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Deployments and trials are underway, but the market for RFoG and other cable FTTP tech won't bloom right away, Heavy Reading says

March 5, 2009

5 Min Read
Cable Starts to Seed All-Fiber Future

A cable fiber push may make complete sense from a competitive standpoint, but North American MSOs are taking a long and winding road before fully embracing fiber-to-the-premises (FTTP) technologies, according to new research from Heavy Reading.

The troubling financial climate is factoring into cable’s sluggish all-fiber drive. “The economy is dampening any enthusiasm for cable fiber projects, especially the bad housing market," says Alan Breznick, senior analyst at Heavy Reading and author of the report, "Next-Gen Cable Networks: Opportunities for Fiber-Based Technologies."

The business also faces a chicken-and-egg scenario, given that standards are still being hammered out for cable’s FTTP ambitions. The industry is waiting for the Society of Cable Telecommunications Engineers (SCTE) to craft the initial set of technology guidelines for building FTTP extensions to HFC plant. Breznick says those Radio Frequency Over Glass (RFoG) standards should be out this fall.

Still, that isn’t stopping about a dozen vendors from unveiling RFoG equipment, and MSOs from ramping up some early fiber trials and pilot deployments. (See Zhone Does RFOG, Alloptic Notches 'RFOG' Wins, Harmonic, CommScope Team On 'RFoG', Hitachi Rolls Out RFoG Gear , and Calix Uses RFOG.)

“Right now, cable feels that it can compete with its current infrastructure,” says Breznick. “However, operators also realize that they may not be OK. They know they need to start planning for the future.”

The Heavy Reading study predicts North American cable operators will pass no more than 50,000 to 100,000 homes and businesses with RFoG technology.

As proposed, RFoG enables MSOs to target all-fiber extensions off of legacy HFC networks to new housing developments, businesses customers, or other "greenfield" opportunities, without changing any existing headend and hub technology or customer-side equipment, including digital cable-set top boxes and Docsis-based cable modems and embedded multimedia terminal adapters (E-MTAs). In most RFoG scenarios, a small optical network unit (ONU) handles the optical-to-electrical conversion at the premises.

The predicted number of RFoG homes passed could grow higher if one or more major operators make a sizable commitment to fiber, the study suggests. Already, several North American MSOs are scrutinizing the potential of all-fiber installations.

Time Warner Cable Inc. (NYSE: TWC) and Cox Communications Inc. have issued separate requests for information (RFIs) about cable FTTP architecture. (See Time Warner Cable's Fiber-licious RFI and Cox Flirts With Fiber .)

Meanwhile, Bright House Networks and WideOpenWest Holdings LLC (WOW) are either testing or rolling out all-fiber networks. And small operators -- such as Armstrong Cable , BendBroadband , Midcontinent Communications (Midco) , and NPG Cable Inc. -- are deploying FTTP systems to serve residential or commercial subscribers, according to the Heavy Reading study.

A number of other MSOs, including Comcast Corp. (Nasdaq: CMCSA, CMCSK), Bresnan Communications LLC , Cable One Inc. , Suddenlink Communications , Sunflower Broadband , and Canada-based Rogers Communications Inc. (NYSE: RG; Toronto: RCI), also are giving FTTP a closer look.

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And there's a good reason why there's so much more deployment activity among smaller MSOs these days. “Small cable operators are more flexible and they can move faster,” says Breznick. “For these operators, a fiber build is not that big of a construction project.”

Several small cable operators are located in remote areas. In some circumstances, fiber build costs are on par with, or are less expensive than, traditional HFC plant in low-density rural areas. These MSOs also may face a serious telco fiber threat.

More importantly, small, privately held MSOs rarely encounter any close examination from Wall Street, known for its tough scrutiny of publicly traded MSOs and their capex outlays.

For other MSOs, it’s hard to justify the price tag for a fiber rollout under any circumstance. Fiber is at times more expensive to install when compared to HFC. However, as Breznick points out, fiber is cheaper to operate and maintain when compared to traditional cable infrastructure. And those opex savings may have some MSOs more aggressively investigating fiber.

Also, the price gap between fiber and coax installations is constantly narrowing, the report says.

The seventh deadly sin
And then there’s simple pride to consider. The cable industry is loath to contradict itself when it comes to past comments about telco fiber. “They don’t want to be seen as rewarding Verizon’s fiber strategy,” says Breznick, referring to Verizon Communications Inc. (NYSE: VZ)’s massive (and massively expensive) FiOS rollout.

Residential requirements aside, the best argument for cable FTTP may center on its business services potential. But RFoG, which doesn't give much in the way of a capacity edge over HFC, may not be enough.

With that in mind, the cable industry is also considering Passive Optical Network (PON) technology in an attempt to reach businesses with the capacity needs they require, says Breznick.

Heavy Reading believes cable may emphasize EPON technology (rather than GPON, the standard being used by Verizon) because it's considered more "cable network friendly" in some circles. Some vendors already have added EPON products to their RFoG portfolios. (See RFoG Gets the Squeeze.)

Although the market for RFoG and RFoG with PON extensions remains small, it has attracted a sizeable and still-expanding vendor pool. Arris Group Inc. (Nasdaq: ARRS), for example, just joined the RFoG crew this week. (See Arris Enters RFoG Fray .) Last month, Motorola Inc. (NYSE: MOT) fleshed out its RFoG portfolio via a partnership with Alloptic Inc. . (See Moto, Alloptic Tag-Team on RFoG .)

Other vendors in this sector include cable veterans Cisco Systems Inc. (Nasdaq: CSCO), CommScope Inc. , and Harmonic Inc. (Nasdaq: HLIT) and traditional telecom equipment powerhouses such as Calix Inc. (NYSE: CALX), Hitachi Telecom (USA) Inc. , and Pacific Broadband Networks (PBN) . Newer players like Aurora Networks Inc. and Salira Systems Inc. also are promoting cable fiber portfolios.

— Michael Hopkins, Special to Cable Digital News

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