FTTP: The New Standard and How It's Changing Already

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-premises (FTTP). Since then, FTTP has become the "gold standard" in local access. Verizon is installing FTTP BPONs at a rate of 3,000,000 per year. It appears other major telcos are ready to jump on this bandwagon, and many smaller telcos are installing similar access architectures across the country. AT&T is installing FTTN (and some FTTP) at the rate of about 2,000,000 per year with a speed-up promised.

In the midst of all this success, we are about to see some major changes! The architecture is going to change; the players are going to change (more will be joining); and the rate of installation will increase! Why do we face change in this very successful program? What is the new architecture, and why is it being selected? What are the other major RBOCs going to do? This report will address these questions.

We have now been producing annual reports on FTTP since before the program was actually originated. This is the most comprehensive of those reports, and it has the most useful direct forecast information ever presented on FTTP. This latest incarnation of our efforts to keep our clients completely up-to-date on FTTP will focus on the following:

• The substantial progress to date for FTTP
• The changes we see coming for FTTP from new organizational structures
• Changes we see coming for the architecture
• Our forecasts for the future, including for RBOCs not now involved

Table of Contents

Table of Figures

The Lightwave Network Series of Reports

Introduction

This Report

Background

Market Competitive Analysis

Pre-Merger Competition

RBOCs vs. the CLECs (IXCs)

The RBOC Counterattack - Long Distance

Post Merger Competition

RBOC Purchase of IXCs

RBOCs vs. Cable Companies

Cable Companies vs. Satellite Companies

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

The Need for Capacity

How Much Bandwidth Is Enough?

Basis for Estimating Needs

Access Architecture

Various Approaches for Fiber-based Access Architecture

Fiber to the “X”

xDSL Versions

Design Details for Current Plans

Fiber to the Neighborhood (FTTN)

AT & T‘s Fiber to the Node (FTTN)

BellSouth’s Fiber to the Curb (FTTC)

The RFP - PONs Will Set Us Free

What Are PONs?

The PON Design

Status of PON

Advantage and Disadvantages of PON

Types of PONs

BPON

EPON

GPON

The PON in the First RFP

GPONs

Architectures to Meet the Needs

Approaches to Video Delivery

Broadcast

IPTV

IPTV Architecture

IPTV Global Architecture

Super Hub Office

Video Hub Office

Serving Offices

IPTV Distribution and Access Architecture

IPTV Channel Selection

RBOC Plans

Verizon Plan

Verizon - Physical Description

Verizon Vendors

Verizon - Size of Rollout

Verizon - Services

AT&T Plan

AT&T - Physical Description

AT&T Vendors

AT&T - Size of Rollout

AT&T - Lightspeed Services

Video

Internet

Voice

AT&T U-verse Video Services

High-Speed Access U-verse Services

BellSouth Plan

BellSouth - Physical Description

Pre-Merger

Post-Merger

Qwest Plan

FTTP

Other Architectures

Future Plans

Comparing the Plans of the RBOCs

Operations Savings Estimates

Summary of Announced Plans

Verizon

AT&T

Bell South

Qwest

Summary information on the Announced Plans

Announced Plans - Quantitative Analysis

Announced Plans - Size

Announced Plans - Costs

Forecast for FTTP

Forecasts for Deployment

AT&T

Verizon

BellSouth

Qwest

Deployment Forecast Summary

AT&T

Verizon

BellSouth

Qwest

Forecast size of Deployments

Technology Forecast

Forecast Technologies by Type

Forecast PONs - GPON vs. BPONs

Forecast Costs

Vendors of the Light Sword

Requirements for a Successful Vendor

Possible Consortiums

Selected Vendors

Vendors of GPONS

Vendors Listing

Summary of Vendors

Detailed Listing of Vendors

ACTERNA

Adtran

Advanced Fibre Communications Inc. (AFCI) (Now Tellabs)

Alcatel

Alloptic Inc

Amino Technologies plc

AOC Technologies

Avanex Corporation

Broadlight

Calix

Cisco

Corrigent

Entrisphere, Inc.

Ericsson

Fiberxon

Finisar Corporation

FlexLight Networks

Fujitsu

Genone3 Technologies, Inc.

HUMAX USA Inc.

iamba Networks

JDS Uniphase

Kreatel Communications AB

LightComm Technology

Lucent/Alcatel

Marconi

Microsoft

Motorola

NeoPhotonics

Nortel

OFS

O-Net Communications Ltd

Oplink Communications, Inc.

Optiviva Inc.

Optical Solutions

Osaki Electric Co., Ltd.

Paceon (Mitsubishi)

Passav

Quantum Bridge Communications

Salira Optical Network Systems

Scientific-Atlanta

Siemens

Tandberg, Ltd.

Tellabs

Terawave

Tut Systems

Vinci Systems, Inc.

