communications Inc. (NYSE: VZ) issued a press release saying they've decided on a "set of common technical requirements" for extending FTTP and have put appropriate manufacturers on notice that they'll be issuing an RFP for gear very soon (see RBOCs Agree on Access Specs).

Shawn Dainas of SBC confirms that the technologies the group is seeking are based on PON (passive optical networking) standards, such as the G.983 specs from the International Telecommunication Union (ITU) and the GR-909 standards from Telcordia Technologies Inc.

Interestingly, Qwest Communications International Inc. (NYSE: Q) wasn't part of today's announcement. "We did know about the fiber-to-the-home project and were approached to join, but after conducting our own internal analysis we decided it didn't meet our own success threshold," says a spokeswoman. Qwest won't rule out joining in the future, she says.

Notwithstanding, PON vendors are in high spirits from the news, which apparently has been anticipated for months. Most expect the RFP to be issued within a couple of weeks.

"This is very, very good news for the industry," says Darryl Ponder, CEO of Optical Solutions Inc., which by most accounts leads in PON market share. He says carriers realize it doesn't make economic sense to install copper cable if data, voice, and video are on the cards for future services.

Others agree. "We're excited about it," says Tom Tighe, CEO of Wave7 Optics Inc. He says the carriers had surveyed manufacturers industrywide in April, and vendors have been eagerly anticipating the announcement ever since.

At least one analyst thinks it's significant. "Sources suggest the RBOCs are collectively looking to deploy between 500,000 and 1 million lines per year beginning as early as 2004, if the price is right," writes Steven Levy of Lehman Brothers in a note this morning. He says current prices of $1,200 to $1,800 per line will probably go down to $700 or so once the RFP action begins.

But Levy's cautious about getting investors too hyped. He says PON rollouts will likely mimic the slow uptake of DSL. Further, he says it would be misguided to think the RFP signals any uptick in carrier capital spending.

Levy says one possible outcome could be M&A, however, as large companies that have pulled away from PON hasten to get with the small players that have persisted in the market despite the negatives.

Indeed, Alcatel SA (NYSE: ALA; Paris: CGEP:PA) stands relatively alone among large companies that have stood by PON. Others, including Marconi Corp. plc (Nasdaq/London: MONI) and NEC Corp. (Nasdaq: NIPNY), put their efforts on ice indefinitely.

Some expect next week's Supercomm 2003 to be a convenient venue for PON partnerships. "I'm certain partnering will happen," says Jeff Gwynne, VP of marketing and a founder at Quantum Bridge Communications Inc. He says a crucial juncture has been reached, as the cost has dropped and carriers finally see a chance for revenue-producing services via PON. "Everything's coming together," he says.

Wave7's Tighe agrees that partnerships are in the offing. Indeed, Wave7's been working on deals with larger companies for months particularly in Asia (see Pining for PON). Regarding next week's show in Atlanta, "It'll be fun," he says.

— Mary Jander, Senior Editor, Light Reading

For extensive and up-to-date coverage of next week's Supercomm tradeshow, visit Light Reading's Supercomm Preview Site.

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dljvjbsl
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dljvjbsl,
User Rank: Light Beer
12/4/2012 | 11:59:20 PM
re: RBOCs Hungry for Fiber

I think you'll find that that if you want ubiquity of connectivity it'll be GSM & 3G. Text and Picture messaging has already done this. GSM is growing in the US too.


My own impression of 3G is that the market (resd users) have already given its verdict on this. It is expensive and does not provide any useful features that cannot be provided better and cheaper by other technologies.

I agree with Metcalfe that WiFi will replace cellular and 3G before it is born. The economies of the two technologies create a compelling case that WiFi or a future variant will win.

A new hotel owned by Terry Matthews of Newbridege fame has just opened in Ottawa. It boasts 14 WiFi base stations. I think this is an example that shows that 3G just does not stand a chance of surviving.

With its 14 base stations, the hotel is also boasting about its VoIP phone system whereby guests can plug into the network through the VoIP telephones in their rooms. This strikes me as the desparate attempt by VoIP and PBX vendors to maintain their relevance. A user with a WiFi modem can connect to the network by merely switching on his computer. Why bother with jacks on expensive VoIP phones?

