FTTx 2004: The Cost, Demand and Market Development of PONs, FTTP & Telco TV

• Who makes PON/FTTH/FTTP equipment?
• What are the key specifications of these products?
• What are the important technological issues to consider when evaluating PON equipment?
• What are the key issues in the ATM-PON vs. Ethernet-PON debate?
• What are the important demand drivers and suppressants in the PON/FTTH/FTTP market?
• What is the market opportunity for PON/FTTH/FTTP equipment?
• What is the market opportunity for services provided over a PON/FTTH/FTTP network?
• What do the economics of deploying a PON/FTTH/FTTP network look like?

• Equipment Vendors
• Anyone Considering a PON/FTTH/FTTP deployment (Telecom Carriers, Municipalities, Utility Companies, Real Estate Developers, etc.)
• Venture Capitalists/Investors
• Policy Analysts/Lobbyists

1.0 Executive Summary

1.1 Study Overview

1.1.1 Scope of Research

1.1.2 Methodology of Research

1.2 Summary of Findings

1.3 Key Conclusions

2.0 Study Overview

2.1 Introduction

2.1.1 Definition of FTTx Acronyms

2.1.2 Definition of VDSL

2.2 Scope of Research

2.3 Methodology of Research

3.0 Network Architecture Fundamentals

3.1 Network Topology Overview

3.1.1 Passive Optical Network (PON) Overview

3.1.1.1 Optical Line Termination

3.1.1.2 Passive Optical Splitter

3.1.1.3 Optical Network Termination

3.1.2 Advantages and Disadvantages of PONs

3.1.2.1 Advantages of PONs

3.1.2.2 Drawbacks of PONs

3.2 Competing PON Technology Analysis

3.2.1 ATM-PON (APON) Overview

3.2.1.1 APON Technology

3.2.1.2 APON Advocates

3.2.2 Ethernet PON (EPON) Overview

3.2.2.1 EPON Technology

3.2.2.2 EPON Advocates

3.2.3 APON and EPON Comparison

3.3 BPON/GPON Distinction

4.0 Market Development Considerations

4.1 Overview of FTTx Market

4.2 Demand Drivers

4.2.1 Plant Refurbishment

4.2.2 Falling Equipment Costs

4.2.3 Increase in Demand for High-Bandwidth Applications

4.2.3.1 High-Speed Data

4.2.3.2 Video

4.2.4 The Prospect of Increased Competition

4.3 Demand Suppressants

4.3.1 Costs Factors

4.3.2 Slow Growth in Demand for Certain Applications

4.3.3 Current Economic Conditions

4.4 Other Considerations

4.4.1 Location

4.4.2 Additional Cost Considerations

4.5 Advocacy Groups & Standards Bodies

4.5.1 Advocacy Groups

4.5.1.1 Full Service Access Networks (FSAN)

4.5.1.2 PON Forum

4.5.1.3 FTTH Council

4.5.1.4 Ethernet in the First Mile Alliance

4.5.2 Standards Bodies

4.5.2.1 ITU

4.5.2.2 IEEE

5.0 2003 Market Developments

5.1 The Rural Utilities Service (RUS) Broadband Loan Program

5.2 The Issue of the FCC's Triennial Review

5.3 The Federal Court Ruling on Cable Networks

5.4 The BellSouth-SBC-Verizon Joint FTTP Request for Proposals

5.5 Verizon and SBC Vendor Selection Announcements

5.6 The NTT Ethernet-PON Request for Proposals

5.7 The Emergence of Asia-Pacific as the Leading FTTx Market

6.0 Telco TV Developments

6.1 Introduction to Telco TV

6.2 Telco Video Market Opportunities

6.3 Telco TV Equipment

6.3.1 VideoTele.com/Tut Systems

6.3.2 Minerva Networks

6.3.3 AFC

7.0 Equipment Vendor Profiles

7.1 FTTP Vendors

7.1.1 AFC

7.1.2 Alcatel

7.1.3 AllOptic

7.1.4 Aurora Networks

7.1.5 FlexLight

7.1.6 Harmonic

7.1.7 Hitachi

7.1.8 Optical Solutions

7.1.9 PacketFront

7.1.10 Quantum Bridge

7.1.11 Salira

7.1.12 Wave7 Optics

7.1.13 World Wide Packets

7.2 VDSL Vendors

7.2.1 Motorola/Next Level Communications

7.2.2 Tut Systems

8.0 Deployment Activities

8.1 Past Trials

8.2 Current North American FTTH Deployment Activity

8.3 Current North American VDSL Deployment Activity

8.4 North American FTTx Deployment Potential Analysis

8.4.1 Small/Mid-Sized LECs (ILEC & CLEC)

8.4.2 RBOCs

8.4.3 MSOs/Cable Overbuilders

8.4.4 Utilities

8.4.5 Municipalities

