Category : News

Sales of GPON equipment, including both optical line terminals (OLTs) and optical networking terminals (ONTs), grew 10% sequentially and 34% year over year, according to a new report from the Dell’Oro Group. The market research firm this represents the tenth consecutive quarter in which GPON equipment revenue set a new record.

While the Chinese market once again represented the strongest growth engine, sales in other parts of the world picked up as well.

“Although more than half of PON revenue was driven by deployments in China, aggregate GPON revenue derived from projects outside of China increased sequentially for the first time since the second quarter of 2010, driving sequential growth in the quarter,” said Tam Dell’Oro, president of Dell’Oro.

“Russia was a large contributor to growth in EMEA, although an increasing number of smaller deployments in other countries in the region also contributed. Also driving growth in the second quarter were higher GPON shipments to the United States and Latin America,” Dell’Oro added.

The report shows that Huawei used its leadership position in China to top the GPON supplier roster. Alcatel-Lucent, Ericsson, and ZTE, followed, thanks in large part to their shipments into the Chinese market.

Market research firm Infonetics Research predicts that while GPON deployments should ramp nicely over the next several years in Europe, roll outs in India and the Middle East are already approaching maturity. Infonetics’ conclusions appear in its annual GPON Equipment in Key Markets vendor market share and forecast report, which focuses on India, the Middle East, Western Europe, and Eastern and Central Europe.

“Sales of 2.5 GPON equipment will pick up in Western Europe, where major incumbents, led by France Telecom and Deutsche Telekom, are pursuing targeted GPON FTTH rollouts, as well as in Central and Eastern Europe, where major operators in Russia (Beeline, Northwest Telecom, Sibirtelecom, Comstar, and NGTS), are beginning the transition from FTTB to GPON-based FTTH technologies this year,” notes Jeff Heynen, directing analyst for broadband access at Infonetics Research.

For these reasons, Heynen expects revenue from 2.5G GPON equipment to grow at a 16% compound annual growth rate (CAGR) from 2010 to 2015 in Western Europe, and at a 13% CAGR in Central and Eastern Europe.

Heynen is less bullish on GPON in India and the Middle East, however. "In India and the Middle East, GPON sales are actually expected to decline by 2015 because major operators there (namely BSNL in India and Etisalat in the United Arab Emirates) already took huge OLT and ONT shipments in 2009 and 2010 for large-scale GPON FTTH rollouts,” he explains. “Both operators expect to achieve their “homes passed” goals this year. Future rollouts will be far more limited in these regions as the focus shifts to subscriber acquisition.”

While carriers are only beginning to connect customers to their GPON networks, Infonetics forecasts subscribers to premium broadband services via 2.5G GPON technology will rise rapidly, totaling 8.5 million by 2015 in India, the Middle East, and Europe.

The report tracks 2.5 GPON and 10G GPON optical line terminals (OLTs) and optical network terminals (ONTs) used in fiber-to-the-business (FTTB)/multi-dwelling units (MxU) and fiber-to-the-home (FTTH) applications, including ONT gateways. While each of the key regions tracked in the report has its own 2.5 GPON revenue market share leader, only Huawei and Alcatel-Lucent have a strong showing across multiple regions, Infonetics reports.

As far as next-generation GPON technology is concerned, 10G GPON and asymmetrical 10G GPON (XG-PON1) will see only minimal trial deployment in late 2011 and early 2012 in Western Europe, and even later in the other regions, Infonetics predicts. This forecasts mirrors a separate report the market research firm issued this week which indicated that next-gen PON prices must drop before carriers will launch significant deployments (see “Infonetics: Next-gen FTTH costs must drop before carriers will deploy”).

Continuing strength in the demand for fiber to the home customer premises equipment (FTTH CPE) drove a trend-busting increase in the overall broadband CPE market during the first quarter of 2011. Market research firm Infonetics Research released the numbers earlier this week within its first quarter 2011 Broadband CPE and Subscribers: PON, FTTH, Cable, and DSL market forecast and vendor market share report.

