Eight months after three RBOCs started to fan the passive optical networking (PON) flame with a joint RFP on such equipment, details about actual PON deployment plans from BellSouth, SBC Communications and Verizon are still quite spotty. It appears Verizon is dedicated to get the ball rolling — having named a handful of PON vendors and announced plans to pass about 1 million homes with PON-based FTTP technology in 2004. But PON deployment for the RBOCs as a whole is generally expected to be slow going. “We’re not going to see huge rollouts now for some time,” says Michael Howard, principal analyst and co-founder of Infonetics Research, adding that he thinks North American PON-based FTTP deployment will happen during the next 10 to 15 years.
By Infonetics’ accounts, in North America, about $60 million in PON equipment was sold last year, and about $155 million is expected to be spent this year on such gear.
According to research and consulting firm RHK Inc., by the end of the second quarter of 2003, there were approximately 730,000 homes passed worldwide with FTTH, and PON systems made up about 35 percent of that. RHK reports there are approximately 22,000 PON subscribers in the United States, being served about evenly by independent telephone companies and municipalities.
As for the other RBOCs, BellSouth — which has passed 1 million households with the Marconi FTTC equipment it began using prior to the issuance of the joint PON RFP this summer — was mum about specific PON deployment plans or vendor selections as of late November, other than to say it was in trials with vendor equipment. But company spokesman Jeff Battcher told xchange at the time that BellSouth expected to release some information on its PON vendor selection by this month.
In October, the other three RBOCs said they were staging lab trials of FTTP throughout 2003, with plans for field trials in the first half of 2004, and early greenfield deployments in the latter part of next year.
SBC, which is expected to be the laggard of the PON RBOC trio, is “planning to do some FTTP stuff on a small scale next year — new builds or MDUs — but nothing more than that,” says company spokesman Wes Warnock. Also, SBC is already operating a PON trial in Mission Bay, Calif., which launched prior to news of the RFP.
Howard of Infonetics says the fact that SBC’s DSL deployment “is still going really well,” may be contributing to this RBOC’s more conservative approach to PON. “But they will roll it out,” he says. “The question is how quickly will they ramp.”
RHK’s program director, Teresa Mastrangelo, agrees that SBC is the slowest of the three RBOCs with PON. “They have stated they’re going to do greenfield only,” she says. “I think they’re going to wait and see what happens with Verizon,” and wait to see what kind of demand for video SBC sees through its resale deal with DBS provider EchoStar Communications Corp. Mastrangelo adds that meanwhile, Verizon has already reached its goal of 71 percent coverage with DSL, and although the company will continue the DSL rollout, it apparently feels it can now start to focus on the next thing, which is video — in some cases over FTTP.
The fourth RBOC, Qwest Communications International Inc., was not involved with the three other RBOCs on the PON RFP and has made no public comments on any potential plans to use PON.
Over the past few months, the three RBOCs have noted their frustration with the FCC’s Triennial Review rules on FTTP and related technology, saying those restraints are preventing them from going forward with larger-scale PON deployments for the immediate future. Many people in the industry consider the fact that the FCC isn’t making the ILECs completely unbundle these new fiber-based networks for competitors a victory for the RBOCs. But the ILECs are railing against FCC rules that require them to unbundle voice to competitors in areas where the ILECs update existing networks with fiber — also known as overbuilds. The order also relieves ILECs from voice unbundling only in FTTH builds, but not in cases in which fiber is extended only to the curb, which is an issue for BellSouth in particular, considering it already has 1 million homes passed with an FTTC architecture.
Mastrangelo says BellSouth is working hard to get regulatory relief from the FTTC unbundling rules. BellSouth’s current Marconi FTTC solution gets it within 500 feet of the customer, she says, so the RBOC could use VDSL or another method for the drop. Howard thinks BellSouth is figuring out how to extend its existing FTTC deployments, and he believes the RBOC has made undisclosed plans to trial methods of extending the FTTC networks to FTTH.
On the Verizon
Despite what looks to be a slow road for PON, Verizon’s plans to use the technology in more than 100 central offices across nine states (undisclosed as of November) this year — with at least two test markets in the first half of this year — are promising. Verizon has said its PON deployment pace could potentially double in 2005.
