Nokia Networks has beat a very brave retreat from the GPON (gigabit passive optical network) broadband access market, saying it will invest instead in next generation fiber-to-the-home (FTTH) technology and wait for carriers to move beyond GPON, Light Reading can exclusively reveal.

Responding to questions from Light Reading, a Nokia Siemens Networks (NSN) spokesman confirmed that the vendor "plans to focus on DSL technologies," including DSL as part of fiber-to-the-building and fiber-to-the-curb deployments, "and the next generation of optical access for when the market is ready, but we are not focused on GPON for FTTH. We are not investing in our existing GPON assets – we are waiting for what we call the next generation optical access [NGOA]."

Nokia Siemens is one of a number of major fixed network equipment vendors that have been trying to establish themselves as GPON suppliers to the major Tier 1 carriers globally, but it's had little success, winning only small deals in Kuwait and Denmark, while Canada's Telus Corp. (NYSE: TU; Toronto: T) is believed to have at least trialed the vendor's GPON MSAN (multiservice access node). (See Kuwait Opts for FTTH.)

With little headway made, putting a halt to GPON investments fits in with the company's stated strategy of putting its R&D dollars only into markets where it believes it can be a leader and make money. (See Nokia Siemens Gets Ruthless on R&D Focus.)

That leaves a little more breathing room for the likes of Alcatel-Lucent (NYSE: ALU), Ericsson AB (Nasdaq: ERIC), and Huawei Technologies Co. Ltd. , which have made greater headway in what is a growing market. (See Neuf Does GPON With AlcaLu, GPON Gets a 10G Look, Bright Prospects for GPON, AlcaLu: We're Not Just a GPON Player, BT Preps GPON Shortlist, and Ericsson Adds to Euro GPON Action.)

But the NSN spokesman denied the company was looking to sell off its GPON assets. "These assets are not for sale. We will continue to support existing customers, but not invest any further in GPON. In addition, some existing key resources will be moved from GPON onto NGOA," he stated, though he couldn't be totally specific about the details of NGOA.

Heavy Reading chief analyst Graham Finnie has an idea where NSN might be heading with its FTTH home strategy, but he also thinks its current decision is something of a gamble.

"It's surprising they've decided to do this. GPON is where the action is for the next few years where the Tier 1 carriers are concerned, and Nokia Siemens is a Tier 1 vendor," says Finnie. "Even if they focused on point-to-point fiber access in the future, I imagine the Tier 1 carriers will be looking for a mixture of GPON and point-to-point capabilities. This looks like quite a risky move."

At the same time, though, Finnie believes NSN couldn't have matched its peers: "I can't see that NSN would manage to be anything higher than the No. 4 player in GPON. Alcatel-Lucent, Ericsson, and Huawei are all desperate to be the No. 1 player and are highly competitive. I can't see any way NSN could be the No. 1 or No. 2 player in GPON."

Instead, Finnie believes NSN will leverage its investment in Korean vendor DASAN Zhone Solutions Inc. , an access and optical equipment specialist in which Nokia Siemens owns a 56 percent stake. (See Siemens Converges in Venice.)

Dasan has already developed a next-generation optical access platform based on WDM PON, a technology that is rapidly becoming the hot access topic of the summer. (See Ericsson Joins Cost-Cutting WDM-PON Team, WDM PON: Sooner Rather Than Later?, NXTcomm Preview: GPON & WDM-PON, and Tellabs Lays Out WDM-PON Plan.)

And NSN has also expressed an interest in exploring the possibilities of a technology known as long reach, or XL, PON that, in theory, can connect hundreds of customers at distances of up to 100 kilometers, though this is some years away from being a commercial technology, the vendor told Light Reading earlier this year.

— Ray Le Maistre, International News Editor, Light Reading