3G and converged wired VoIP PBXs - dinosaur technology trying to find some reason to survive. The WiFi asteroid has alrady struck.
dljvjbsl
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dljvjbsl,
User Rank: Light Beer
12/4/2012 | 11:59:20 PM
re: RBOCs Hungry for Fiber

Now if you actually believe fiber offers a practical/wide-scale/cost effective solution at those speeds - then you have just made the case for the need for massive bandwidth in the wide pipes, ie Corvis, among others. Once typical homes get that kind of connectivity and speed, the need for bandwidth would be never ending


The most practical benefit of these very wide bandwith channels to teh home is not to provide high bandwidth connections but to provide low latency applications.

Users will be able to download large files very rapidly. These will be provided either from nearby caches or by dynamically sharing a channel of similar size in the network. There is very very little prospect that applications requiring continuous 1Gb/s rates to users will be developed
gea
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gea,
User Rank: Light Beer
12/4/2012 | 11:59:19 PM
re: RBOCs Hungry for Fiber
Jet wrote...

"I will concede that at some point 1 Gb/s home service might be commonplace, again supporting the case for Dr Huber's all optical approache."

What on earth are you talking about? Do you actually think that what Corvis is trying to offer is a system of reconfigurable lightwaves all the way to a user's home? Not even Huber would claim that, and indeed he wouldn't: it's nonsensical (ie, you seem to believe that even routers will dissappear).

As djbvsl indicated, the application of a 1GbE to the home (and PON isn't that, by the way) merely allows a very high bandwidth that the user can burst up to if desired. This GbE will still be terminated on (at most) an edge router. Bandwith on the ore-side of the router will be highly oversubscribed. In the far future, that router might be able to summon up more bandwidth a la GMPLS, to crerate more bandwidth between it and a core router. On the other side of the core router is where Corvis gear might get deployed, if the traffic patterns grow in such a way as to make ULH worthwhile.
spegru
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spegru,
User Rank: Light Beer
12/4/2012 | 11:59:19 PM
re: RBOCs Hungry for Fiber
My own impression of 3G is that the market (resd users) have already given its verdict on this. It is expensive and does not provide any useful features that cannot be provided better....
I agree with Metcalfe that WiFi will replace cellular and 3G before it is born. ....
A new hotel owned by Terry Matthews of Newbridege fame has just opened in Ottawa. It boasts 14 WiFi base stations.....


I was really picking up on dljvjbsl's impression that it is conectivity & communities that are important.

That's the thing with mobile phone networks - they really are pervasive. It'll be a *very* long time, if ever, before WiFi can manage that. I really don't understand the hype about wifi replacing GSM etc. There is no fundamental technology reason why it should and theref are are fundamental problems wrt user authentication, security billing and roaming. Wifi has a huge task to manage all that - and why bother, GSM,3G, CDMA etc have already done it.

It's still v.early days for 3G - only a couple of months for one network so far in the UK, so no verdicts have been offered yet.

If we are talking hotels and offices then sure wifi has an important place, if only as a cheap-to-install alternative to 10BaseT. But a few hotels, offices and cofee bars etc certainly do not create ubiquity.
IMHO the biggest competitor to wifi (where it does suit) is not moble radio but bluetooth...

discuss/flame away!

spegru
spegru
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spegru,
User Rank: Light Beer
12/4/2012 | 11:59:19 PM
re: RBOCs Hungry for Fiber
the truest broadband connection to the home is FTTH. PON is the best technology available today that make economic sense for the RBOC

What I was really querying was the business case cost of fibre digging/ deployment compared to DSL etc that are already there.
The arguement here seems to be about absolute speed, but most people hav'nt even got dsl or cable yet.
FTTH may come one day - I just can't see it any time soon.
So I'm surprised about these apparent RFPs...

spegru
skeptic
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skeptic,
User Rank: Light Beer
12/4/2012 | 11:59:18 PM
re: RBOCs Hungry for Fiber
What on earth are you talking about? Do you actually think that what Corvis is trying to offer is a system of reconfigurable lightwaves all the way to a user's home? Not even Huber would claim that, and indeed he wouldn't: it's nonsensical (ie, you seem to believe that even routers will dissappear).
------------------
He is just repeating material from the high
level Corvis vision pitch. There isn't any
understanding of networks beyond it.

Corvis markets itself to ignorant people by
confusing them about its products and how
they are used in networks. In the Corvis
vision, Corvis is the magical ideal all-optical
router which cannot ever be surpassed and which
has made all existing networks obsolete. And
everyone is going to save so much money by
buying Corvis that the products pay for themselves
and cost nothing.

