Atrica Dials Into FTTP

Metro Ethernet equipment startup Atrica Inc. says it's now jumping into competition with passive optical networking (PON) players, deploying a point-to-point Ethernet solution for fiber-to-the-premises (FTTP) in France.

These days, everybody seems to want a piece of FTTP. Atrica joined the parade yesterday, announcing a project serving 100-Mbit/s Ethernet to 160,000 residents in the city of Pau! in southwestern France (see Pau Touts Optical Ethernet).

It's a bold move -- especially in a market with escalating competition among deep-pocketed players such as Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI).

Announced in November, the Pau project involves building one city-owned network open to multiple service providers, with customers paying €30 per month for access to all the services. Pau began deploying fiber two years ago, and city officials hope to reach 45,000 households (out of a possible 60,000) and 10,000 businesses within three years, according to Jean Michel Billaut, a broadband consultant who advised Pau in building the network.

Atrica is placing its A-2100 edge boxes at the curb, in air-conditioned containers, delivering fiber to 24 homes from each one. The 2100s feed back to a core including Atrica's A-8000 line of switches. Two Juniper Networks Inc. ERX-1400 switches are in the network as well, Billaut says.

To complete an FTTP network, Atrica also needs a customer-premises element akin to a PON optical networking unit (ONU) [ed. note: a PONONU?]. In Pau's case, that's handled by a media gateway built by French conglomerate Sagem SA, which is also maintaining the network.

Such an advanced broadband buildout seems all well and good, but with competion mounting and profit margins dipping, the question is whether it's good business for a startup.

FTTP is a hot market lately, but that's also made it viciously competitive. With so much publicity going to fiber projects and so many equipment vendors anxious to secure places with large carriers, prices have dropped substantially. The common wisdom is that larger vendors are dropping their prices to get an early entry into the business (see FTTP Bidders Slashing Prices?).

Here's one example of how pricing pressure can narrow the market size involved: A recent Light Reading Insider report pegged FTTP costs at $2,000 per household, half of which goes to labor. That leaves $1,000 per household for all the equipment involved -- but those prices are falling fast. Carriers are pressuring the vendors to get that figure even lower, with prices of $700 per connection being quoted, according to the report.

Atrica says it's not worried. Its haul in the project will include "tens of 8000s and hundreds of 2100s," says Nan Chen, the company's director of marketing.

Billaut says the tally so far includes four A-8000s and 3,000 A-2100s. Assuming $15,000 for each 8000 and $3,500 for a 2100 (using prices that were announced in 2001), Atrica's take comes to just more than $11 million.

That comes to about $500 per connection -- and even that figure may be generous. Advanced Fibre Communications Inc.(AFC)'s (Nasdaq: AFCI) haul from the Verizon Communications Inc. (NYSE: VZ) FTTP contract could be as little as $300 per home (see How Big Is FTTP for AFC? ). Billaut wouldn't comment on Pau's budget for the network.

Even if Pau isn't a goldmine, Atrica says it's been working on several other FTTP projects during the past year, including one totaling more than 1 million households, according to Chen.

PON vendors say they haven't seen any competition from Atrica yet, and they're skeptical that the Pau installation can be expanded to FTTP in general.

"It sounds like it would be awfully expensive," says Jim Diestel, vice president of product management for Salira Optical Network Systems Inc. "They're doing fiber to the curb, which has proven to be uneconomic in every implementation -- which is why you've got U.S. carriers saying they have to have fiber all the way to the house."

The expense comes from the fact that a PON is passive, while Atrica's curbside boxes will continually chew up electricity. Those power numbers aren't trivial, according to one PON-industry source, requesting anonymity, who had previously analyzed DSL costs for a carrier. "Most of the cost is not in the customer box. It's in the outside plant," the source says. "Forty percent of the total life-cycle costs for VDSL systems was the electrical power used by the nodes."

Atrica hasn't computed the amount of power needed for the Pau network, claiming it hasn't emerged as an issue. "They didn't seem to be really concerned about that," Chen says.

Finally, there's also the question of competition. Better known for building metro networks, Atrica will find itself competing in FTTP against giants like AFC and Alcatel.

Pau created its own service provider, IPVSet, which is tapping sources such as France Telecom SA (NYSE: FTE), Movielink, and TV networks to deliver content and services on the network. The hope is that other commercial providers will offer services on the network as well.

— Craig Matsumoto, Senior Editor, Light Reading

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rbkoontz 12/5/2012 | 2:13:06 AM
re: Atrica Dials Into FTTP C'mon LR. Call a spade a spade.

