Overview of Japanese FTTH Market

1
Overview of Japanese FTTH Market Lessons
learned from FTTH deployment in NTT

• November 14, 2006
• Hiromichi Shinohara
• shino_at_ansl.ntt.co.jp
• NTT Access Network Service Systems Labs.

2
Broadband users in the whole Japanese market
3
85
million
16
14
ADSL
14.5million
ADSL
12
10
FTTH
8
6.31million
6
HFC (CATV)
4
3.41million
2
FTTH
0
04 Sep.
05 Sep.
03 Sep.
02 Sep.
06 June
Source http//www.soumu.go.jp/s-news/2006/060911
_5.html
3
Broadband users in the whole Japanese market
million
25
FTTH
20
15
ADSL
10
5
Source 2005 Yano Research Institute
0
00 Sep.
'01 Sep.
02 Sep.
03 Sep.
04 Sep.
05 Sep.
4
Quarterly net increase in new users in the entire
Japanese market
k
1600
1400
1200
ADSL
1000
Grow
800
600
400
FTTH
200
Stagnate
0
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
3Q
4Q
2Q
2005
2004
2003
CY2002
2006
Source http//www.soumu.go.jp/s-news/2006/060911
_5.html
5
Monthly net increase in NTT
150k
NTT-East
NTT-West
100k
ADSL
FTTH
50k
ADSL
FTTH
0
-50k
04
05
06
6
Breakdown of Broadband users
FTTH
ADSL
Business user
Business user
Residential user
Residential user
7
NTTs plan to achieve 30 million FTTH users by
2010
Cumulative number (million)
8
Fiber penetration in NTT
Fiber coverage rate Fiber serving area / Total
area
9
Lead time for B-FLETS service in FSA
OLT
ONU
Drop indoor
Distr. Cable
Raising Cable
Feeder Cable
Lead time
Closure
I
lt 1 w
lt 80
II
lt 2 w
lt 20
III
lt 3 w
IV
lt 10
lt 2 m
6
10
FTTH service in NTT

• Main FTTH service in NTT B-FLETs
• Flat rate Internet access service
• B-FLETs Service Line-up
• Business
• Basic for SME heavy users

• Family for mass users

Monthly charge

• Hyper family for mass users

35 (40 incl. ISP)

• Condominium for MDU

17 (24 incl. ISP)
11
Configuration of B-FLETS Services
NTT CO
100Mbps_at_
1.55µm
MC
100Mbps_at_
1.3µm
FTTH
FTTH
18
14
100Mbps_at_
1.55µm
ONU
MC
- - -
OLT
MC
100Mbps_at_
1.3µm
FTTBasement
MCMedia Converter
12
Config. of condominium service MDU
Type I CAT5
Type II VDSL
Type III Fiber
bran-new
HR home router
H R
H R
H R
vDSL
ONU
H R
H R
H R
ONU
vDSL
vDSL
L2-SW
Optical splitter
ONU/MC
ONU/MC
Basement
Basement
Basement
Also for MTU
Demarcation point
13
Why EPON? (Why not GPON)

• Services
• High-quality IP Telephone and IP video are
  becoming the important Basic FTTH services
• Leased line users are shifting to Ethernet L.L.
• Networks
• Full IP backbone network for B-FLETs
• Switches routers in the network employ Ethernet
  Interfaces
• System Carrier-grade (quality, reliability)
  EPON has been realized

Simple natural decision !
14
Typical B-FLETs application services
Transaction
Broadcast
Communication
RF format
VoIP (with 050 AB.J)
Internet access - Shopping - Trading - etc.
IP broadcast will be launched in 2008
Hikari-denwa (High-quality IP phone with 0ABJ)
VOD (IP video)
Flets square (content service)
Video telephony
Podcasting
Location free video
offered by NTT in conjunction with ISP or
satellite television provider
offered by NTT
offered by ISP
11
15
Hikari-denwa Optical telephone

• Low-price
• Monthly charge JPY 525 (cf. POTS JPY 1,785)
• Dialing charge JPY 8/3min. to any fixed
  telephone
• Geographically assigned telephone number of
  0AB.J
• Current telephone number can be used
• The existing telephone set can be used
• Voice quality is equivalent to POTS
• 2-lines 5 telephone numbers
• Emergency calls (Fire Police) can be made

