Broadband Access in the US: Does FTTH Raise its Head Again? Dr. Stefano Galli Telcordia Technologies, Inc. Room: MCC-1J124B 445 South Street Morristown,

Broadband Access in the US:Broadband Access in the US:

Does FTTH Raise its Head Again?Does FTTH Raise its Head Again?

Dr. Stefano GalliTelcordia Technologies, Inc.Room: MCC-1J124B445 South StreetMorristown, NJ 07960-6438Tel. : (973) 829-4980Fax : (973) 829-5886Email: [email protected]

Copyright © 2003 Telcordia Technologies. All Rights Reserved.

11stst OPTIMIST Workshop on Broadband Access, ECOC’03, September 21 OPTIMIST Workshop on Broadband Access, ECOC’03, September 21stst, 2003, , 2003, Rimini, Italy.Rimini, Italy.

Telcordia Technologies Proprietary - Copyright 2003.

ECOC 2003Access in the US Access in the US

Broadband rollout forecast (Yankee Group, 2001)



Actual USA broadband internet access lines (www.FTTHcouncil.org)

Cable companies: 63%; RBOCs: 37%

0

5

10

15

20

25

30

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

*

3Q03

*

4Q03

*

Time

# U

SA

Bro

ad

ba

nd

Inte

rne

t L

ine

s

(mill

ion

s)

Total

Cable Modems

Telco DSL

Other

2001 Forecast

Error



The worldwide DSL trend is different than in the US (www.DSLforum.org)

4Q00 4Q01 3Q02 4Q021Q03

DSL lines 6.5 18.7 30.635.9 41.4

Cable modems unknown 13 20 24

28

DSL subscribersper region



Cable versus DSL

• Cable has higher penetration in the US than in much of the world;

• Unfavorable regulatory issues (unbundling) for DSL in the US;

• Cable modems got to the market first!!

• Cable has high margins 40%, payback period < 1 year;

• Cable companies will soon offer telephone service (unlimited long distance) probably at $40 for cable TV customers.

• The Regional Bell Operating Companies (RBOCs) are not yet competitive against cable TV services, but cable companies are under pressure from satellite TV.

• Number of residential phone lines going down (worldwide trend).


ECOC 2003

FFTH Conference (October 2002) August report on FTTH installations showed a 200% growth rate in 2002. In 2003, FTTH installations are expected to grow by 330% from 72,100

homes passed to 315,000 homes passed, ultimately reaching between 800,000 and 1.4 million homes by 2004.

Key market segments include developers of large housing developments and master planned communities, public electric companies (municipalities, public utility districts, and rural electric coops), ILECs, and CLECs.

Over the last six months, more than 1% of all new homes in the U.S were built with FTTH service available.

Currently, almost all FTTH homes are offered high-speed Internet,

nearly 75% are offered video

66% are offered voice.

To date, 60% of all FTTH homes are offered all 3 services.

Access in the US Access in the US



State Development, City or County Area currently planned CA Poppy Meadows- Development

American Canyon

CA Palo Alto Trial area

CA Roseville Entire municipality

CA Sacramento Part of municipality

CO Colorado City Entire municipality

CO Rye Entire municipality

FL LPGA Community-Daytona Beach Development

GA Dunwoody-Atlanta Development

IA Guthrie Center Entire municipality

IA Huxley Entire municipality

IA Cambridge Entire municipality

IA Slater Entire municipality

ID Bear Creek-Meridian Development

KS Almena Entire municipality

KS Hill City Entire municipality

KS Osborne Entire municipality

KS Norton Entire municipality

MN Morris Entire municipality

MN Alberta Entire municipality

MN Chokio Entire municipality

MN Evermoor-Rosemount Development

MN Town Lakes-Albertville Development

MN East Ottertail Entire municipality

NE Greenfield Addition-Blair Development

State Development, City or County Area currently planned

OR Woodburn Entire municipality

PA Kutztown Entire municipality

SC Daniel Island-Charleston Development

SC Sandy Point-Bluffton Development

TX Avery Ranch-Austin Development

TX Burleson Part of municipality

TX Laredo Part of municipality

TX Canyon Gate Brazos-Houston Development

TX Hometown-North Richland Hills Development

TX Lakes on Eldridge-Houston Development

TX Northpointe-Houston Development

TX Rock Creek-Houston Development

TX Stone Gate-Houston Development

TX Grand Lake Estates-Houston Development TX Victory Lakes-Houston Development TX Crystal Falls-Leander Development UT Kamas Part of municipality UT Provo Trial area VA Southern Walk at Broadlands-Ashburn Development VA Lansdowne on the Potomac-Leesburg Development VA Braemar-Bristow Development WA Chelan Co. Trial area WA Douglas Co. Entire county WA Grant Co. Entire county WA Issaquah Highlands-Seattle Development WA Mason Co. Entire county

