After years of relying on Gigabit Passive Optical Network (GPON) technology for its high-end fixed broadband service delivery, Verizon is set to push the button on an upgrade to next-generation PON (NG-PON2).
Multiple industry sources have now confirmed that Verizon released a request for proposal in December last year that called for vendors to submit bids for the upgrade, which will ultimately allow Verizon to deliver symmetrical 10-Gig broadband on each of four wavelengths delivered over a single fiber, with the possibility of increasing capacity even further in the future.
The planned upgrade doesn't mean Verizon Communications Inc. (NYSE: VZ) will have to change out its existing fiber, but it will have to install new software and replace existing optical line terminals (OLTs) at central offices, as well as upgrade the optical network terminals (ONTs) at user locations. That makes any upcoming vendor contracts potentially very lucrative.
There's no word yet on the scope of the RFP, the amount of money at stake, or how many vendors might be selected to supply NG-PON2 technology. However, one source suggested that Verizon may be close to a decision on vendor choice, with RFP respondents having already formally defended their proposals twice in what is known as the "bid defense process."
Verizon hasn't responded to requests for comment.
To put the new RFP in context, Verizon last upgraded its residential fiber-to-the-home network ten years ago when it transitioned from BPON to GPON. Back then the big vendor winners were Alcatel-Lucent (NYSE: ALU), Motorola and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA).
Today, AlcaLu -- as part of its new parent company Nokia Corp. (NYSE: NOK) -- and Tellabs could still be contenders, while other possible candidates include Adtran Inc. (Nasdaq: ADTN), Calix Inc. (NYSE: CALX) and Cisco Systems Inc. (Nasdaq: CSCO).
Huawei Technologies Co. Ltd. is also technically capable of bidding for the project, but it's highly unlikely to be included in the RFP process as Chinese communications vendors are still perceived to be a security threat in the US. (See US vs Huawei/ZTE: The Verdict.)
Verizon ran a field trial of next-gen PON technology last summer, proving that the technology works to deliver speeds up to 10 Gbit/s downstream and 2.5 Gbit/s upstream, and that GPON and NG-PON2 can coexist on the same fiber. The test included Cisco and PT Inovacao as vendor partners and took place between the company's central office in Framingham, Mass., and both a Verizon Fios home and a business location nearby. The telco said at the time that NG-PON2-enabled networks would be applied to the business services market initially, but that the technology would have a role to play in residential markets as well with the spread of 4K video and Internet of Things applications. (See Verizon Revs Up Wireline Race With NG-PON2.)
Since Verizon's field test last year, the landscape for PON technologies has continued to evolve. Earlier this month, the ITU reached first-stage approval on two standards for next-generation PON. The first covers XGS-PON for 10-Gig symmetrical services, while the second covers NG-PON2 with the potential (eventually) to offer 40-Gig symmetrical services. (See Gigabites: Google, ITU Think Beyond the Gig.)
According to Adtran, NG-PON2 is almost the "gold-plated" version of next-gen PON technology, but its high performance comes with a cost premium. Adtran has been one of the leaders in pushing XGS-PON, which it sees as a nearer-term and less-expensive alternative to NG-PON2. The company hopes that by 2017, as operators move on from GPON, that XGS-PON becomes the "broadband of choice," although Adtran also confirmed it is participating in the NG-PON2 RFP process with Verizon. (See Adtran Launches 10-Gig Trials.)
Much of the industry attention on Verizon centers on the company's wireless networks, and particularly on its investments in 5G technology. But the telco's recent acquisition of XO Communications was a reminder of the importance of wireline infrastructure to support all services: After all, greater wireline capacity supports wireless access upgrades. There's more than one reason for Verizon to bulk up on fiber and drive higher performance out of the wired networks it already has. (See Verizon Bags XO for $1.8B.)
— Mari Silbey, Senior Editor, Cable/Video, Light Reading