10
Hikari-denwa is very attractive application on
FTTH
16
Comparison of fixed monthly charges

43
37
Hikari denwa
ONU rental fee
POTS
Indoor cable rental fee
Modem rental fee
43.60
In-house wire rental fee
28.59
Service fee
Service fee
Flet's ADSL(47 Mbps)
B-Flets Hyper Family
17
Breakdown of FTTH users by service type
Hyper-family (Hikari-denwa can be used)
Family (Hikari-denwa cannot be used)
0
May
July
Sep.
Nov.
Jan.
Mar.
2005
2006

• Hikari-denwa (High quality and low-priced IP
• telephone) is spurring user demand for FTTH

18
Video services on B-FLETs
4th MEDIA
On demand TV

• VOD (6000 titles)
• More channel (60ch)
• Karaoke

• VOD(4500 titles)
• More channel (34ch)

IP video
RF video
OCN Theater
Skyperfect Hikari

• Broadcast re-transmission
• (incl. HDTV)
• More channel (280ch)

• VOD (1500titles)
• Karaoke

19
Fixed monthly charge for triple play
A. Broadcasting service (RF format)
- Basic channels 12 digital analog
terrestrial broadcast digital analog
satellite broadcast
- Basic channels 12 digital analog
terrestrial broadcast digital analog
satellite broadcast
12
3
Hikari denwa
- More channel lt 15.00
ONU rental
B. VOD (IP format)
Data 40
Analog terrestrial broadcast will be terminated
in 2011. Areas with poor reception of digital
terrestrial broadcast broadcast
divide Broadcast service offered by FTTH will
solve broadcast divide
Service fee
16
20
Driving force behind FTTH growth- Customers
perspective -
Usage of B-FLETs service
100
Speed !! Data Demand for higher quality
higher speed internet
approx. 40 increasing rapidly
Price !! Voice Demand for Hikari denwa
Service !! Video incl. Broadcast Triple play
Less than 10 but increasing
21
Driving force behind FTTH growth- NTTs
perspective -
Infrastructure Aged metallic cables have to be
replaced. FTTH future proof network
Competition Speed competition in ADSL opens
FTTH market Strong competition in FTTH market
- Triple play - Lose FTTH competition means
lose everything
Expenditure Revenue OPEX on FTTH lt OPEX on
FTTC/FTTCab ARPU from FTTH gt ARPU from ADSL
22
Problems in FTTH Service Offering

• Difficulties in prompt service offering
• Service start-up date could not be fixed
  immediately according to user demand
• ? OSS for service provisioning
• Const. work for SO was time consuming
• Elimination of excess fiber storage
• ? Field assembly cable sheath connector
• Easy-to-handle optical cord
• ? Freely bendable optical cord
• IFC
• highly depend on PON utilization rate
• ? appropriate network design

23
Fiber unbundling price
8 branches
OLT
ONU
P2P fiber
JPY 5,074
P2MP fiber 8braches as a unit
JPY 5,546 / branch
EPON 8braches as a unit
JPY 11,886 / branch
Point of interface
24
Technologies for full-scale FTTH era

• Solutions for digital divide
• Cost reduction by optimizing network design
• FWA for triple play service
• Further effort to establish easy construction
  tech. to achieve 30 million FTTH by 2010
• Next generation FTTH system to meet ever
  advancing user demand
• Next generation system must be able to share a
  fiber with BPON or EPON ? WDM access
• Solutions to maintain huge number of FTTH users
  efficiently

25
Thank you!
26
Breakdown of FTTH users
Whole Japanese market
FTTA/ FTTB
FTTH
as of Dec. 2005
NTT
Besides NTT
27
Triple play service in NTT
BS/CS
Terrestrial
Internet, VOD
1.49
GE-ONU
TA
WDM
WDM
1.31
GE-OLT
HQ IP telephone
V-ONU
STB
V-OLT
coder
1.55
TA
RF Broadcasting video
Satellite television provider.
Broadcast service offered by this system is
fully compatible with terrestrial or satellite
broadcast
28
Summary

• Broadband market shifts from ADSL to FTTH.
• FTTH market shifts from single play to triple
  play
• Easy construction technologies are the keys for
  cost reduction and for prompt massive service
  offering
• Next generation system must ensure smooth
• migration from B-PON or GE-PON.
• Reduction of operation maintenance cost is
  indispensable for the full scale FTTH era

29
Market Share of FTTH Providers
Others
11.8
USEN
8.0
NTT
Power company
64.6
15.6
As of June 2006