FTTH Technology Fracas Continues

During 2007, the world's telecom carriers connected another 9 million homes to optical fiber; by 2010, if current trends continue, the number of homes connected to FTTH will pass 50 million. A massive transition to all-fiber access is now all but inevitable everywhere. Yet the road to FTTH is full of twists and turns that make it difficult and frustrating for vendors to negotiate – not least in determining what technologies will be used, where, and when.

For a start, despite the strenuous efforts of GPON cheerleaders such as Alcatel-Lucent (NYSE: ALU), there's no chance that GPON is going to dominate global FTTH deployment any time soon. In fact, as we reveal in Heavy Reading's new report, FTTH Worldwide Technology Update & Market Forecast, the deployed bases of the three main FTTH technologies – GPON, GEPON, and active or point-to-point (P2P) Ethernet – are likely to be more or less equal, by which time around 90 million homes will be connected to fiber.

Given the hyperbole that has swirled around GPON over the past two years, this might seem a surprising conclusion. But the fact is, there is no "global" FTTH market today, and there will be no global FTTH technology – at least, not in the foreseeable future.

Why so? First of all, no two national markets are the same – and even within a single city, one technology may not fit all needs. In Japan, by far the world's biggest FTTH market with more than 11 million connected homes, GEPON is universally used to connect single dwellings, while active Ethernet dominates in multi-dwelling units (MDUs), and there's little sign that a shift to GPON in either case is imminent.

Given the size of the Japanese market, that alone means that GPON cannot win the race in terms of sheer numbers any time soon. And although GPON looks certain to be the technology of choice for major incumbent telcos in both the U.S. and Europe, active Ethernet is actually more widely deployed in Europe today – and is likely to maintain that position right through 2012.

The truth is that although the International Telecommunication Union (ITU) Full Service Access Network (FSAN) group has worked very hard to establish GPON as the worldwide reference for FTTH, its strengths – high downstream speeds, carrier-class features, and low opex, among other things – haven't convinced everyone that it is the right technology everywhere, at least not yet. For now, GEPON gear is cheaper and more widely deployed – persuasive qualities in its Asian homeland.

Meanwhile, active Ethernet advocates point to their technology's simplicity, low-cost CPE, and suitability for use in so-called "open access" networks, such as those being built by municipalities and utilites worldwide. Advocates such as Cisco Systems Inc. (Nasdaq: CSCO) argue that incumbents that deploy GPON would in effect be making it more difficult for regulators to ensure that the new fiber networks can be used on equal terms by other service providers – an argument that certainly carries weight in regions such as Europe, where DSL unbundling has driven a vibrantly competitive market.

There is plenty of room for argument around the edges. For example, which way will China jump? China has already brought fiber into or very close to apartment blocks serving at least 15 million homes – far more than anywhere else. Almost all of it is simple Ethernet switching with very little PON deployed to date, but the big Chinese telcos are all preparing to move to PON. While GEPON currently has the upper hand, the longer the Chinese telcos delay, the more likely they may opt for GPON – potentially tipping the scales decisively in its favor.

Widespread deployment of GPON elsewhere would certainly help to make the case in China, since mass deployment will drive down the cost of equipment, and cost is the big issue there: Telcos are seeking a combined price for ONT and OLT of $200 per customer – less than half the typical current price.

However, widespread deployment of GPON probably isn't coming in 2008. While most GPON vendors are bullish about the medium term, it's been a long, slow haul, with many projects running late. Verizon Communications Inc. (NYSE: VZ) has slipped behind its original schedule for GPON; Orange (NYSE: FTE), the biggest European telco committed to GPON, is also behind schedule; and vendors themselves are mostly cautious about the coming 12 months, betting that scale deployment won't really begin before 2009.

It's a Catch-22 that can only be resolved by time – and based on current trends, within a few years, carriers and vendors will need to be thinking about the next generation of technology. In addition to higher-speed P2P Ethernet, WDM PON and 10G PON are both being prepared for launch around the 2012 time frame.