ANd when integrated with Dorsal, Corvis will
inevitably replace or obsolete all of the
undersea capacity in the world.

Logic and reason doesn't work against the story.
As far as an investment, Corvis might not be
a bad stock anymore. The story of Corvis is
so strong that it seems to defeat any attempt
to bring reality into the picture. And it
doesn't seem that far fetched anymore that
they could change nothing and end up with
a multi-billion dollar market cap.
jnj
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jnj,
User Rank: Light Beer
12/4/2012 | 11:59:17 PM
re: RBOCs Hungry for Fiber
3G is not to be...
and as it becomes obvious the money spent is not coming back..it's gonna make some folks hyper-ventilate
see shirkys' essay permanet vs nearlynet
http://shirky.com/writings/per...
firstmile
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firstmile,
User Rank: Light Sabre
12/4/2012 | 11:59:17 PM
re: RBOCs Hungry for Fiber
Or at least the most important points...

1. Why are the carriers looking to PON?
Because the cable guys are eating their lunch. RBOCs are losing a huge number of subscribers each quarter and the competition is wireless (which they are trying to own) and cable. The bad news and urgency for the RBOCs, is that the cable guys still have not yet nationally stepped up the efforts on getting softswitches out in their networks. But the RBOCs know that they will, and also know that the Cable guys will eat their lunch with a triple play (voice, video, data). Sooooo what's an RBOC to do? Offer their own triple play. But you cannot really deliver the necessary bandwidth from the existing DSLAMs and the existing copper plants (Note-we're not talking IOCs in BFE where 10 channels are enough). The RBOCs need fiber to the home. They have held off due to previous concerns about unbundling. Those concerns are now gone.

2. So why this joint RFP? Because they want to follow the same model that they did in ADSL. Anyone remember the "Joint Procurement Committee" (JPC)? Same players...and oh by the way, I would not be surprised if Alcatel pushed for this type of format, because it worked out so well for ADSL. And by the way, I'm pretty sure that the Alcatel 7300 ASAM (DSLAM) is the same platform that supports BPON.

3. Not the best technology? This I have to agree with. Just by the fact that BPON (read APON) will probably win because of the Alcatel footprint. It's the economy...it's just too hard for the RBOCs to do anything new, when the incremental business case for taking baby steps looks so good.

My 3 cents

-fm
dljvjbsl
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dljvjbsl,
User Rank: Light Beer
12/4/2012 | 11:59:16 PM
re: RBOCs Hungry for Fiber

If we are talking hotels and offices then sure wifi has an important place, if only as a cheap-to-install alternative to 10BaseT. But a few hotels, offices and cofee bars etc certainly do not create ubiquity.


In my opinion, you have just pointed out 3G's fataql vunerability. Hotels, offices, air ports, coffee shops, trains, planes etc. are all prime candidaes for WiFi installations. They are also the places where teh biggst use of these mobile applilcations will take place.

In this view, WiFi can decapitiate 3G by taking away the most valuable parts of its market and thus making it financailly impossible.


As another example of how WiFi changes the scene, comsider the hotel case. The hotel invsts heavily in a VoIP PBX and also some cheap WiFi base stations. A user is faced with making a long distnce call. Does he:

a) use the hotel PBX and pay the hotel premium

b) fire up his VoIP client on his laptop, connect to his home netork and talk to his heart's content

Also in the WiFi case, the user will have his home network voice features with no need to pay any hotel premium

The availability of cheap wirless bandwidth connected to the Internet changes the applicaion landscape dramaticaly. 3G, VoIP PBXs with fancy expensive sets, etc., all face severe competition that could draamtically change user behavior and eliminate their market.
sp@mmer
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sp@mmer,
User Rank: Light Beer
12/4/2012 | 11:59:15 PM
re: RBOCs Hungry for Fiber
> I will concede that at some point 1 Gb/s home
> service might be commonplace, again supporting
> the case for Dr Huber's all optical approache.

Sure, at some point. But it takes years for such an industry to develop -- even today, you would be hard-pressed to name a _consumer_ application that requires 1Gbps transmission. Unless you are running a remote storage facility business out of your basement (but that technically makes you a business), I'd say this was a distant dream.... Adoption takes years...



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