Optical Fiber Communities With Customers Served Today via FTTH


ECOC 2003Tough times for US RBOCs Tough times for US RBOCs

Capital replacement cycle is getting shorter, but RBOCs are slowing their investment (John Ryan, RHK – NFOEC 2003):

($ Billions) 2000 2001 2002 2003* 2004*

CAPEX 103 84 33 30 31

OPEX 142 135 123 120 120

• Internet backbone revenues per Gbit are today around $6, decline rate around 45%/year

• Peer-to-Peer traffic (Napster, Gnutella, etc.) is 30% of overall internet traffic.

• Data transport: 60% traffic, 7% of revenues.There is something wrong with the business model!!


ECOC 2003What’s new todayWhat’s new today

US FCC’s Triennial Review (Feb. 20, intention –confirmed in August)

The Federal Communications Commission (FCC) recently decided not to require incumbent local exchange carriers (ILECs) to unbundle new optical access networks.

The FCC's ruling removes FTTH from unbundling rules, which require ILECs to lease facilities to competitors.

“… carriers seeking to serve the mass market face varying levels of impairment without unbundled access to the transmission path between the central office and the customer premises depending upon…” type of plant and type of services.

However, for “loops consisting of fiber from CO to the customer premises, i.e., FTTH loops, we find no impairment on a national basis.”


ECOC 2003What’s new todayWhat’s new today

…. but this is not the whole story:

“… however, in a FTTH overbuild situation we must ensure continued access to an unbundled transmission path suitable for providing narrowband services to customers served by FTTH loops.”

“… only in fiber loop overbuild situations where the ILEC elects to retire existing copper loops must the ILEC offer unbundled access to those fiber loops, and in such cases the fiber loops must be unbundled for narrowband services only. ILECs do not have to offer unbundled access to newly deployed or “greenfield” fiber loops.”

What about FTTCurb?


ECOC 2003The RFPThe RFP

Joint Request for Proposal (June 2003):

Three of the four remaining RBOCs (BellSouth, SBC, and Verizon) issued an RFP saying that they have adopted a set of common technical requirements based on established industry standards for what they call “fiber to the premises” (FTTP). Qwest did not participate.

FTTP is to allow an array of digital services, up to and including HDTV, on a common platform with volume-driven low prices.

BellSouth, SBC and Verizon will independently finalize their FTTP deployment plans after receiving and evaluating these proposals from vendors. The RFP reportedly asks for ITU-T G.983 (APON/BPON) standards compliance (the press reports that some companies have also proposed GPON and EPON).

These three big carriers indicate that they are looking into buying FTTP equipment for deployments in 2004 and beyond.


ECOC 2003What’s FTTPWhat’s FTTP

O/E

FTTCabHFC

NT

NT

Radio

Light Beams

FSO

FTTC

FWANT

NTNT

Twisted Pair/Coax

Fib

er+

othe

r

NTNT

Interfaces to switch or backbone networks

O/EO/E

Access Network PremisesNetwork

ACCESS

NODE

ACCESS

NODE

Access Network

Possible fiber topologies include:-Point-to-point (Home Run, WDM)-Point-to-multipoint (PON) -Ring

O/E+ NT

O/E+ NT

FTTB

FTTH

O/E+ NT

O/E+ NT

All

-Fib

er

O/E

O/E

O/E/O

PassiveOSP

ActiveOSP

O/E + NT

O/E + NT

NT

FTTPremises


ECOC 2003FCC ruling and RFP: comments in the pressFCC ruling and RFP: comments in the press

The regulatory relief is for FTTH only, but “FTTcurb is a more cost effective solution.” – Bill Smith, BellSouth CTO (TelephonyOnline.com, 09/08/03).