Yet for all the current frustrations, this is a market manifestly worth pursuing and investing in. The transition to FTTH is a once-in-a-generation infrastructure overhaul, and the winners over the next five years will be very well placed to reap continuing benefits for years to come. FTTH is a 20-year project that will entail hundreds of billions of dollars of telco spending, with the aim of achieving domination of wireline networks for decades to come. By any reckoning, that's a prize well worth pursuing – despite the twists and turns in the road ahead.

– Graham Finnie, Chief Analyst, Heavy Reading

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bollocks187 12/5/2012 | 3:47:33 PM
re: FTTH Technology Fracas Continues GPON is and will continue to be a vendor propriatory solution. FSAN has failed for over a decade and has never achieved its goals of interopability and low cost.

GEPON(most deployed PON in the world) is the alternative to GPON but with an interoperability flavor - which nce again struggles due to the lack of GEPON deploymentws outside of ASIA. In additonseveral carriers deploy splitters in the CO and not the OSP in effect a psuedo P2P with a bandwidth limitaiton on service, this deploymetn is alos true for GPON.

Active Ethernet = P2P - is by definition "vendor interoperabe" from the get go. This is a big plus for carriers. It also provides the LOWEST COST CPE than any PON solution - FACT. In addition P2P brings in a whle class of other vendors that will drive down the network equipment cost and price paid by the consumer for service.

Fact not Fiction
opticalwatcher 12/5/2012 | 3:47:33 PM
re: FTTH Technology Fracas Continues "That depends on how you build. Most active Ethernet buildouts are done with a "basement switch" in an MDU, with Cat 6 cabling to the apartments. In this way, only the switch needs a transceiver. An important point here, if one compares the switch with PON, is that the switch will give you packet-level multiplexing."

The discussion should be split it two: apartments and houses. The economics are different.

"In Active ethernet people are using a simple OE converter that cost around 5 dollar i volumes. This should be compared to maybe a super aggresive price of 70 USD per ONT which means a switch in the basement which adds maybe 20 USD per port. So the comparison is a ONT of 70 USD and fiberslit cost of 3 USD per port (~73 USD)compared to OE cost and MDU switch cost (~25 USD)"

$5 GigE OE converter? Who makes this? And again, I assume that for houses, there is no switch (and in Silicon Valley, there are no basements). What's a fiberslit?
jepovic 12/5/2012 | 3:47:32 PM
re: FTTH Technology Fracas Continues "Active P2P ethernet is OK for small scale deployments but for mass large scale it fails heavily on rackspace, power requirements, due to the sheer number of required ports on a switch/MC. That is the key. "

Wrong. There are millions of active P2P Ethernet ports installed around the world, and the first operators started 10 years ago. In existing buildings, that is, not new-builds.

In a FTT basement scenario, rack space is not an issue. Even in a fiber from the CO scenario, true P2P, active Ethernet can achieve higher density. This is because the technology has evolved much much further. If you actually take a look at a rack full of PON ports, you will realize that the density is very low. Unless you split 1:128 or more, the practical density is actually lower.

And as far as the costs, you are comparing current numbers for active Ethernet with hopeful guesses for PON. Even 10 GE alone probably already has higher volumes than all PON taken together, and comparing with GE and FE is just embarrasing.
mpls2 12/5/2012 | 3:47:32 PM
re: FTTH Technology Fracas Continues "Wrong. There are millions of active P2P Ethernet ports installed around the world, and the first operators started 10 years ago. In existing buildings, that is, not new-builds."

If there are millions of active P2P installations why does it not show up on the FTTH radar ? Why in the top 2 FTTx subscriber bases in world in Korea & Japan ?