Wave7 Optics

Worldwide Packets, Inc

Zhone Technologies

Table of Figures

Figure 1, Market Matrix - Pre-Mergers

Figure 2, RBOCs vs. CLECs (IXCs)

Figure 3, RBOCs in Long Distance

Figure 4, Revised Competitive Structure Due to IXC Purchases

Figure 5, RBOCs Subsume IXCs and CLECs

Figure 6, RBOCs vs. Cable Companies

Figure 7, High Speed Forecast

Figure 8, Verizon H-S Access Lines - By Quarter

Figure 9, Adoption Rates of PCs and High-Speed Access

Figure 10, Cable Companies vs. Satellite Companies

Figure 11, Summary of Competitive Position

Figure 12, Five Reasons for ‘Why FTTP Now?’

Figure 13, FTTP Schedule

Figure 14, Bandwidth Needs - Current Compression Technology

Figure 15, Usage Forecast Calculation Details

Figure 16, Fiber to the 'X' Varieties

Figure 17, Chart of Various xDSL Technologies

Figure 18, Fiber to the Neighborhood

Figure 19, Fiber to the Node

Figure 20, Fiber to the Curb

Figure 21, PON Basic Arrangement

Figure 22, RFP PON - Central Office Portion

Figure 23, RFP PON - Outside Plant Portion

Figure 24, RFP PON Service Assignments

Figure 25, BPON/GPON Comparison

Figure 26, Typical GPON

Figure 27, Bandwidth Needs vs. Capabilities

Figure 28, Broadcast TV on BPONs

Figure 29, Broadcast TV

Figure 30, IPTV General Architecture

Figure 31, IPTV Global Architecture

Figure 32, IPTV Access Architecture

Figure 33, FTTP Architecture for IPTV

Figure 34, IPTV Hub Office Architecture

Figure 35, IPTV Channel Selection

Figure 36, Map of Verizon FTTP Exchanges

Figure 37, Verizon FIOS Offices

Figure 38, Verizon Services

Figure 39, AT & T U-verse Video Services

Figure 40, North Texas U-verse Service Offering

Figure 41, AT&T U-verse High-speed Access Services

Figure 42, Announced Plans Summary Chart

Figure 43, Announced Plans - Annual HPs

Figure 44, Announced Plans - HPs Cumulative Passed vs. Served

Figure 45, Announced Plan - Comparison to H-S Accesses

Figure 46, Severed Customer Cost Assumptions

Figure 47, Cost per Unserved (but passed) House

Figure 48, Assumed Cost for FTTN and FTTC

Figure 49, Announced Plan - Costs by Segments

Figure 50, Cumulative Costs - Announced Plans

Figure 51, Segment Costs Including Video

Figure 52, Announced Plan - Capital Costs and Budget Impact

Figure 53, Forecast Homes Passed Cumulative - All Technologies

Figure 54, Forecast Homes Passed Annually - By Company - All Technologies

Figure 55, FTTX vs. H-S Accesses vs. US Households

Figure 56, Technology Type Cumulative - Forecast

Figure 57, Forecast Technologies - Homes Passed - Annual

Figure 58, Forecast Homes Passed - PONs vs. Other Technologies

Figure 59, Total PONS Forecast - RBOCs - Cumulative

Figure 60, Moving from BPONs to GPONs

Figure 61, Forecast BPONs vs. GPONs by Year

Figure 62, Verizon PON Forecast

Figure 63, AT&T PON Forecast

Figure 64, Severed Customer Cost Assumptions

Figure 65, Cost per Unserved (but passed) House

Figure 66, Assumed Cost for FTTN and FTTC

Figure 67, Forecast FTTP Costs by Plant Segment

Figure 68, Forecast Plan Costs by Architecture

Figure 69, Video Costs as Related to Total Plan

Figure 70, Forecast Cumulative Cost and Annual Budget Impact

Figure 71, Requirements for Successful RFP Vendor

Figure 72, Possible Consortiums

Figure 73, Originally Selected Vendors

Figure 74, Newly Selected Vendors

Figure 75, GPON Selected Vendors

Figure 76, Summary of Vendors

Appendix (Added August 30, 2007)

Figure 1, Current Plans - Homes Passed -Cumulative

Figure 2, IGI Forecast for Homes Passed

Figure 3, Penetration Rates Forecast Vs. Plan

Figure 4, Forecast - Homes Served - Annual Additions

Figure 5, Forecast Homes Served - Cumulative

Figure 6, Forecast Homes Passed to Served

Figure 7, Forecast of Penetration Rates

Figure 8, Currently Planned PONs

Figure 9, Forecast for PON Implementation

Figure 10, Forecast Access Networks By Architecture

Figure 11, Chart of Equipment Requirements - BPONS - Plan

Figure 12, Chart of Equipment Requirements - GPONs - Plan

Figure 13, Chart of Equipment Requirements - all PONs - Plan

Figure 14, Chart of Equipment Requirements - BPONs - Forecast

Figure 15, Chart of Equipment Requirements - GPONs - Forecast

Figure 16, Chart of Equipment Requirements - All PONs - Forecast

Figure 17, Fibers Needed Current Plans

Figure 18, Forecast Fiber Used By Technology

Figure 19, Comparison of Plan vs. Forecast for Fiber Strand Requirements