There is not a lot of incentive to build out PON-based FTTP because the cost of the equipment and trenching are still too high. Copper-based DSL is “the key product in our fast-growing data business.” – Edward Whitacre, SBC CEO (Light Reading, 09/11/03).

Some press reports question whether the RBOCs will mass deploy FTTP.

The whole ruling is more than 500 pages long; many think that lawyers will have the last word.



Regulatory relief the RBOCs did not have for copper will allow them to deploy new infrastructure and offer fiber-based services directly to the home user.

The RBOCs entered the residential high-speed market late, they are probably trying to move faster now.

It worked well for DSL: Joint Procurement Group (JPG) in 1996 successfully obtained an attractive bid (about half of then-typical prices) from Alcatel for mass quantities of DSL equipment.

Why the RFP? Why now?



Triple play solution of voice/video/data, provides the possibility of offering new services to grow their revenues.

Respond to cable companies offering voice/video/data bundles to existing cable TV customers.

Operating and maintenance costs are higher for copper-based networks than for fiber based ones, especially if PON architectures are used.

Cost effective commercialization of PON technology, and industry standard to support product interoperability.

The most significant portion of FTTP CAPEX is home and drop cost (60%), which is success-based.

Why FTTP? Why PON-based?


ECOC 2003FSAN FTTx families based on PONFSAN FTTx families based on PON

Source: K. Okada, NTT

Internet

Leased Line

Service Nodes

Frame/CellRelay

InteractiveVideo

Telephony

SNI(VB5)

FTTH

FTTB

FTTC

FTTCab

Optical Fiber

Twisted Pair

ATM-PON VDSL

OLT

ONU

ONT

NT

ONT

Passive Optical Splitter

FTTx

NT

ONU

DomainDomainof G.983.1of G.983.1


ECOC 2003PON: primary rationalePON: primary rationale

PASSIVE outside plant: pushes powering and power backup issues to the ends of the loop

Shared Fiber: single feeder fiber supporting up to 32 ONTs

Shared Equipment: single transceiver at CO supports up to 32 ONTs

Shared Bandwidth: statistical multiplexing, high peak rates with modest average rate as appropriate for web browsing

Symmetric: greater upstream bandwidth than cable modems or ADSL, particularly important for business customers

FULL SERVICE: voice, video (analog and digital), data


ECOC 2003

ONT 1ONT 1

OLTOLT ONT 2ONT 2

ONT 3ONT 3

User 1User 1

User 2User 2

User 3User 3

1 3 3 1 2 1 3 3 1 2

1 33

12

1 33

1 2

1 1

2

3 3

Broadcast and Select

ONTs use ATM cell identifiers to select

Unicast or Multicast

splitter

ATM cells

PON Downstream OperationPON Downstream Operation


ECOC 2003

ONT 1ONT 1

OLTOLT ONT 2ONT 2

ONT 3ONT 3

User 1User 1

User 1User 1

User 1User 1

1 3 3 1 2 2

1

1

33

1 1

2

3 3

Ranging protocol allows precise time-interleaving of cells

OLT issues grants to ONTs to transmit

combiner

ATM cells + 3B

headers

PON Upstream OperationPON Upstream Operation


ECOC 2003

Problem: Multiple access in the upstream direction

– Ranging algorithm assures synchronized interleaving of upstream cells to one bit-time

Problem: Eavesdropping on downstream signals of other users

– “Churn” provides additional protection at the TC layer on a per-VP basis, but is not as secure as encryption

Problem: “babbling ONU” blocks upstream channel

– Passive denial of grants

– Active “shut-up” command

PON-Specific ChallengesPON-Specific Challenges


ECOC 2003

Shared 1 fiber (2 wavelengths) or 2 fibers to splitter, dedicated fibers to each end user, reach (20km) with splitter (up to 32 way split)

For both FTTBusiness and FTTHome/FTTCurb (FTTPremises) Passive OSP Sharing of fiber facilities at CO ATM-PON standardized in 1998 in ITU G.983.1; recent extensions: higher bit

rates, wavelength overlay(s), dynamic bandwidth allocation , facilities protection

