FTTP: Still the Big News in 2006: Industry Report

FTTP: Still the Big News in 2006

Product Type: Market Research Report
Published by: Information Gatekeepers Inc
Published: August 2006
Product Code: R403-89

Description

This 2006 incarnation of the FTTP Report will focus on the coming change to a new delivery mechanism based on GPONs. Verizon has just announced the successful vendors from its analysis of a GPON RFP, and the other RBOCs are watching closely. The other major change is the merger of AT&T and BellSouth. Shortly there will be only two major RBOCs - Verizon and AT&T.

The RBOCs, all four to greater or lesser extents, are now in the process of rolling out FTTP. Verizon has a monumental effort underway, and the others are in various stages (lab tests, minor deployments or preparing massive rollouts) of deployment. The RBOCs are also on the verge of actually moving into the video business in a massive way. At least two of the four RBOCs are expected to be in the residential TV delivery business before the end of 2006. Several relatively new technologies will be deployed in their entries into that business, and the RBOCs will use just about every imaginable combination of those technologies to achieve their objectives. This report covers all details of these activities.

On May 29, 2003, the three largest RBOCs (BellSouth, AT&T, 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. That report (and its subsequent update in 2004) and our latest, previous FTTP report, “FTTP - Going Strong in 2005,” turned out to be very accurate. However, now there is enough new information emerging to justify an entirely new report on the subject.

In 2003, the primary FTTP event (and the main subject of our first report) was that three RBOCs had actually agreed on a direction, and issued an RFP. In 2004, the main story was the technology and the fact that the RBOCs (at least Verizon) were serious about this program and had begun deployment. In 2005, some of the previous story lines were important, but the main story was that the RBOCs (at least Verizon) are going into residential video delivery in a big way. After so much testing, learning, false starts and failures, the RBOCs are really committing to a massive effort to compete on a network basis in residential video delivery. For those who have been in the industry for a time, memories go back to 1985-7 and Cerritos, CA and Orlando, and other early video trials. One wonders if enough has been learned to be successful in this very difficult business. The 2005 version of our FTTP Report highlighted the video effort of the RBOCs as well as giving a complete update on FTTP.

In other times, the announcement of the FTTP RFP (and the subsequent RFP for GPONs) 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. Then in late 2005 the RBOCs issued a RPF for GPON approaches to FTTP. In mid-2006 Verizon announced awards under that RFP.

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 $1,500 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.

This report will consider the issues of the background competitive landscape - especially now that the RBOCs have swallowed up the two largest IXCs (and CLECs) ; the details of the RBOC PON (and the coming GPONs); details of the various RBOC access architectures, and how video fits into these architectures; details of the various options for deploying video - FTTX, broadcast video and IPTV; the current deployment scenarios; an analysis of the economic impact (capital and on the overall network) of that deployment; the specific plans of each of the RBOCs; vendors of the equipment and software; and details of the video plans. This update will add the information on the selected vendors, as well as illustrating the impacts of the so-far identified deployment plans.

