The business case for GPON in FTTP networks
GPON gives cable operators an edge in the consumer and enterprise markets
The case for gigabit passive optical networking (GPON) is a simple one: in order to remain competitive, service providers need more capacity to carry bandwidth-intensive applications; fiber is the ultimate carrier of bandwidth, and GPON is one of the most cost-effective ways for a provider to deploy fiber.
Although video-on-demand (VOD) is still a relatively new service in many U.S. households, it’s fast becoming popular: 36 percent of cable subscribers have used VOD, according to a summer 2007 survey of 1,300 households by Leichtman Research. That’s up from 10 percent three years ago.
Other recent studies have found even higher VOD usage among digital subscribers: In 2006, 54 percent used VOD, up from 35 percent in 2004, according to a February 2007 CTAM study. The CTAM study also found growing usage of and interest in high-definition (HD) VOD: Two-thirds of cable HD subscribers have used HD VOD, while 19 percent of digital cable customers said they’re likely to subscribe to HD in the next six months in order to get HD VOD.
Figure 1: Throughput requirements for a variety of services.
There’s also a booming market for linear HD programming. A July 2007 CTAM study found that the number of cable customers with an HD set nearly doubled over the previous year, to 29 percent.
What all of those numbers add up to is an opportunity for cable operators. But meeting growing consumer demand for HD and VOD requires a network capable of supporting bandwidth-intensive services. Figure 1 summarizes the throughput requirements for a variety of services.
That capacity is also key for targeting the enterprise services market, which is another major growth opportunity: Enterprise services drove about $1.2 billion in revenue in 2005 for North American cable operators, according to estimates by Ovum.
Cable operators have a variety of options for deploying the capacity necessary to support bandwidth-intensive consumer and enterprise video and data services. But one stands out: GPON, which provides downstream speeds of 2.5 Gbps and upstream speeds of 1.25 Gbps. That’s ample bandwidth for a variety of consumer and enterprise applications, ranging from HD VOD to HD videoconferencing. Deploying GPON from the beginning allows cable operators to upgrade their infrastructure to also accommodate new high bandwidth services that will come on stream in the future.
Throughput is particularly important for enabling triple-play services (voice, video and broadband). For example, a household with broadband service, two standard-definition (SD) TVs and one HDTV uses between 16 Mbps and 26 Mbps. Add in more demanding HD services, and the bandwidth requirements grow to between 59 Mbps and 85 Mbps per household.
Falcon Broadband of Colorado Springs is one example of how cable operators are using GPON to gain a competitive edge. Over the past year, satellite providers have marketed their HD line-ups to differentiate themselves versus cable and telco TV. By providing the bandwidth necessary to offer an extensive HD line-up, GPON is giving Falcon another way to attract and retain customers – not just against satellite, but also against other cable operators.
“The primary thing we’re using that bandwidth for at this time is HD,” says Mark Ewell, director of marketing and sales at Falcon Broadband, which currently offers about 35 HD channels in areas where it has deployed GPON. “We’ve dramatically expanded our HD offering. It certainly differentiates us from Comcast and Dish.”
GPON is the fastest commercially available member of the PON family of technologies, which also includes Broadband PON (BPON) and Ethernet PON (EPON). Table 1 summarizes the three technologies.
Besides ample bandwidth to support long-term growth in services and subscribers, GPON has several other key benefits.
GPON is a proven technology, with standards finalized in 2005. The first commercial, full-rate GPON deployment in North America launched in June 2006. This and subsequent real-world deployments have proven GPON’s ability to support mission-critical carrier and enterprise applications.
GPON easily supports a mix of voice, video and data services, so it’s an ideal foundation for triple-play services. In fact, the ITU created GPON with multiple services in mind. Triple-play services are increasingly important to cable operators because they increase average revenue per subscriber (ARPU) and because the more services customers get from a single operator, the less likely they are to churn.
GPON leverages fiber, including a variety of implementations, such as fiber-to-the-home (FTTH). Unlike copper-based technologies, GPON doesn’t suffer from decreasing performance over distance, so subscribers located within 20 km of the centrally located optical line terminal (OLT) enjoy the same performance as those located next door. The OLT typically receives data – including video – via a high-capacity metro ring or long-haul transport facility. So as long as the transport can be arranged, GPON can provide high-bandwidth services to smaller population centers that previously were too remote to meet the ROI requirements of large operators. GPON also leverages fiber’s cost, which is comparable to that of copper. However, fiber is more cost-effective over the long run because it has ample headroom to support future services, while copper will never have the same capacity as fiber.
GPON leverages PON’s low opex and capex, including low subscriber-equipment costs. PON subscriber equipment and network infrastructure also are passive, which translates into low maintenance and replacement costs because there aren’t active components to fail. All of these savings improve the cable operator’s ability to price its video and broadband services competitively yet profitably.
GPON is inherently secure, with wiretapping and other hacks nearly impossible. That security is a major asset when selling into the enterprise services market.
In addition to providing the most efficient transport of packet data such as Ethernet (see Table 1), GPON’s standard protocols inherently support synchronized TDM services such as voice and T1 lines, providing additional flexibility to accommodate the types of business services cable operators offer, including legacy TDM and evolving applications such as Ethernet connectivity to cellular base stations.
Table 1: PON comparison.
GPON supports higher infrastructure density than point-to-point fiber deployments, saving valuable space in headends and other facilities.