And the rumored low-cost bids the RBOCs received from vendors as a result of their joint RFP could potentially stoke new interest in PON from other service providers that may have previously considered the technology economically out of reach, according to Mastrangelo. “What happens with the RBOCs is going to have some pretty big impacts globally,” she says. “All big carriers interested in a PON architecture are obviously looking at what’s happening here.”
Corey Geiger, vice president of marketing for Advanced Fibre Communications Inc. (AFC), which is Verizon’s only named vendor for central office and premises optical electronics, or “active” elements, for the PON installation, says by SUPERCOMM this year, Verizon “will be viewed as the tip of the spear.” By the June show, he says, both large and small service providers will have announced plans to move from copper-based to fiber-based infrastructure.
Verizon and its vendors did not provide details on the per-home-passed cost of the PON system or the values of individual vendor deals with the RBOC. In an interesting side note to the PON discussion, Vice Chairman and President Lawrence T. Babbio Jr. said the company’s PON deployments would be done without an increase to Verizon’s historical capital spending levels. He said wireline capital expense will be approximately $7 billion this year, and the company expects it to remain at approximately the same level in 2004.
Mastrangelo says Babbio’s remarks during that recent speech may indicate Verizon intends to equip its COs with the AFC equipment, but might not install the fiber cards for them until customers subscribe to video service or other Verizon requirements are met. “Verizon won’t identify the nine states, so there could be a lot of multidwelling applications that already have fiber, so all they have to do is go up the riser,” she adds.
Mark Marchand, a spokesman for Verizon, says general industry estimates of the per-home cost are anywhere from $1,000 to $1,250, with about 40 percent of that cost in the active and passive equipment and 60 percent for labor.
However, Mastrangelo says she heard the RBOC PON RFP target was $700 per home passed, and that rumors are that vendor responses to the RFP came out well below that mark.
AFC will get 100 percent of the active component (optical line terminals) business from Verizon for the first two years — 2004 and 2005, according to Verizon. For optical network terminals, they will have 100 percent of the business for the first year and at least 50 percent for the second year. Overall, it’s a five-year contract that’s based on an as-ordered basis.
AFC’s Geiger says Verizon will likely use the systems initially in sites with multiple properties and in “a large number of wire centers across their network — from the Northeast to the West Coast and in between.”
(Alcatel and Motorola/Quantum Bridge were the other two vendors rumored to be on the RBOCs’ short list of PON vendors resulting from the joint RFP.)
Sumitomo Electric Lightwave, Pirelli Communications Cables and Systems North America, and Fiber Optic Network Solutions will provide the fiber-optic cabling and other outside plant equipment for the project.
Why FTTP PON?
FTTP PON networks can offer downstream bandwidth of up to 622mbps and upstream bandwidth of up to 155mbps, according to Verizon. That could allow the service providers employing the technology to support bandwidth-intensive entertainment services like home video (including on-demand video) and interactive games, in addition to data services and voice on a single network. The move to push fiber closer to residential users is also expected to provide telephone companies significant maintenance savings vs. copper.
About the AFC Solution
The Advanced Fibre Communications Inc. FiberDirect FTTP solution that Verizon has chosen for its initial PON deployments is a card-based enhancement to the vendor’s popular AccessMAX product line.
“It’s easy for Verizon to leverage their installed AccessMAXes and put these new cards in,” says Michael Howard, principal analyst and co-founder of Infonetics Research.
The equipment enables service providers to leverage their existing investments in the AccessMAX, which has more than 100,000 shelves and more than 8 million lines deployed with carriers industrywide. Every AccessMAX AFC shipped since 1996 can be upgraded to FiberDirect. That means service providers with existing AccessMAX products not only maximize use of their existing boxes, but they also can easily convert customers from copper to fiber and leverage the time they’ve put into tech training, processes and support systems already in place to support AccessMAX.
FiberDirect supports PON, IP voice or TDM voice in a single shelf. Some other solutions require a new GR303 upgrade to Class 5 switches to support voice.