8.4.6 Housing Developers

8.4.7 North American Analysis Summary

8.5 Asia-Pacific FTTx Deployment Activities

8.6 European FTTx Deployment Activities

9.0 U.S. FTTx Market Forecasts

9.1 Forecast Methodology and Assumptions

9.1.1 The Addressable Market

9.1.2 Diffusion Models

9.1.2.1 The Fisher-Pry Curve

9.1.2.2 The Bass Curve

9.2 Key Forecast Demand Drivers and Suppressants

9.3 FTTx Forecasts

9.3.1 U.S. Homes Equipped

9.3.1.1 Homes Equipped by Group

9.3.2 U.S. Equipment Revenue

9.3.3 U.S. Converged Services Revenue

9.3.3.1 Composition of Revenue Mix

10.0 FTTx Economics

10.1 Theoretical Framework: The Discounted Cash Flow Model

10.2 DCF Model Assumptions

10.3 Scenario A: RBOCs

10.3.1 DCF Analysis Results

10.3.2 Cost Breakdown

10.4 Scenario B: Mid-Size LECs Municipalities, Utilities

10.4.1 DCF Analysis Results

10.4.2 Cost Breakdown

10.5 Scenario C: Rural LECs, Municipalities, Utilities

10.5.1 DCF Analysis Results

10.5.2 Cost Breakdown

Chapter 11 - Report Conclusions

11.1 FTTH vs. VDSL Capital Expenditures

11.2 Equipment Revenues Constrained by RBOC Buying Power

11.3 Retaining Voice Customers Most Important to Telcos

11.4 Questionable NPVs Do Not Doom FTTx

11.5 RBOC's Remain Key to Widespread FTTH Deployment in North America

Appendix A: Alcatel FTTU Partner: General Bandwidth - Company Profile

Appendix B: Equipment Vendor Financial Data

LIST OF EXHIBITS

Chapter 1 Exhibits

Exhibit 1.1 Summary of Forecasts (All Units in Millions)

Exhibit 1.2 Equipment vs. Service Revenues (USD, Millions)

Exhibit 1.3 Total Percentage of U.S. Homes Passed by FTTx

Exhibit 1.4 Percentage of Homes Passed by Group

Chapter 2 Exhibit

Exhibit 2.1 Common FTTx Acronyms

Chapter 3 Exhibits

Exhibit 3.1 FTTx Network Hierarchy

Exhibit 3.2 PON Network Topology

Exhibit 3.3 Handicapping The Pros and Cons of PONs

Exhibit 3.4 APONs vs. EPONs

Chapter 4 Exhibits

Exhibit 4.1 FTTx Market Players

Exhibit 4.2 U.S. High-Speed Lines In Service (Millions)

Exhibit 4.3 CRG's Demand Driver Handicap Sheet

Exhibit 4.4 FSAN Members

Exhibit 4.5 PON Forum Members

Exhibit 4.6 FTTH Council Members

Exhibit 4.7 EMFA Members

Chapter 6 Exhibits

Exhibit 6.1 Telco TV Handicap Sheet

Exhibit 6.2 AFC's Telco Video Architecture

Chapter 7 Exhibits

Exhibit 7.1 AccessMAX 9 Capabilities Table

Exhibit 7.2 AFC's FiberDirect Topology

Exhibit 7.3 AFC's Customer Announcements

Exhibit 7.4 Alcatel's Customer Announcements

Exhibit 7.5 AllOptic's Customer Announcements

Exhibit 7.6 Optical Solutions' FiberPath 400 System Architecture

Exhibit 7.7 Optical Solutions' Customer Announcements

Exhibit 7.8 PacketFront's FTTP Customers Announcements

Exhibit 7.9 Quantum Bridge's FTTP Customer Announcements

Exhibit 7.10 The Salira 2000 Platform

Exhibit 7.11 Salira's FTTP Customer Announcements

Exhibit 7.12 Wave7 Optics' Customer Announcements

Exhibit 7.13 World Wide Packets' Customer FTTP Customer Announcements

Exhibit 7.14 MNLC's FTTP Customer Announcements

Chapter 8 Exhibits

Exhibit 8.1 FTTH Announcements 2002-2003

Exhibit 8.2 North American VDSL Announcements 2002-2003

Exhibit 8.3 Deployment Potential Analysis Summary

Chapter 9 Exhibits

Exhibit 9.1 Where to Expect Initial FTTx Installations

Exhibit 9.2 Standard S-Shaped Curve

Exhibit 9.3 Fisher-Pry Formula

Exhibit 9.4 Bass Diffusion Curve Formula

Exhibit 9.5 Summary of Forecasts (All Units in Millions)

Exhibit 9.6 U.S. Homes Passed by FTTx Equipment - Table (units in 000's)

Exhibit 9.7 U.S. Homes Passed by FTTx Equipment - Chart (units in 000's)

Exhibit 9.8 Homes Passed by Group - Table (000's)

Exhibit 9.9 Homes Passed by Group - Chart (000's)

Exhibit 9.10 Percentage of Homes Passed by Group
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