The report tracks DSL, cable broadband, FTTH, and voice CPE, residential gateways, and broadband subscribers.

"Worldwide CPE unit shipments were up 3% in the first quarter, which is normally down after a strong fourth quarter when consumers upgrade CPE during the holidays. There was growth in DOCSIS 3.0 cable CPE, indicating cable companies are finally seeing growth in higher-end DOCSIS 3.0 subscriptions. FTTH CPE continues to grow, particularly in Asia Pacific and EMEA, driven by growth in Japan, China, and the Middle East," notes Jeff Heynen, directing analyst for broadband access at Infonetics Research.

Highlights of 1Q11 Infonetics reported include:

• Pace ranked first in overall broadband CPE revenue in 1Q11, beating out Huawei by just over 1 percentage point. Huawei remained the leader in total unit shipments, however.
• Year-on-year worldwide revenue grew for all categories, with DSL CPE up 12%, broadband cable CPE up 25%, and FTTH CPE up 46%.
• Quarter-over-quarter (1Q11 vs. 4Q10), worldwide revenue was up 26% for cable wideband gateways (following a 53% jump in 4Q10), up 57% for 1.25-Gbps and 2.5-Gbps FTTH EPON ONTs, and up 12% for VDSL IADs.

Despite broadband subscriber saturation in some markets in North America and Western Europe, the overall broadband CPE market is relatively strong due to healthy broadband subscriber growth in other regions and several transitions now occurring in each segment of the market. For example, Infonetics cited the transition away from bridged ONTs to integrated ONT residential gateways, designed typically for in-home FTTH deployments, as a growth driver within the FTTH CPE space.

For more on FTTH equipment and suppliers, visit the Lightwave Buyers Guide.

The FTTH Council asserts the Federal Communications Commission’s (FCC’s) study of residential broadband service performance underscores the superiority of fiber to the home (FTTH) networks to cable-based and DSL networks.

The FCC’s study, reported in the recently released Measuring Broadband America, found that, on average, FTTH services delivered 114 percent of advertised speeds, compared to 93 percent for cable and 82 percent for DSL, when comparing advertised download connection speeds of the various services, the FTTH Council points out. FTTH services also delivered 112 percent of advertised upload speeds, again outpacing cable and DSL services.

The FTTH Council asserts the Federal Communications Commission’s (FCC’s) study of residential broadband service performance underscores the superiority of fiber to the home (FTTH) networks to cable-based and DSL networks.

The study also states that when looking at peak period download speeds as compared to a 24-hour average, FTTH services delivered peak speeds around the clock. Conversely, DSL performance dropped off 5.5 percent during peak usage periods and cable-based services declined 7.3 percent.

The FTTH Council asserts the Federal Communications Commission’s (FCC’s) study of residential broadband service performance underscores the superiority of fiber to the home (FTTH) networks to cable-based and DSL networks.

Latency in FTTH networks proved lowest across all speed tiers as well.

The FTTH Council asserts the Federal Communications Commission’s (FCC’s) study of residential broadband service performance underscores the superiority of fiber to the home (FTTH) networks to cable-based and DSL networks.

The FCC study examined offerings from 13 broadband providers during March 2011. Thousands of broadband subscribers volunteered to participate in the study, during which the FCC measured their service offerings using automated, direct measurements of broadband performance.

“This FCC report, which is firmly grounded in the experience of broadband consumers across the country, provides further evidence of what we have been saying for some time — that FTTH networks are superior to other access technologies with regard to delivering fast broadband consistently and reliably,” said Dan O’Connell, president of the FTTH Council. “In the years ahead, only fiber to the home will be able to deliver the level of performance that will be needed for consumers to keep pace with emerging applications and services and the bandwidth they will require.”

Bell Aliant (Toronto: BA-UN.TO) may have seen a slight 1 percent dip in Q2 2011 revenues to CAD 693 million (USD 734 million), but strong growth in broadband and IPTV drove it to increase its full year revenue guidance.

