As local telcos, utilities and municipalities continue to breathe light into their FTTx systems, the specter of mainstream deep-fiber deployments is becoming more real. For true believers, it is just a matter of time.
CED-FTTx | March, 2002 | By MICHEAL LAFFERTY | Senior Editor
Just as the unsettling but always fascinating “X Files” television series comes to an undoubtedly eerie end, a previously unimaginable reality may be taking shape in broadband telecommunications.
Fiber-to-the-curb (FTTC), fiber-to-the-home (FTTH), even fiber-to-the-user (FTTU) systems are gaining renewed attention from local telcos, utilities and municipalities across North America and around the world. This unrelenting activity seems to have created a weird trickle-up theory of deep-fiber deployment. Apparently, as more local entities deploy deep fiber solutions, the service provider behemoths are taking notes, making plans and launching trials.
“The most important factor that’s giving life to such approaches as fiber-to-the-home is the Internet,” says Geoff Wilbur, an analyst with industry researcher KMI Corporation. “Like any new or advanced method, fiber-to-the-home started out as a ‘something we (service providers) can do, but it’s really expensive’ approach. But, they’ve been chipping down the price ever since.
“In the meantime, there’s this other revenue stream that’s popped up that could potentially pay for the investment–high-speed data. That’s because when they first started doing this, there wasn’t any Internet. There was only voice and video, and those don’t add up to pay off the costs. If it weren’t for the Internet, fiber-to-the-home would be pushed back at least another 20 years.”
This past fall, KMI’s report, “Residential Broadband Access in the United States: Fiber-to-the-Curb and Fiber-to-the-Home,” predicted FTTH systems in the United States will reach 2.65 million homes by 2006 (see Figure 1), after starting from just 89,000 homes in 2001. As a result, says the report, the FTTH equipment market will grow from just $100 million in 2001 to nearly $1 billion in 2006.
The KMI report also states that in the next four to five years, increased market demand and decreasing cost factors are expected “to drive most or all of the RBOCs (Regional Bell Operating Companies) to begin FTTH deployment in new housing developments, then in network rebuilds.”
Factors that may accelerate this thirst for all things fiber, says the report, would be faster-than-expected cost reductions or applications that drive bandwidth demand beyond what non-fiber-based technologies can provide. However, the report cautions, factors that may hinder the rollout of deep fiber solutions include slower cost reductions or improvements in non-fiber-based technologies that keep pace with future bandwidth demands.
While the cost of big time deployments is still up in the air, some groundwork is being laid. “Right now, you have the small town guys–a few competing carriers, local governments and real estate developers–doing it,” says Wilbur.
“It can say the payback is a little longer than if it were a public company. But, they’re government. So, if it throws in the ‘good of the community,’ then suddenly it makes more sense, and their payback horizon can be a little farther off. But, if you’re an RBOC, you’re not going to do one small town in your territory. They have to make decisions for their whole regions, and suddenly that’s a lot of investment there.”
A year to remember
Darryl Ponder, chairman and CEO for Optical Solutions Inc., an FTTH platform manufacturer, believes 2001 was a watershed year for the future of deep-fiber deployments. “2001 was a historic year in the fiber-to-the-home business,” says Ponder. “That’s because, for the first time in history, FTTH is less expensive than deploying copper, twisted pair or coax.
“However, there are two caveats. It needs to be in a converged services environment with two or more services of voice, video or data. In fact, most of our deployments have all three (see Figure 2). And it needs to be in a greenfield application.
“In those environments, our numbers show that on a typical 5,000-home deployment, fiber beats coax by about $300 a home. The cost for a system, depending on a variety of factors, can range from $1,800 to $2,100 per home. That’s a total installed cost of the infrastructure, the labor and the electronics. That includes voice, video and data, multiple phone lines, 100 BaseT and analog video. If you use roughly $2,000 as the cost of a fiber install, you can compare that to roughly $2,300 for an HFC equivalent.”
Ponder explains that the breakthrough for FTTH was the result of two factors–cheaper equipment costs and better technology.
“The cost of fiber came down a good 15 percent,” he says, “or maybe even 25 percent. Splitters and couplers are down very significantly. Today, you can get glass splitter/couplers that two years ago would have cost $100 to $150 a port, for $35 a port now. Labor is down a bit because of the recession as well.
“The optics costs have come down as well. In fact, today we pay 25 percent of what we did for optics two years ago. And then, we also get to enjoy all the normal Moore’s Law-type associations with higher integration of the new generation of network processors that are out there.”