Existing buildings is not an argument because there are cases for both Active and Passive solutions or even Cat5 or even twisted pair (for VDSL). We should be talking straight to the home, and PON has better costs benefits than active .. When we are talking about BT, Verizon NTT, kinds of scale, PON is the only way to go..
TechSyn 12/5/2012 | 3:47:32 PM
re: FTTH Technology Fracas Continues Glad to hear I'm not the only one that doesn't know where to get a Gig E OE converter for five bucks... What about the capex for the point to point fiber? Or is the assumption that its already in place?
paolo.franzoi 12/5/2012 | 3:47:31 PM
re: FTTH Technology Fracas Continues
Actually as far as I know, FiOS is bigger than the FTTH deployment in Korea.

I am not going to argue that PON CPE is cheaper than potential Ethernet CPE. It won't be. But the Ethernet CPE will not be so infinitely cheaper that it wins hands down.

The other piece of the cost in on the head end side. PON ports are not greatly different than GigE ports in price. They are shared amongst users, giving a lower cost per subscriber.

From a cost standpoint, Active and Passive are very similar in terms of the electronics. The cabling is simply cheaper for PON as their is less of it. But the trenching/laying costs are the same.

So, I don't subscribe to a great difference in cost of the solution.

In terms of interoperability, bollocks is correct. Today, there are some significant limitations on PON interoperability. I suspect that if the same goals were attempted by Ethernet CPE, those same limitations would exist. Today, the interoperability challenges primarily are around the OMCI implementation. I think we have finally gotten past the problems of Tcont usage.

EPON in Japan has no interoperability challenges as NTT has worked with their vendors to create a multi-vendor environment. The FSAN carriers are interested in the same thing, but their own actions unknowingly stand in the way of that.

Most of the active Ethernet Deployment is occurring in Europe. This has evolved from Other Carrier (many are power utilities) and municipal networks. The major incumbents have been turned out RFx (I, P, Q) documents using PON for their deployment (actual or theoretical).

So, GPON, EPON and Active Ethernet will all be deployed. The operators that choose each technology do so to achieve somewhat different goals.

mpls2 12/5/2012 | 3:47:31 PM
re: FTTH Technology Fracas Continues "Active Ethernet = P2P - is by definition "vendor interoperabe" from the get go. This is a big plus for carriers. It also provides the LOWEST COST CPE than any PON solution - FACT. In addition P2P brings in a whle class of other vendors that will drive down the network equipment cost and price paid by the consumer for service. "

Answer these, lowest cost CPE, really ? with a 10KM transceiver ? How about a corresponding 1 to 1 port 10km transceiver at the CO. and the bundle of corresponding 1:1 fibre ?
jepovic 12/5/2012 | 3:47:31 PM
re: FTTH Technology Fracas Continues It seems to be a misunderstanding. Why would you need an OE converter on the downstream side in a FTTB setup anyway, it's CAT6 cabling. The Cat6 FE port is easily available for five bucks. For the 100 USD imagined PON port price, one can even get a GE port.
paolo.franzoi 12/5/2012 | 3:47:30 PM
re: FTTH Technology Fracas Continues
You would need the O/E converter to reach back the 10Km (actually PON is specced at 60Km ranging with 20Km with B+ optics and no repeater) to the end office. You 10/100 port goes 100m.

From an FTTB case, you would have to roll the cost of the remote switch (in the basement) and the CO switch to reach equivalence. Also, many building owners (at least in the US) do not allow new cable in the riser. This is why VDSL2 is being looked at for in building distribution - as a way to get reuse the existing wiring. Also, 100m is a real problem in large apartment buildings. Those buildings would need a switch on every floor.


mpls2 12/5/2012 | 3:47:29 PM
re: FTTH Technology Fracas Continues i managed to find a datasheet from Utstarcom, maybe they have even higher density boxes, who knows ?


256 users in 1RU box.. if someone can show me a active solution that can beat that, I'd be interested.. So until then i'm sticking with PON for going straight to peoples homes..

BTW, I do not work for Utstarcom or work with them .. it came up first entry when I did a google for GE-PON
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