Based on its Q2 results, Bell Aliant has raised its operating revenue guidance for 2011 to between CAD 2.72 billion (USD 2.86 billion) and CAD 2.78 billion (USD 2.93 billion), while retaining its previously set guidance for EBITDA, free cash flow and adjusted earnings per share.

As seen with other Canadian and U.S.-based telcos much of Bell Aliant's CAD 7 million (USD 7.3 million) losses were the result of declining local and long-distance voice subscribers.

"The growth rates of our Internet and TV revenues have increased while the rates of decline in our traditional voice and data services have slowed," said Karen Sheriff, president and chief executive officer, Bell Aliant in the earnings release. " Our significant investment in a world-class fibre-to-the-home network is contributing to this improvement and gives us confidence that we are on the right path to returning to overall revenue growth."

Here's a breakdown of key company metrics:

• Access Line Loss: During the quarter, Bell Aliant's local and long distance revenues declined CAD 13 million (USD 13.7 million) (4 percent) and CAD 3 million (USD 3.16 million) (2.7 percent), respectively, in Q2 versus Q2 2010 due to 5 percent lower Network Access Service (NAS) connections.
• Broadband Access: Similar to other recent quarters, broadband continues to be a big seller for Bell Aliant. As of the end of June, the telco had 855,000 broadband customers. However, Bell Aliant only added 4,000 new broadband subscribers in the quarter versus 8,000 in Q2 2010 due to a result of declining growth in legacy DSL services and cable competitors offering DOCSIS 3.0 services. One of the growth engines that did perform well in Q2 was its FibreOp Fiber to the Home (FTTH) service. During the quarter, Bell Aliant added 8,000 new subscribers, which gave it a total of 22,000 FTTH subscribers as of the end of June. A good number of the new FibreOP subscribers that were migrating from DSL and Fiber to the Node (FTTN) networks.
• Video Services: Like fiber-based broadband, IPTV continues to be a growth engine in Bell Aliant's consumer wireline portfolio. During the quarter, the service provider reported CAD 10 million (USD 10.5 million) in IPTV revenue. As of the end of June, Bell Aliant added 5,000 new IPTV customers bringing it 59,000 total IPTV customers.

Obviously, the challenge for Bell Aliant going forward will be maintaining its IPTV and FTTH momentum by adding new features and functionality options like its FibreOP 2.0 service for existing customers migrating to the new service and new customers.

Verizon's wireline business saw operating revenues of $10.2 billion, a decline of 0.3 percent compared with the year ago quarter but an improvement over a shortfall of 2.2 percent in first-quarter 2011 revenues compared to first-quarter 2010 earnings. Newly acquired Terremark Worldwide contributed $98 million in revenue, representing 100 basis points of wireline revenue growth, in second-quarter 2011.

Revenues for Verizon's FiOS consumer retail FTTH services generated approximately 57 percent of consumer wireline revenues in second-quarter 2011, compared with approximately 48 percent in second-quarter 2010. Consumer revenues overall grew 1.3 percent compared with second-quarter 2010. Consumer ARPU for wireline services was $92.44 in second-quarter 2011, up 9.4 percent compared with second-quarter 2010. ARPU for FiOS customers remained more than $146, Verizon stated.

Verizon added 189,000 net new FiOS Internet connections and 184,000 net new FiOS TV connections in second-quarter 2011. Verizon had a total of 4.5 million FiOS Internet and 3.8 million FiOS TV connections at the end of the quarter.

FiOS penetration stands at 30 percent or more for both services, Verizon asserted. FiOS Internet penetration was 34 percent at the end of second- quarter, while FiOS TV penetration was 30 percent. Verizon’s FiOS network passed 16.1 million premises at mid-year 2011, the company said.

Broadband connections totaled 8.6 million at the end of second-quarter 2011, a 3.3 percent year-over-year increase. FiOS Internet connections offset a decrease in DSL-based Internet connections, resulting in a net increase of 62,000 broadband connections from first-quarter 2011.