I’d rather PON, than switch
Optical Solutions’ fourth-generation platform, the FiberPath 400, like its predecessors, is based on a passive optical network (PON) configuration. And for good reason, says Ponder.
Late last year, in a November keynote address at the IEEE Globecom Conference, SBC Communications Inc.’s Chief Technical Officer and Senior Vice President for Services Ross Ireland said the cost and difficulty of managing active electronics in remote loop-carrier pedestals was a factor in the company’s pullback from expanding DSL service.
“When we were done with the rollout of Project Pronto,” Ireland told the conference, “we had some 40,000 ‘huts,’ or neighborhood gateways, all requiring remote power management.” He went on to say that long-term, “the end game is passive fiber pushed very far into the network. PON is for new build-outs only right now. Still, the day will come when the passive combiner will beat out active electronics in delivering broadband services.”
The PON approach, with its lack of active devices along the fiber route, means that power is needed only at the fiber’s termination to run the resident’s network interface unit (NIU). Up to now, Ponder says the company has used external batteries. With the new generation 400 family, it is now offering an internal battery solution for its NIU.
Ponder credits American Power Conversion for helping take some of the complexity and hassle out of the battery maintenance program. APC has a battery rotation program where residents get a new battery every five years. They take the old one out, put the new one in, and put the old one in the shipping box and send it back to a recycling center. The system also has the ability to detect premature battery failure so that a new battery can be sent or a person can be dispatched to replace the unit before it fails completely.
I’d rather switch, than PON
Chris Bonang, Harmonic Inc.’s senior director of marketing and development for the company’s Broadband Access Networks Division, believes the PON approach for deep fiber deployments is geared more toward telcos who’ve traditionally not had power in the field. For people like cable operators and utility companies that already have power in the field, says Bonang, it’s not a big issue.
“Ethernet has definitely become the ubiquitous standard for delivering data services,” says Bonang. “We think Ethernet to the home or business is the next wave in communication services. So, we’ve put Ethernet switches (i.e., the Harmonic CURBswitch Ethernet Switch module–see photo at right) out in our node platforms. You can put an Ethernet switch anywhere you want–outdoors on a pole, in a cabinet, on a pedestal, in the basement, on the side of a building.”
Ethernet, says Bonang, is something all of broadband is eventually going to, especially for businesses that are already quite familiar with it in their day-to-day operations. That, in turn, will dictate how deep-fiber approaches will progress.
“It’s started, and it’s not going to stop,” says Bonang. “In the short term, people are more focused on going to businesses, because they can obviously get more revenue from them. Cable operators want to do that. Overbuilders want to do that. Everybody wants to do that.
“It’s a pretty easy business case, because they’re trying to compete with telcos that have been charging $1,000 a month for a T-1 line. That means it’s nice, low-hanging fruit. The next thing is fiber to the MDU-type of application. Again, you’re sharing a fiber you’ve pulled to a building amongst many subscribers, which makes it very cost-effective.”
Small town, big impact
For an increasing number of small communities, telcos and utilities, deep-fiber networks are not only a matter of comparative costs, but economic survival as well.
“Fiber-to-the-home,” says Mark McDonald, vice president of the FTTH/FTTC Business Unit at Marconi Corp., “has been going into rural areas and small cities predominantly because it’s less expensive. There are fewer roads, fewer driveways to cross and the installation costs can be lower.
“A lot of cities are also quite intrigued by the possibility of putting in their own infrastructure and having better service than they get from their incumbent providers. It can really be a win-win because the big phone and cable companies don’t want to go into a smaller city or town and put in a whole bunch of capital.”
At the same time, these smaller communities are very cognizant of the fact that they’re faced with a pretty bleak future without a viable broadband strategy. Like many other communities, the Borough of Kutztown, Pa. (pop. 4,500) recently announced it was deploying an Optical Solutions’ FTTH system to serve its residents, a local university (enrollment: 8,200), and its current and future business residents.
“This community-owned fiber-optic network,” says Keith Hill, Kutztown Borough manager/treasurer, “is a catalyst to building economic development and enhancing our existing services. We believe broadband capability is critical to our future.”
The Grant County Public Utility District (GCPUD) in Ephrata, Wash. is conducting one of the most high-profile, small-community fiber build-outs in the country. When completed in 2005, the fiber network, known as Zipp, will consist of nearly 50,000 miles of fiber reaching 40,000 homes, businesses and farms throughout Grant County. Currently, the network passes approximately 7,000 homes with nearly 2,000 customers already receiving services.
