Challenges Operators Face in Deploying FTTX

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Challenges Operators Face in Deploying FTTX

• Bruce Ross
• Vice President, Broadband Products
• Tellabs Inc.

2
Agenda

• What is FTTX
• Bandwidth drivers for deeper fiber
• FTTP Capex and Opex Breakdown
• Labor Challenges
• Capex versus Installation Tradeoffs
• Conclusion

3
Carrier Network Evolution

• Competition
• Satellite
• Developers
• Cable
• Other countries

• Finances
• Revenue
• Profitability
• ARPU
• Investment
• Network Maintenance

Evolving NetworkArchitectures

• Government
• Open Access
• Bandwidth mandates
• Incentives to improve infrastructure

• Customer Expectations
• Speed
• Availability
• Interactivity
• Personalization
• Business

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Multiple Access Network Architectures

• Fiber to the Premises (FTTP)
• Shared 2.4 Gbps (GPON)
• Eliminate actives and copper from the OSP
• Triple-Play (High Speed Internet, Voice, Video)

• Fiber to the Curb (FTTC)
• 80-100 Mbps per subscriber
• Reuse existing copper drops
• Triple-Play (High Speed Internet, Voice, Video)

150 Meters

• Fiber to the Node (FTTN)
• Least expensive initially, but
• Least bandwidth capable up to 24 Mbps
• High Speed Internet and Voice

ADSL2/ VDSL2
1,500 Meters
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Why FTTP at Verizon?

• Concept of FTTP finally became feasible
• Technology matured for potential economies of
  scale
• Residential broadband market has taken off in
  terms of penetration and bandwidth demands
• Regulatory reform in the local loop
• FTTP chosen over FTTN, FTTC, WiMAX
• Greatest flexibility and potential
• but Wall Street reaction has been tough
• FTTP is now the core element of Verizons future
  strategy
• Largest project Verizon has ever undertaken
  modernization of the Local Loop into the 21st
  century
• A revamped network to support triple-play to
  residential and small business customers
• Replaces copper in the last mile with
  future-proof technology
• Passive network drives large savings

Verizon will not be beaten on Bandwidth
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Verizons FiOS Strategy and FTTP Results

• Strategy Gain Share in Broadband and Video
• Overall opportunity
• 33M Households and 3.6M Businesses
• Targeting 18M Households-Passed by 2010
• 50B Voice/Data/Video Market in Verizon Footprint
• 725K Internet Subscribers in 16 states in 2006
• Penetration rate
• 6 months 8
• 9 months 12
• 12 months 15
• Churn-rate is lt1.5

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FiOS Pricing
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Bandwidth Demands per Home

• Carriers are planning for up to 100Mb/s in the
  future
• HDTV adoption is occurring at a rapid pace

HDTV set sales saw strong growth during the
holiday season. U.S. retailers sold about 750,000
HDTVs between Thanksgiving and Christmas, or
about 26 of total TV sales in 2005, up from
about 360,000 in the 2004 period, or 13 of all
TV set sales that year, according to retail sales
tracker NPD Group Inc.
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Bandwidth Demands per Home
Multiple video streams means gt24 Mbps required
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High Level Challenges and Opportunities

• Bandwidth demands are increasing
• Video, differentiated video services, Mobile
  Video, Personalization
• High speed Internet, Bandwidth Intensive Gaming
  are key drivers
• Convergence of Video, Data and Voice
• FTTN and deeper DSL offer least expensive upgrade
  path
• To deliver higher speed Internet and voice
  services, but
• Are inadequate for future video evolution
• FTTP/PON is cost-equivalent to copper in
  Greenfield applications
• FTTP/PON is an effective competitive
  differentiator
• FTTP/PON network has numerous benefits
• High bandwidth for triple-play services including
  video
• Reduced OPEX with elimination of actives and
  copper
• Improved customer satisfaction with ONT
  intelligence

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NTT View of Costs Through Time
Source NTT
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Verizon Costs For Passing and Connecting

• Cost per home passed
• C.O. Equipment
• Feeder, distribution plant
• Installation

• Cost per home connected
• ONT, Home Router, Wiring
• Installation

Source Verizon presentation, Sept. 27, 2006
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Long-Term Maintenance Reduced Opex