FTTx household penetration in Israel stands at less than 1%, despite the country being home to leading international vendors in passive optical network (PON) technologies, including ECI Telecom, Broadlight, and Passave (acquired by PMC-Sierra).

The situation could change rapidly as a result of government action following a simple question posed by Israel’s Minister of Communications Moshe Kahlon: with all of Israel's capabilities, why is the country not widely deploying FTTx? Kahlon's immediate solution was to approve a pilot FTTx project built by Israel Electric Corporation (IEC) and grant the utility a country-wide license (with financial partnership stipulations) to expand its network.

Bezeq, Israel's incumbent telco operator, will respond vigorously to this competitive threat. In our view, a partnership between IEC, Bezeq, and financial institutions would be the most efficient and sustainable way to bring FTTx to Israel, finally giving the developers of PON technologies a chance to taste the fruits of their labor on their home turf.

With more than 90% of its 7.7 million people living in urban areas, Israel’s population density fits well with PON's point-to-multipoint architecture. Israel's GDP is more than $25,000 (€17,644) per capita, suggesting an adequate level of household income. Also, Israelis are familiar with fixed broadband services, with combined 80% household penetration of DSL and cable.

In addition to the population and economic fit, world-class products from domestic companies and Israeli-based multinational subsidiaries can be used to expand FTTx networks in Israel. ECI can build the PON systems with PON MAC SoCs from Broadlight or PMC-Sierra.

Even with these positives, FTTx networks are expensive to build. But Israel has an advantage here too, as the majority of existing electricity and communications cabling infrastructure in the country is aerial, meaning there is no need for costly and disruptive trenching. And IEC does it one better with its existing fiber infrastructure, which exists today for internal use but could be deployed tomorrow for Israel's consumers.

IEC's approach was pursued by Japan's electric power companies ten years ago when Tokyo Electric (TEPCO), Chubu Electric, and Kansai Electric, among others, began to deploy FTTx networks. Over time, several sold their respective fiber networks to telco operators.

What attracts electricity companies to FTTx? These companies own the poles and rights-of-ways. Fiber-optic cable can reside alongside electricity cables without causing interference. Many electricity companies built fiber networks across their own electricity networks for internal use. With aerial-based infrastructure, the costs of pulling the fiber are not prohibitive. Customer relationships, call centers, and billing systems are in place already, although engineering and support staff must learn the ins and outs of communications services.

IEC received a license to build a fiber-based communications network throughout Israel. However, IEC is restricted to 49% ownership of this venture. The remaining 51% is to be owned by a financial institution or consortium thereof. The Israeli government will be issuing a tender in early August. According to the Ministry of Communications, more than 15 banks will participate in the financial tender.

Critics claim that the need for financial investors shows the lack a business case for nationwide FTTH. The Ministry of Communications counters that the size of the project, one of the largest ever in Israel, warrants the financial support of the country's largest banks.

Bezeq, the incumbent telco, claims to invest over $1 billion annually in network infrastructure and plans to deploy FTTH/FTTB to homes and buildings. We expect Bezeq to speed up its FTTx deployments as IEC expands its network from the initial pilot project in Northern Israel to the rest of the country. Wireless service providers have also expressed concerns about IEC's license.

Others suggest that a partnership should be formed where IEC provides the fiber infrastructure, Bezeq provides the services, and banks provide the funds. While multiple-party partnerships are often difficult to structure and manage, it is hard to believe that a country with fewer than eight million people can support two separate fiber networks.

Eventually though, the founders of Passave (now PMC-Sierra) and Broadlight may enjoy the wireline broadband speeds that their technology has enabled for millions of others around the globe.

Bell Aliant (Toronto: BA-UN.TO) is continuing its ongoing expansion of its FibreOP Fiber to the Home (FTTH) service by dedicating CAD $13 million (US $13.49 million) to bring the service to an additional 27,000 residential customers in the New Glasgow and Annapolis Valley areas.

This latest investment brings Bell Aliant’s total FibreOP investment in Nova Scotia to over CAD $83 million (US $83.6 million).