Table of Contents

INTRODUCTION
THE COMPETITIVE LANDSCAPE - THREATS IN EVERY DIRECTION: RBOCs vs. the CLECs (IXCs); RBOC Purchase of IXCs; RBOCs vs. Cable Companies; Cable Companies vs. Satellite Companies
THE RFP - PONS WILL SET US FREE: What Are PONs?; GPONs; Other Approaches for Access Architecture; Fiber to the “X”; xDSL Versions; Design Details for Current Plans
APPROACHES TO VIDEO DELIVERY: Broadcast; IPTV
RBOCS’ FTTP PLAN - THE LIGHTWAVE IS BACK!: FTTP as the Light Sword of the RBOCs; Comments on Triennial Review Results; Original Schedule; Differences of the RBOCs
RBOC PLANS: Verizon Plan; AT&T Plan; BellSouth Plan; Qwest Plan; Comparing the Plans of the RBOCs; Announced Implementations
ANALYSIS OF ANNOUNCED PLANS: Verizon; AT&T; Bell South; Qwest; Announced Plans - Quantitative Analysis
VENDORS OF THE LIGHT SWORD: Requirements for a Successful Vendor; Possible Consortiums; Selected Vendors; Vendors Listing; Detailed Listing of Vendors
APPENDIX I - DEPLOYMENT SCENARIOS: Deployment Scenarios (Cases); Case Development; Case I - The Most Ambitious; Case II - An Intermediate Plan; Case III - The 3% Solution; Case IV - The Smallest Plan - Greenfield Only; Summary of Four Scenarios; General Summary Comments about the Cases
Table of Figures: Figure 1, Market Matrix; Figure 2, Revised Competitive Structure Due to IXC Purchases; Figure 3, RBOCs vs. CLECs (IXCs); Figure 4, RBOCs in Long Distance; Figure 5, RBOCs Subsume IXCs and CLECs; Figure 6, RBOCs vs. Cable Companies; Figure 7, High Speed Forecast; Figure 8, Adoption Rates of PCs and High-Speed Access; Figure 9, Cable Companies vs. Satellite Companies; Figure 10, PON Basic Arrangement; Figure 11, RFP PON - Central Office Portion; Figure 12, RFP PON - Outside Plant Portion; Figure 13, RFP PON Service Assignments; Figure 14, BPON/GPON Comparison; Figure 15, Typical GPON; Figure 16, Bandwidth Needs; Figure 17, Fiber to the 'X' Varieties; Figure 18, Chart of Various xDSL Technologies; Figure 19, Fiber to the Neighborhood; Figure 20, Fiber to the Node; Figure 21, Fiber to the Curb; Figure 22, Broadcast TV on BPONs; Figure 23, Broadcast TV; Figure 24, IPTV General Architecture; Figure 25, IPTV Global Architecture; Figure 26, IPTV Access Architecture; Figure 27, FTTP Architecture for IPTV; Figure 28, IPTV Hub Office Architecture; Figure 29, IPTV Channel Selection; Figure 30, Summary of Competitive Position; Figure 31, Five Reasons for ‘Why FTTP Now?’; Figure 32, FTTP Schedule; Figure 33, Map of Verizon FTTP Exchanges 2004-2005; Figure 34, Verizon FIOS Offices Through 2005; Figure 35, Verizon Services; Figure 36, AT & T U-verse Video Services; Figure 37, AT&T U-verse High-speed Access Services; Figure 38, Announced Plans - Annual HPs and Penetration; Figure 39, Announced Plans - HPs Cumulative Passed vs. Served; Figure 40, Announced Plan - Comparison to H-S Accesses; Figure 41, Announced Plan - Costs by Segments; Figure 42, Segment Costs Including Video; Figure 43, Announced Plan - Capital Costs and Budget Impact; Figure 44, Requirements for Successful RFP Vendor; Figure 45, Possible Consortiums; Figure 46, Originally Selected Vendors; Figure 47, Newly Selected Vendors; Figure 48, Summary of Vendors; Figure 49, Deployment Scenarios - Four Cases; Figure 50, Parameters by Case; Figure 51, U.S. Census - Households; Figure 52, Assumed Take Rates; Figure 53, High Speed Access Average Busy Hour Throughput, and FTTP Multiplier; Figure 54, Percent Aerial Distribution; Figure 55, Average Capital Cost per Home Served; Figure 56, Cost per Home Passed but Not Served; Figure 57, Case I - Annual Homes Passed and Penetration; Figure 58, Case I - Homes Passed Cumulative; Figure 59, Case I - Comparison to High-Speed Accesses; Figure 60, Case I - Costs by Segment; Figure 61, Case I - Capital Costs and Budget Impact; Figure 62, Case I - Comparisons of Traffic FTTP and High-Speed Access; Figure 63, Case I - Total Network Traffic; Figure 64, Case II - Annual Homes Passed and Penetration; Figure 65, Case II - Homes Passed Cumulative; Figure 66, Case II - Comparison to High-Speed Accesses; Figure 67, Case II - Costs by Segment; Figure 68, Case II - Capital Costs and Budget Impact; Figure 69, Case II - Comparisons of Traffic FTTP and High-Speed Access; Figure 70, Case II - Total Network Traffic; Figure 71, Case III - Annual Homes Passed and Penetration; Figure 72, Case III - Homes Passed Cumulative; Figure 73, Case III - Comparison to High-Speed Accesses; Figure 74, Case III - Costs by Segment; Figure 75, Case III - Capital Costs and Budget Impact; Figure 76, Case III - Comparisons of Traffic FTTP and High-Speed Access; Figure 77, Case III - Total Network Traffic; Figure 78, Case IV - Annual Homes Passed and Penetration; Figure 79, Case IV - Homes Passed Cumulative; Figure 80, Case IV - Comparison to High-Speed Accesses; Figure 81, Case IV - Costs by Segment; Figure 82, Case IV - Capital Costs and Budget Impact; Figure 83, Case IV- Comparisons of Traffic FTTP and High-Speed Access; Figure 84, Case IV - Total Network Traffic; Figure 85, Comparison of Scenarios

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