FTTP: A 2004 Perscpective

This publication has been discontinued on July 19, 2011.

Introduction

On May 29, 2003, the three largest RBOCs (BellSouth, SBC, and Verizon) announced that they had adopted a common set of technical specifications for the delivery of fiber-to-the-premise (FTTP). In October 2003, Information Gatekeepers issued "FTTP - The RBOCs' Light Sword?" That report detailed various possible scenarios for FTTP deployment, identified the most likely, and did the same things for the vendors. While that report turned out to be very accurate, enough new information has emerged to justify updating.

In other times, this announcement of the FTTP plan would likely be viewed by most with a big yawn - just another technical standardization. However, in today's times, this was the biggest news in the telecommunications world - perhaps the biggest in years. The initial announcement was followed by a joint RFP issued in June 2003 to selected vendors for the FTTP equipment. Responses and vendor selections were scheduled for the third quarter of 2003, with initial deployments to begin in 2004. As we will detail, this schedule was not completely met, but the RBOCs were close.

These three RBOCs serve 136,000,000 of the 187,000,000 access lines (73%) in the US. This is the base reason for the excitement. These three companies are the powerhouses of the telecom world. Their 2002 capital expenditures were 76% of the total by major telephone companies, and over 46% of all capital spent in 2002 by cable companies, IXCs and major telcos! Clearly, these three companies have the financial power to rule the equipment markets.

The equipment vendors have looked at the potential size of a project to bring fiber near the customers of these three companies, and they visualize a return to the go-go days of the late 1990s telecom market. At around $1500 capital cost per installed fiber line, it is easy to see how a program that involves over 100,000,000 lines could easily drive a return to profitability for many equipment vendors.

The RFP has been held very tightly, but a few bits of information have been released. The author of this report has managed to obtain interviews (on a 'no direct quotes' basis) with several of the potential vendors and principles involved. The major item disclosed is that the RFP calls for a solution based on ITU standard G.983. This standard provides for a passive optical network (PON) using ATM transmission. Details of deployment assumptions from the RFP (if included) have not been released.

Several things have happened since the first report:

• The RBOCs have selected the vendor finalists;
• They have completed lab tests;
• Two of the RBOCs have selected vendors;
• Short-term plans for deployment have been announced;
• And, perhaps most importantly, the FCC Triennial Review results have been better understood.

This report, then, is more than just an an update of the earlier report. The new report contains all relevant information as of the date of its issue, as well as the material from the previous report.

This report considers the following:

• Issues of the background competitive landscape (ILECs vs. CLECs vs. IXCs vs. Cable Cos. vs. Satellite Cos.).
• The details of what the assumed PON would involve.
• Other types of PONs that could eventually become a part of this program.
• Feasible deployment scenarios (four detailed cases).
• The incremental impact (capital, traffic, and on the overall network) of that deployment.
• Requirements for success as a vendor.
• Possible vendors of the equipment and a discussion of selected vendors.
• Possible consortiums.
• Finally, questions that have led to skepticism regarding the FTTP plan.

Table of Contents

• TABLE OF CONTENTS
• FTTP - A 2004 PERSPECTIVE?
• TABLE OF FIGURES
• THE LIGHTWAVE SERIES OF REPORTS
• INTRODUCTION
• THE COMPETITIVE LANDSCAPE:
• THREATS IN EVERY DIRECTION
  • RBOCs vs. the CLECs (IXCs)
  • The RBOC Counterattack - Long Distance
  • RBOCs vs. Cable Companies
  • Cable Companies vs. Satellite Companies
• THE RFP - PONS WILL SET US FREE
  • What Are PONs?
  • The PON Design
  • Status of PON
  • Advantage and Disadvantages of PON
  • Types of PONs
  • B-PON
  • EPON
  • GPON
  • The PON in the RFP
• RBOCS�f FTTP PLAN SHINES THE LIGHT
  • FTTP as the Light Sword of the RBOCs
  • Comments on Triennial Review Results
  • Potential Schedule
  • Deployment Scenarios (Cases)
  • Assumptions for Case Development
  • Case Development
    • Case I - The Most Ambitious
    • Case I - Size
    • Case I - Costs
    • Case I - Traffic Impacts
    • Case II - An Intermediate Plan
    • Case II - Size
    • Case II - Costs
    • Case II - Traffic Impacts
    • Case III - The 3% Solution
    • Case III - Size
    • Case III - Costs
    • Case III - Traffic Impacts
    • Case IV - The Smallest Plan - Greenfield Only
    • Case IV - Size
    • Case IV - Costs
    • Case IV - Traffic Impacts
  • Summary of Four Scenarios
    • Capital Impacts Comparisons
    • Differences of the Three RBOCs
    • General Summary Comments about the Cases
    • Most Likely Deployment Scenario - and Announced Plans
  • Announced Plans
    • Verizon
    • SBC
    • Bell South
    • Announced Plans - Defined
    • Announced Plans - Size
    • Announced Plans - Costs
• VENDORS OF THE LIGHT SWORD
  • Requirements for a Successful Vendor
  • Possible Consortiums
• Selected Vendors
  • Vendors Listing
  • Summary of Vendors
  • Detailed Listing of Vendors
  • Adtran
  • Advanced Fibre Communications Inc. (AFCI)
  • Alcatel
  • Alloptic Inc
  • Cisco
  • Entrisphere, Inc.
  • Ericsson
  • FlexLight Networks
  • Fujitsu
  • Lucent
  • Marconi
  • Motorola
  • Nortel
  • Optical Solutions
  • Paceon (Mitsubishi)
  • Quantum Bridge Communications
  • Salira Optical Network Systems
  • Scientific-Atlanta
  • Siemens
  • Terawave
  • Vinci Systems, Inc.
  • Wave7 Optics
  • Zhone Technologies
• WILL THE RBOC FTTP PLAN REALLY REIGNITE THE LIGHTWAVE?
  • Content
  • Source of RFPs
  • Tie to Other Plans
  • Neglect of Other Areas of the Network
  • Backbone
  • Residential Access
• APPENDIX I - SAMPLE OF THE IMPACT OF HIGH-SPEED CONVERSION ON LINE COUNTS

