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Next-Generation Fixed Networks: The Other 5G

Sterling Perrin
10/15/2019

Today, communications service providers (CSPs) have firmly seized on 5G because it holds the promise to accelerate revenue opportunities in both consumer and business applications. But operators must understand that the future is not just about mobility. Fixed networks are also crucial to break away from the stagnant revenue of the recent past and realize maximum gains from the coming era.

The "Fourth Industrial Revolution" is increasingly being used to describe the coming together of disruptive innovations in Internet of Things (IoT), robotics, virtual reality and artificial intelligence (AI). The coalescence of these emerging technologies will likely introduce the biggest changes to businesses and global society since the introduction of the computer itself. This revolution will also necessitate the biggest changes to broadband networks since the World Wide Web in the early 1990s.

High stakes
For CSPs, the stakes are high, and "getting it right" -- from both a technical and business perspective -- will be crucial. A look back at recent history underscores this point. During the period from 2012 to 2017, global revenue from Internet content providers, including Google, Amazon, Facebook and others, increased at an 8% compound annual growth rate (CAGR), according to data compiled by Ovum. These Internet giants capitalized on the big shifts in consumer and business behavior brought on by the web and over-the-top content. Over this same period, however, global CSP revenue declined at about a 1% CAGR. This figure includes both fixed and mobile operators and consumer and business services revenue. CSPs provided the underlying networks for innovation but did not reap corresponding rewards.

At this very early stage, use cases and application possibilities abound in the Fourth Industrial Revolution, spanning consumer and business. Among the options are telemedicine, online gaming, connected cars, virtual reality (for both consumer and business), safe cities, smart manufacturing and many more. The industry continues to debate which applications will ultimately take off and which will not. But we do know that fixed and mobile networks must be ready to deliver the bandwidth and performance that the coming use cases demand.

The importance of fixed networks
While 5G (the fifth generation of wireless technology) receives the most attention, much less is being written about fixed network generations. At a high level, the history of fixed networks can be described as a progression through four distinct phases. Original fixed networks needed minimal bandwidth to transmit voice traffic and gave rise to the POTS (or plane old telephony service) public network. The introduction of the web ushered in the second phase of fixed networks, which mandated broadband data rates and was addressed largely by the introduction of asymmetric digital subscriber line (ADSL). The proliferation of Internet video led to DSL innovations to handle greater and greater data rates, including very high speed DSL (VDSL). The fourth phase of fixed networks introduced fiber to the home and addressed high definition (HD) and Ultra HD (UHD) video and broadband capacity requirements beyond 100 Mbit/s.

This brings us to the fifth phase of fixed networking (or F5G), which must meet the demands of this new revolution in computing and the use cases and applications that will follow from it (many of which are unknown). Today's fiber networks based on asymmetrical gigabit passive optical networks (GPONs, which provide 2.5 Gbit/s capacity downstream and 1.2 Gbit/s upstream) are insufficient. Operators globally are looking to migrate to a new generation of 10Gbit/s PON systems.

Furthermore, the asymmetric nature of the previous generation is too restricting for the applications of tomorrow -- which will require high capacities in both send and receive directions. Thus, most operators are looking at the ITU G.9807.1 standard for symmetrical 10Gbit/s PON, called XGS PON. Some deployments have already begun. Aside from XGS PON, a minority of operators (most notably Verizon today) plan to move to NG-PON2 (ITU G. 689), which combines time-division multiplexing (TDM) and wavelength-division multiplexing (WDM) PON to deliver 4x10Gbit/s symmetrical wavelengths per system. Regardless of approach, operators agree that the next rate is symmetrical 10 Gbit/s.

A combined effort
In summary, meeting the communications demands of the coming Fourth Industrial Revolution will require a combined effort of mobile and fixed networks. Operators that myopically focus only on the 5G opportunities risk losing out on the full set of financial rewards. It's time to invest in the fifth generation of fixed networks, or 10G PON.

This content is sponsored by Huawei.

— Sterling Perrin, Principal Analyst, Heavy Reading

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