The video portion of the GCPUD’s broadband triple play is being supplied by Minerva Networks, a provider of video-over-IP services. The company will connect 40 of its Video Network Platform (VNP) MPEG-2 IP encoders and 60 of its MediaGateway DVB-to-IP demultiplexers to the Zipp network. Additional equipment in the IP video network includes IP video servers, Ethernet-based set-top boxes, IP multicast-enabled network equipment and dedicated bandwidths of more than 5 Mbps to each home.
The HTML and IP-based infrastructure, says Reed Majors, Minerva’s vice president of marketing and business development, will provide a host of capabilities and interactive services including unlimited TV channels, VOD, NVOD, PPV, network-based PVR, TV-based Web portal and e-mail access, bill preview, on-screen messaging, self provisioning, multiple user accounts and parental control.
Big telco, big trial
All of this deep-fiber activity on the local level has caught the attention of the big boys. Brambleton Group LLC recently announced the development of a master planned community in Loudoun County, Va. that will feature an FTTH system backed by Verizon Communications. The development will eventually consist of roughly 6,200 homes/residences and businesses that will be built over a number of years. The FTTH trial, which is expected to run at least a year, will focus on the first phase of the development that will include approximately 700 residences.
Built on Marconi’s Deep Fiber FTH-1000 system, the deep-fiber network will be centered around a comprehensive Technology Master Plan developed by The Broadband Group, a Sacramento, Calif.-based technology consulting firm that serves the land development industry.
“I think Brambleton is a very important step,” says Tom Reiman, president and founder of The Broadband Group. “That’s because we took a step back and suggested that before they run any numbers, before they analyze FTTH, FTTC, coax or whatever, we wanted to try and define the appetite for bandwidth, information services and video transport in the community. If we could do that, then we could give them a better opportunity to look beyond what they know works.”
Brambleton’s bandwidth appetite may be a perfect match for the FTTH network’s planned capabilities. Located just 45 minutes west of Washington, D.C., the 2,010-acre development is also within shouting distance of telecom giants AOL Time Warner’s and WorldCom’s facilities.
For Verizo’s part, the FTTH trial has both technical and marketing implications. “The trial looks to address both of them,” says Joe Serowatka, distinguished member of Verizon’s technical staff. “Fiber-to-the-home hasn’t been done in quite awhile. So, it needs another look. On the technology side, we want to take a look at the outside plant hardware and techniques we have today, as well as the electronics on the end of the network. From the marketing perspective, we’ve got the triple play to deal with and how all that will work.”
According to Reiman, the Brambleton trial could be the first step on the road to acceptance of pure fiber solutions for other incumbent service providers. “If I can start in a community where we begin to support the economics and bandwidth needs (of deep-fiber systems),” says Reiman, “then the biggest challenge I have is that when we connect that first home on a pure fiber network, we don’t just analyze the cost to connect that single living unit.
“In a way, that’s not fair economics. That’s because you can’t build a plane solely for the first passenger that happens to get on. What we’re hoping is that Brambleton is nothing more than the first of many other similar communities.”
Let the battle be joined
The Brambleton trial, with its RBOC connection, holds a great deal of promise for the future of deep-fiber solutions. It may also have some far-ranging implications for other big-time broadband service providers in the not-too-distant future at a price point that piques their interest, says Optical Solutions’ Ponder.
“Let me say, (it has to get) below $1,500,” says Ponder. “But really, in mass deployment, we’re already there. We’re only talking about a matter of scale.” He believes there will probably be one or two RBOCs trialing deep-fiber PON systems this year. In 2003, he expects FTTH and PON deployments “on a significant scale,” primarily in greenfield scenarios.
“Then, what I think you’ll see in 2004,” predicts Ponder, “is deployment of fiber-to-the-home probably first from a telephony side, in a massive way, overbuilding existing plant because they won’t take competition from a combined Comcast/AT&T Broadband lying down. I think as the MSOs do converged services, you’ll see telephone companies in those competitive areas probably go in and put in fiber to compete.
“The RBOCs are worried about cable now. Comcast and AT&T Broadband, with their telephony rollouts, have finally tipped the balance. Plus, they’re killing the telcos with their high-speed access service.
“Personally, I think that the MSOs will be forced to go into a fiber architecture because as they start competing against telcos and overbuilders that have put in fiber, they will find that they’ll be losing customers. Coax simply can’t compete with fiber.
“I do think the timing for that is probably in the 2004 timeframe. That’s because, right now, cable operators are winning the battle for high-speed Internet access. Cable modems beat DSL. It’s that simple. But…cable modems do not beat fiber-to-the-home.”