Verizon Preps Next Major Broadband Upgrade

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.

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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

Duh! 3/24/2016 | 1:17:40 PM
Re: NGPON2 Forum Kickoff I strongly doubt that this is a residential/small business play.  GPON utilization is light, and if you believe Adtran's (quite credible) analysis, good out to 2022 in the most aggressive load growth scenario.

NG-PON2 TWDM trials are, is as near as I can tell, being done with demoware. As I've observed, if it were ready to take off, we'd have seen lots of announcements at OFC.  The component vendors all seem to have their attention focused on 100G/200G/400G for various applications. And the system houses are promoting forward compatibility rather than shipping product. In any event, NG-PON2 ONTs and OLT Line cards are going to be very, very expensive... way too much for residential.

My guess: Verizon will deploy some N-GPON2 for enterprise and large MTU applications. It will probably be used as one of several 5G backhaul and fronthaul solutions. However, there are lots of caveats for this scenario.

On the other hand, I'd not be surprised if they decided that there is no business case for it.

N-GPON2 is in the "Hype" phase of the hype curve. More likely than not, it will have a major impact... several years out.  XGS-PON is a more practical solution in the meantime.

philharvey 3/24/2016 | 12:40:43 PM
Re: NGPON2 Forum Kickoff Thanks for that. I don't think 5G depends on this, to be clear, but I am interested to know now much a general fiber infrastructure upgrade is required to provide 5G.

Also, does anyone know how many homes Verizon may pass with NGPON2?
brooks7 3/24/2016 | 11:36:30 AM
Re: NGPON2 Forum Kickoff If it is mandatory for 5G, then Verizon has a problem because a whole lot of the country - a significant majority - does not have FiOS.  Given that this is an overlay plan, then there is only a core of citiies in the NE corridor that would get 5G.  That seems like a really bad plan.


philharvey 3/24/2016 | 10:20:31 AM
Re: NGPON2 Forum Kickoff How much of an industry impact will this have in terms of potential homes passed, etc.?

Verizon has divested a lot of its landline assets over the years (including its original FiOS neighborhoods), so I'm wondering how interested they really are in deploying the tech for business and consumer use.

Also, would they need to do this anyway to properly deploy 5G?
msilbey 3/23/2016 | 10:16:36 AM
Re: NGPON2 Forum Kickoff Looking forward to hearing more on the NGPON2 Forum. Sadly I'm not on the west coast, but we have at least one editor at OFC this year. 
steve q 3/22/2016 | 7:02:37 PM
Re: NG-PON2 in a 5G world Hi like in the past the only way for Verizon to move outside those of the cable world is to provide fiber into the customer home like that of google fiber. Putting in a fiber jumper in place of their ont will give them the speed needed and let the customer have more option in the type of in home service. We need to let the customer move from the outside world of the use of their cellphone to that in the home data service.
Duh! 3/22/2016 | 5:20:58 PM
Technology maturity? I expected a rash of NG-PON2 and XGS-PON component announcements around OFC this week.

II-VI Systems announced a "prototype" ONT ROSA.  Other than that - nothing?

[email protected] 3/22/2016 | 3:59:33 PM
NGPON2 Forum Kickoff Dear Industry friends,
A lot is happening in the NGPON2 market. Verizon and other Tier 1 carriers have issued Next Generation PON RFP's. If you're at OFC this year, please join us
for an Happy Hour get together to kick off the NGPON2 Forum at
Location: Anaheim Marriot within walking distance to OFC exhibition center (Bar area)

700 West Convention Way, Anaheim CA 92802
Date: Tuesday March 22nd, 2016
Time: 5:00PM PST
R.S.V.P. to [email protected] or [email protected]
Best regards

[email protected] 3/22/2016 | 11:44:57 AM
NG-PON2 in a 5G world NG-PON2 is going to be an importantg part of the 5G mix, I would imagine, as one of the techs deployed for fronthaul. That's a way down the line but the planning needs to start now, right?
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