GPON equipment is available from a large and growing number of vendors, and it’s standards-based. This combination of vendor support and standardization gives cable operators peace-of-mind because going with GPON doesn’t mean being locked into a small vendor universe.
Telco providers are among a variety of other service provider types deploying GPON, so cable operators aren’t carrying this technology by themselves. That wide adoption also increases equipment volumes, which in turn drive down costs.
GPON supports both IPTV and RF video. That flexibility lets MSOs maximize their existing investments in headend equipment without impeding their migration to IPTV. Operators that deploy both IPTV and RF video typically use the RF video for basic channels to avoid the need for set-top boxes, and use IPTV for premium channels, VOD and other services requiring upstream communication to the headend. The GPON standard includes a 1310 nm upstream wavelength, which provides a superior mechanism for upstream communication compared to RF return schemes that require additional equipment at the headend and proprietary capabilities at the subscriber’s premises. The wavelength division multiplexing (WDM) technology used by GPON to accommodate simultaneous upstream and downstream communication paths eliminates crosstalk between the paths – a characteristic of fiber optic technology and an asset for RF video deployments.
These benefits are driving the GPON market, which is already experiencing strong growth despite being a relatively new technology. By 2011, the worldwide market for GPON optical network terminals (ONTs) and optical line terminals (OLTs) will be worth $4.7 billion, according to a May 2007 Light Reading Insider report. Part of the reason for this outlook is declining ONT costs, which the firm expects to drop below $200, and declining OLT costs, which it forecasts dropping below $100 per sub (see Figure 2).
Another reason for this outlook is that GPON is gaining traction worldwide, which translates into a global cost structure with enormous equipment volumes. Although most GPON deployments thus far have been in North America, Light Reading Insider estimates that by 2011, GPON will be used in about half of all fiber-connected households in Europe and about one-third of fiber-connected households in Asia/Pacific.
Some cable operators see GPON as critical for achieving the cost structure they need to compete against satellite and telco TV. For example, Falcon Broadband recently won the right to be the exclusive provider of choice for voice, video and broadband for residents of Banning Lewis Ranch, a Colorado community that will open early this year. Falcon beat out Comcast and Qwest partly because GPON allows it to price its triple-play services competitively.“The deal that we cut was for a significantly lower rate than what we would sell those services for to the general public,” Ewell says. “Without doing it this way [with GPON], there’s no way we would have been able to meet the price point that was necessary to win the business.”
GPON also has the flexibility to provide cable operators with a solid network foundation for at least the next several years. For example, WDM technology could be used to carry additional “layers” of GPON, thanks to the virtually unlimited capacity of the fiber optic medium. That design means that cable operators can continue to leverage GPON well into the next decade.
Figure 2: Excerpt: ‘Forecast global market value for GPON active electronics.’
GPON is an especially good fit for greenfield deployments. For example, a cable operator could deploy GPON in order to relieve bandwidth bottlenecks in targeted areas such as new residential and mixed-use developments without resorting to an overbuild. An overbuild is typically the secondary initiative for an operator, although with the increasing need for bandwidth beyond the capacity of the hybrid fiber/coax (HFC) plant, overbuilds in selected existing areas are often justified to relieve bottlenecks.
A variety of factors should be considered for GPON greenfield deployments. Two are market size and location, which relate to the full utilization of the system components. Location refers to the proximity to high-bandwidth trunking facilities such as a metro or regional fiber optic ring. A third consideration is the market’s demographic make-up, such as the percentage of the population that uses or are potential customers for services such as HD, VOD and broadband.
Other key considerations are:
• Is there a minimum number of housing units necessary to justify deploying GPON? The OLT typically accommodates between 1,000 and 2,000 subscribers, depending on the manufacturer and configuration. The rule-of-thumb is to have a pool of potential customers within the OLT’s 20 km range to fully utilize that OLT.
• Who does the wiring? Cable operators generally prefer to control the configuration of the outside plant cabling, especially as it ties into their existing cable plant. Inside-the-home cabling, known as “structured wiring,” is typically done by contractors – typically working for the building contractor or developer – that specialize in low-voltage wiring.
• What network options are there? Major FTTx architectures include GPON (2.4 Gbps downstream, 1.2 Gbps upstream), GEPON (1 Gbps symmetrical) and point-to-point active Ethernet (1 Gbps symmetrical). Headends can be RF, IP or a combination. GPON supports an overlay for RF video transport: a 1550 nm wavelength multiplexed onto the fiber with the 1490 nm downstream wavelength and the 1310 nm upstream wavelength.
Some operators that started with a BPON deployment use the RF video overlay because the video doesn’t count against the downstream bandwidth, which is reserved for data and voice. GPON provides enough bandwidth to carry all video, data and voice on the 1490 nm downstream wavelength. Because GPON can also accommodate the RF video overlay, some operators are deploying a combination of RF video for “basic cable” channels and using IP video for premium channels, VOD and pay-per-view.
Cable operators also should choose a vendor capable of delivering an end-to-end GPON solution from the source to the subscriber: not just equipment, but also project feasibility, technology assessment and billing. The operator may already provide some of these services, but having all elements in place at the beginning will reduce the network’s time to market.
The bottom line is that GPON provides the cost structure, flexibility, support for bandwidth-intensive services and room to grow that cable operators require for both the consumer and enterprise markets.