Beginning later this month, customers in New Glasgow, including the Trenton, Westville, Stellarton and Pictou areas, will be able to access the FibreOP service. Annapolis Valley residents that reside in Windsor, Wolfville, Kentville and New Minas areas will get the service beginning in the fall.

Bell Aliant’s latest deployment drive will complement the deployment it conducted in Halifax Regional Municipality in the Spryfield, Beechville, Timberlea and Lakeside communities. The service provider added that the remaining areas including Halifax, Dartmouth, Eastern Passage, Cole Harbour, Sackville, Hammonds Plains, Waverley, Timberlea, Bedford, St. Margaret’s Bay and Lake Echo will be completed by the end of the year.

In addition to expanding the reach of the FibreOP service, Bell Aliant has been providing its existing data and video customers a new incentive by automatically updating them to FibreOP 2.0 with no additional fees.

Given the large financial bet Bell Aliant is making in expanding its IPTV and FTTH network reach, the introduction of FibreOP 2.0 is a way the service provider can add incremental value and keep its customers happy as the novelty of FTTH eventually wears off.

Verizon (NYSE: VZ) is enhancing how users in its Pittsburgh and Tampa Bay area markets interact with their FiOS TV experience with a new version of its FiOS TV Interactive Media Guide (IMG).

IMG allows users to pull together content from broadcast TV, the Internet and users’ own personal media into one media-management system. Since the IMG was initially introduced in 2007, the IMB has become a tool that includes applications for social networking, Internet video, media streaming, account management and multi-screen/mobile viewing.

Based on customer feedback Verizon received in product development labs, field trials and social media forums, Verizon created over 25 new upgrades to FiOS TV IMG that customers in both the Pittsburgh area and the ILEC’s six-county Florida service area can now access.

Customers can access the IMG’s new features–including new DVR enhancements (DVR chaptering and Multi-hub DVR), personalization features (parental control and guide customization), and improved search capabilities–via FiOS TV remote control or through Verizon’s FiOS Mobile application. The FiOS mobile application enables users to use their smart phone (iPhone, iPod Touch, iPad or Android) into a remote control.

At a time when Verizon has scaled back its FiOS rollout plans, the service provider’s move to create an enhanced IMG is a sign it’s focusing adding more value to its FTTH-based product beyond just offering a faster bandwidth pipe.

QCOL, a western Pennsylvania-based Internet services and triple-play provider, will deploy MXK from FTTx network access systems provider Zhone Technologies Inc. (NASDAQ:ZHNE) as its primary Gigabit Passive Optical Network (GPON) access platform for a new fiber-to-the-home (FTTH) network it is building to deliver triple-play services to customers.

Zhone’s MXK system will equip QCOL to deliver affordable, reliable, high-speed Internet access, VoIP, and video services to more than 2,000 subscribers across Fayette County, Penn.; Garrett County, Md., and Preston County, W.V., beginning August 2011.

The system capabilities of Zhone’s MXK platform enable up to one gigabit (1GB) capacity in the home and the ability to support the extreme bandwidth demands generated by multiple high-definition television (HDTV) screens, high-definition digital video recorder (HD-DVR) content, and video streaming within the home. Its scalability and flexibility help future-proof the network for more advanced service rollout, while reducing recurring operating expenses (OPEX) and any adverse customer impact from rollout of these next-generation services, says a company representative.

“The residential and business customers we serve are demanding increasing amounts of bandwidth. We sought a solution to address not only current but future bandwidth requirements,” explains Brian Frazee and Doug Friend, owners of QCOL. “We selected Zhone for the impressive density offered by 8-port GPON cards, along with the MXK’s superior scale, effective network management capabilities, and system flexibility to support multiples services in the same chassis. We were extremely intrigued by the cost savings anticipated for us and our customers.”

With QCOL delivering radio-frequency (RF) video over fiber and the MXK’s ability to support the same via either Passive Optical Network (PON) or point-to-point Active Ethernet, the MXK was a fit for this project. QCOL is also deploying Zhone’s zNID Optical Network Terminals (ONTs) for the end points.