Table of Figures

• Figure 1, Market Matrix
• Figure 2, RBOCs vs. CLECs (IXCs)
• Figure 3, RBOCs in Long Distance
• Figure 4, RBOCs vs. Cable Companies
• Figure 5, High Speed Forecast
• Figure 6, Adoption Rates of PCs and High-Speed Access
• Figure 7, Cable Companies vs. Satellite Companies
• Figure 8, PON Basic Arrangement
• Figure 9, RFP PON - Central Office Portion
• Figure 10, RFP PON - Outside Plant Portion
• Figure 11, RFP PON Service Assignments
• Figure 12, Summary of Competitive Position
• Figure 13, Five Reasons for �eWhy FTTP Now?�f
• Figure 14, FTTP Schedule
• Figure 15, Deployment Scenarios - Four Cases
• Figure 16, Parameters by Case
• Figure 17, U.S. Census - Households
• Figure 18, Assumed Take Rates
• Figure 19, High Speed Access Average Busy Hour Throughput, and FTTP Multiplier
• Figure 20, Percent Aerial Distribution
• Figure 21, Average Capital Cost per Home Served
• Figure 22, Cost per Home Passed but Not Served
• Figure 23, Case I - Annual Homes Passed and Penetration
• Figure 24, Case I - Homes Passed Cumulative
• Figure 25, Case I - Comparison to High-Speed Accesses
• Figure 26, Case I - Costs by Segment
• Figure 27, Case I - Capital Costs and Budget Impact
• Figure 28, Case I - Comparisons of Traffic FTTP and High-Speed Access
• Figure 29, Case I - Total Network Traffic
• Figure 30, Case II - Annual Homes Passed and Penetration
• Figure 31, Case II - Homes Passed Cumulative
• Figure 32, Case II - Comparison to High-Speed Accesses
• Figure 33, Case II - Costs by Segment
• Figure 34, Case II - Capital Costs and Budget Impact
• Figure 35, Case II - Comparisons of Traffic FTTP and High-Speed Access
• Figure 36, Case II - Total Network Traffic
• Figure 37, Case III - Annual Homes Passed and Penetration
• Figure 38, Case III - Homes Passed Cumulative
• Figure 39, Case III - Comparison to High-Speed Accesses
• Figure 40, Case III - Costs by Segment
• Figure 41, Case III - Capital Costs and Budget Impact
• Figure 42, Case III - Comparisons of Traffic FTTP and High-Speed Access
• Figure 43, Case III - Total Network Traffic
• Figure 44, Case IV - Annual Homes Passed and Penetration
• Figure 45, Case IV - Homes Passed Cumulative
• Figure 46, Case IV - Comparison to High-Speed Accesses
• Figure 47, Case IV - Costs by Segment
• Figure 48, Case IV - Capital Costs and Budget Impact
• Figure 49, Case IV? Comparisons of Traffic FTTP and High-Speed Access
• Figure 50, Case IV - Total Network Traffic
• Figure 51, Comparison of Scenarios
• Figure 52, Comparison of Capital Budget Impacts of Cases I and IV
• Figure 53, Announced Plans - Annual HPs and Penetration
• Figure 54, Announced Plans - HPs Cumulative
• Figure 55, Announced Plan - Comparison to H-S Accesses
• Figure 56, Announced Plan - Costs by Segments
• Figure 57, Announced Plan - Capital Costs and Budget Impact
• Figure 58, Requirements for Successful RFP Vendor
• Figure 59, Possible Consortiums
• Figure 60, Summary of Vendors
• Figure 61, SBC Impact of High-Speed Conversion

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