• Main FTTP savings areas
• Repair routine maintenance
• Eliminate copper active components with FTTP
• Copper line maintenance costs can be up to 100
  annually per line
• Intelligent ONT end-point
• Remote monitoring, testing troubleshooting
• Auto-discovery system inventory
• Automated service modification
• Increased satisfaction by pre-setting customer
  expectations
• Customer-chargeable event like indoor wiring
• Non-chargeable event

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Access FTTP PON Deployment
Video Serving Office (VSO)
CATV Video Optional
CustomerPremises
Optical Network Terminal(ONT)
Optical Line Terminal (OLT)
Video (RF) Data (CAT-5) Voice (POTS)
Optical Couplers(WDM)
Note MoCA HPNA optional
Optical Splitter
Flexible support for high bandwidth triple-play
services
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FTTP Network Topology An Aerial Outside Plant
Video Serving Office (VSO)
Outside Plant
Customer Premises
1490 nm 1310 nm
Distribution
CWDM
OLT
Drop
Fiber Distribution Hub (FDH)
FDF
Feeder
1550 nm
ONT
CATV Video Optional
Feeder
Splitter
Distribution
Drop
20 km reach typical
With PON, no electronics between VSO residence
All passive
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FTTP Capex Opex Breakdown

• Installation labor typically most significant
  cost
• Electronic equipment costs 2nd
• Roughly 75 CPE to CO
• Variables can affect this including
• Subscriber penetration
• PON fill rate and split ratio
• IPTV vs. CATV
• TDM voice vs. VOIP
• Outside plant varies by design
• Aerial generally less than buried but
• Aerial generally higher annual maintenance costs

Capex Opex savings easiest to find here
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FTTP Industry Challenge

• Reduce installation labor (time and costs) while

• Developing delivering cost-effective ONT FTTP
  equipment
• Improving customer satisfaction, loyalty and
  retention rates
• Reducing annual maintenance costs

Largest avoidable cost for an FTTP network is
rolling a truck twice
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Labor Challenges

• Installation cost can be 40 of total cost per
  subscriber, including fiber plant electronics

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ONT Product Definition

• Global
• Interoperability open standards compliance
• G.983 BPON / G.984 GPON / 802.3ah EPON
• PON to electrical demarcation point
• North America
• More single family than multi-dwelling
• Outdoor is dominant
• Temperature-hardened components
• Weather-proof
• Integrated voice VOIP upgradeable
• CATV support requires triplexer
• Asia/Pacific, LAC, EMEA
• Multi-dwelling single family
• Indoor is common
• Ethernet connection - voice, data video
  transmitted across the Ethernet port

Modular ONT with slack storage, enclosure
electronic unit
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FTTP Multiple PON Specifications
GPON More Speed, Ethernet-Like Packets
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Optical Network Terminals Different ONT for
different applications
Outdoor / Indoor / Single Family
Remote Power / Medium Density
Indoor / Single Dwelling
Indoor Rack Mount / Multi-Dwelling
Remote Power / High Density
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ONT Capex vs. Installation Tradeoffs
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ONT Capex vs. Installation Tradeoffs
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Element Management OSS

• Easy to use EMS/OSS is key to rapid deployment
  minimization of opex
• Service activation
• Traffic capacity management
• Fault management
• Test diagnostics

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Test Diagnostics

• Rapidly identify OLT headend issues
• Mis-jumpered PON fiber
• Identified automatically in minutes instead of
  manual in hours
• PON module diagnostics
• Separate OLT from ONT issues
• ONT find
• Locate lost ONT anywhere in the system

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Test Diagnostics

• Rapidly identify resolve ONT issues
• Battery Backup Unit (BBU)
• Full telemetry support
• E.g., battery discharging
• Telephony
• E.g., draw break dialtone test
• Video (CATV)
• E.g., input output transmit power level
• Data
• E.g., ping, loss of link detection

OLT
ONT 610
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Conclusions

• Controlling Capex Opex in FTTP networks is
  essential
• Installation labor costs are the biggest category
• Intelligent ONT FTTP equipment designs can
  reduce installation labor costs
• EMS diagnostics are critical to customer
  satisfaction eliminating unnecessary end-user
  site maintenance costs
• FTTP with PON delivers significant operational
  savings