Is this a joke? Air conditioned boxes at every curb? Carriers are desperately trying to eliminate the costs of maintaining active, carrier-hardened electronics in the outside plant. Can you imagine the lifecycle cost of maintaining hundreds of tiny air conditioning units - one for every 24 subscribers?

This is a soon-to-be-bankrupt competitive carrier's experiment at the expense of misguided venture capital and a desperate vendor in a failed market trying to get onto the coatails of FTTP hype so it can raise new cash of its own.
ThePau 12/5/2012 | 2:13:00 AM
re: Atrica Dials Into FTTP Good morning

"most wanted", please drink some french wine to cool off, since when you started to believe everything printed on light reading :)

I am from Pau and familiar with the situation. tell the facts:

1. Almost all of thousands of Atrica's 2100 are in building basement, from which it serves 24 homes each over fiber. so they are not in air-conditioned street containers.

2. The triple-play network was built to provide services homes and business. it's not just dumb FTTP PON. so you can not just compare this network with dumb PON physical transport.

3. we selected Atrica since it was the performance/price leader for things we wanted to accomplish. we evaluated all companies, PON, Ethernet, etc. Price per line printed in the article is clearly wrong, way off.

4. LR missed the point. We are not just doing FTTP. FTTP is only physical thing, physical tranport, in other words, another form of physical fiber, dumb. the network we built is an intelligent, broadband infrastructure with lots lots lots of QoS-guaranteed broadband services, to turn city of Pau into a digital city. Residents and businesses love it. It's a new communication experience for us.

5. In addition, the network we built is future proof. it was designed for tripe-play on fiber and on phone wire access also (in case, fiber is not available)

I will clarify other questions...
BraveNewWorld 12/5/2012 | 2:12:59 AM
re: Atrica Dials Into FTTP Is ThePau actually from France?

ThePau 12/5/2012 | 2:12:58 AM
re: Atrica Dials Into FTTP yes, The Pau is in south west of France.
it's a great place for wine, and technology :)
Scott Raynovich 12/5/2012 | 2:12:58 AM
re: Atrica Dials Into FTTP Actually, we didn't miss the point at all. It may be a great deal for the service provider (or possibly the customer), but the question everybody will have is whether there is any profit to be had in selling FTTP gear at the price points that are being demanded. So we provided the analysis.
ThePau 12/5/2012 | 2:12:52 AM
re: Atrica Dials Into FTTP Dear Mr. Raynovich,
Happy to see you to comment. please allow me clarify.

We looked at PON, it's more or less physical fiber plant to save fiber, which was not issue for us. I am not surprised to learn FTTP/PON people fight for almost merely on falling price. To that, you probable right about FTTP.

We are in services business, not just bandwidth, By the time we added all services and functionalities we need on both ends of PON, it did not make sense any more, at least for us. so We paid more for Atrica's Optical Ethernet than straight PON, but we received quite more, plus we received very good support from Atrica and its partner Sagem. Optical Ethernet and PON should be different categories with significant different value added. this is i think where LR missed the point.

enough technology for one day. now it's time for some good wine :)
Scott Raynovich 12/5/2012 | 2:12:52 AM
re: Atrica Dials Into FTTP So if you paid more, as you say, you are going to have to charge more for services. I'm curious, do you disclose the average subscriber revenue? I would be interested in knowing what folks in Pau are willing to pay for Ethernet. Does this include services such as pay-per-view movies and music downloads? What are the additional services you plan to add to make up for the cost?
etherlover 12/5/2012 | 2:12:50 AM
re: Atrica Dials Into FTTP Scott,

I think the Pau guy is trying to tell you that he is not in the Ethernet service business, but Video (broadcast and VoD), Voice and Data. PON has no provisions for VoD, not for high capacity data in general. The FastWeb network in Italy is a good example of triple play for $80/Month and profitable. The only real difference between Pau and FastWeb is the fact that Atrica is using (very low cost) etherent switching in Pau while Cisco is using extremly expensive router for FastWeb.
veeja1972 12/5/2012 | 2:12:45 AM
re: Atrica Dials Into FTTP Not sure if it matters if it makes money...in the end we can all just drink some wine... :-)

pigglywiggly 12/5/2012 | 2:12:41 AM
re: Atrica Dials Into FTTP Rather, I think the Pau guy is trying to tell you that he is not in the Ethernet service business, but in the wine business, given his frequent references to the delicate elixir.

Also, ThePau's earlier reference to "tripe-play" sounds about right for this whole setup. I'm not sure, though, that I'd pay any more for ox stomach than I would for residential Ethernet "services", or vice versa for that matter.
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