O/E+ NT

O/E+ NT

O/E+ NT

O/E+ NT

O/E+ NT

CentralOffice

Equipment

Shared fiber

Dedicated fibers

Splitter/combiner

Downstream: 155 Mb/s, 622 Mb/s 1.5mUpstream: 155 Mb/s 1.3m

Splitter-Based PON (ITU G.983.1, 10/1998)Splitter-Based PON (ITU G.983.1, 10/1998)


ECOC 2003WDM Overlay for Video (current, in RFP)WDM Overlay for Video (current, in RFP)

OLT ONT

1x32

Data/Voice

1.5-/1.5+WDM

Video TX

V-ONT Video

Original range for downstream TX very wide (1480 - 1580 nm)

– OLT TX is typically a DFB laser in temperature-stabilized environment and is highly shared

– restrict the downstream wavelength range, free up EDFA band for broadcast video signal

Original notion: allow an additional downstream broadcast signal to deliver broadcast services (video)

– Capitalize on distributive nature of PON

– Easily removed for business areas with limited need for video


ECOC 2003

IEEE Ethernet-in-the-First-Mile group is producing standard 802.3ah for EPON, largely vendor-driven standard

Fundamentally similar to ATM-PON but:

– Transports Ethernet frames/packets, not ATM cells

– Minimum standardization, product differentiation

Specifically decided not to standardize the following :

– Bandwidth allocation algorithm (DBA)

– TDM and ATM support

– Security, Authentication

– WDM Overlay Plan, support for Analog Video

– Protection, Diagnostics, Monitoring

– Compliance with existing OSS

– Vendor-specific products do support some of the above

Why Not Ethernet-based PONs (EPON)?Why Not Ethernet-based PONs (EPON)?


ECOC 2003

Passive architectures are not currently in widespread use to serve residential or small-to-medium business customers

G.983 ATM-PONs are likely to be the near-term architecture of choice and will be deployed for small-to-medium business and new-build residential areas

Verizon

– Proprietary (non-FSAN) PON system for residential customers in Brambleton Virginia development (spring 2001)

– Begin ramp up in 2004 with increasing deployment in 2005 and 2006

PON DeploymentPON Deployment


ECOC 2003

SBC

– FTTBusiness—“Next Phase of Project Pronto” On May 9, 2001 SBC announced its use of BPON for extending

direct fiber connections to smaller business customers (T1 replacements)

– FTTH Alcatel WDM-overlay PON for residential customers (July 15

2002), 6000 homes in Mission Bay Development.

BellSouth

– FTTBusiness PON still a prime contender

– Considering three residential options, primarily new-build areas: Current proprietary FTTC (single-vendor) PON-based FTTC PON-based FTTH

PON DeploymentPON Deployment


ECOC 2003

SBC, Verizon, and BellSouth are attempting to recreate the success of the joint purchasing agreement that resulted in dramatically reduced costs for ADSL equipment

– Common technical specifications, separate purchasing arrangements.

– Triple-play platform will be based on G.983 ATM-PON standard, likely residential version will include broadcast video overlay.

– FTTP could mean FTTHome, FTTCurb, FTTBuilding/FTTApartment.

Fiber-to-the-Home

– PONs likeliest architectural choice, but active options are emerging.

– ATM-PONs have the lead, but E-PONs could be a disruptive technology.

– Small-to-medium business customers (FTTB) and new-build residential access (FTTH) likeliest first deployment targets.

ConclusionsConclusions

The broadband access “battle” is underway, with cable apparently winning


ECOC 2003

– Is this RFP the sign that FTTH raises its head again?

QuestionsQuestions

Predictions are tough … especially about the future!!

– Where will the heavy deployment be? New-build area/greenfield or overlay in established neighborhoods? Business customers? (Basically, fiber-to-the-whom?)

– In the current economic climate, is there are vendor that will be able to offer forward pricing to make a viable business case?

– Will the RBOCs follow up in their intentions?

– FTTHome, FTTCurb, FTTBuilding… fiber-to-whatever?

Broadband Access in the US: Does FTTH Raise its Head Again? Dr. Stefano Galli Telcordia Technologies, Inc. Room: MCC-1J124B 445 South Street Morristown,

Documents

us slide

dsl cable

us cable modems

broadband access

ftth homes

us state development

year cable companies

cable tv services