Ovum: 1Q FTTX growth dramatic; DSL not so much

Market research and analysis firm Ovum reports that next-generation access (NGA) network upgrades led to “dramatic” growth in the FTTX and cable modem termination system (CMTS) markets during the first quarter of 2011. The news wasn’t so good for makers of DSL equipment, Ovum says in its new market share report, Market Share Alert: 1Q11 FTTx, DSL, and CMTS.

Ovum says the number of PON optical line terminal (OLT) ports for fiber to the home (FTTH) and building (FTTB) applications reached 988,889 in the first quarter of 2011. This represented an increase of 35 percent from the fourth quarter of 2010 and 182 percent versus the same quarter a year ago. Asia-Pacific accounted for 93 percent of the total, which was good news for Huawei, ZTE, and FiberHome. The three Chinese PON equipment suppliers occupied the first three places for PON OLT port shipments in the quarter, Ovum says.

Shipments also jumped in the Europe, Middle East, and Africa region and in the South and Central America region to their highest levels ever,” Kamalini Ganguly, Ovum analyst and author of the new market report, added.

But DSL technology largely was left out of the upgrade activity. The market edged down 5 percent when compared to the last quarter of 2010. Ovum says it expected the decrease due to normal seasonal trends; it was consistent with the 4 percent sequential drop in the first quarter of 2010 and 2009. However, Ovum adds that DSL growth has slowed or turned negative in some countries, with DSL links replaced by FTTB or FTTH connections.

However, the news for DSL wasn’t all bad. Said Ganguly, “Despite the sequential drop in the first quarter of 2011, year-on-year shipments were higher in all regions, many supported by upgrades related to FTTN [fiber to the node] and FTTB rollouts. In fact, the first quarter of 2011 was another record quarter for VDSL2 shipments, which crested to 4.8 million ports.

According to Ovum’s market analysis, Alcatel-Lucent currently leads the VDSL/VDSL2 market with 42 percent market share, followed by Huawei with 22 percent and Ericsson with 8 percent.

Ovum's findings largely agreed with those of Infonetics Research, which released its 1Q11 figures last month (see Infonetics: 1Q11 PON sales jump while DSL plunges). Infonetics reported the total market space for all three technologies in the quarter was $1.96 billion worldwide.

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FTTH in APAC: adjust your expectations

The FTTH Asia Pacific Council recently held its sixth annual conference in Delhi, India. The theme of the conference was “Fiber to Bridge Socio-economic Divide.” While Asia-Pacific leads the world in FTTx subscribers, household penetration rates vary widely, from less than 0.01% in Bangladesh to 53% in South Korea. Bringing fiber to rural villages is challenging, but in many of Asia-Pacific’s countries, bringing fiber to urban areas is also difficult.

Successful deployments are requiring different approaches, whether network architecture, fiber ownership, business models, government support, financing, or all of the above. We need to adjust our expectations regarding subscriber growth, broadband applications, and network ownership.

First, we should not be lured into thinking that the rapid deployment of FTTx networks in Japan, Korea, and China can be replicated elsewhere. Japan has 20 million FTTx subscribers and reached this threshold in just over five years, while all of Western Europe had 2.9 million FTTx subscribers at year-end 2010. Japan, Korea, and China may become the exceptions rather than the norm.

We need to measure FTTx subscriber growth in the thousands and tens of thousands in remote villages and in the urban areas of India, Bangladesh, and Pakistan. While these numbers may not seem significant, the benefits of broadband to those involved are tremendous. According to the World Bank, a 10% growth in broadband services penetration is estimated to provide a 1.4% growth in GDP.

Second, we are used to hearing about triple-play services with an emphasis on bandwidth-consuming video. The applications driving FTTx to the village are livelihood-oriented, such as healthcare, education, agriculture, banking, and government. Even in selected urban areas, the goal is not video but rather consistent Internet connectivity.

For a farmer, access to information about the weather or crop diseases can save a season's plantings. On a smaller scale, access to crop-pricing information can help a farmer at harvest time. For a worried parent, a child’s illness can be diagnosed through e-medicine applications. Even in large villages where a nurse or primary physician may live, e-medicine supports access to specialists.

Third, we will see diverse FTTx network ownership and deployment models. To date, FTTx networks have been built and owned by telcos, such as Verizon and KT. Often, deployment plans are based on expected return on investment scenarios, leading to a focus on wealthier neighborhoods, for example.A frequent theme at this year’s conference was a shared or open network, whereby multiple service providers offer their respective services over the same network. The goal is to share the large capex associated with FTTx networks or to encourage faster and larger uptake of FTTx services, thereby enabling an acceptable financial return to the builder/owner of the network.

  • In Australia, the National Broadband Network (NBN Co) was established to provide a wholesale-only, open-access network with FTTP (fiber to the premises) for urban areas and wireless technologies for remote areas. NBNCo is slated to be funded by the national government, as attempts to secure private financing failed. The government hopes to be able to sell its stake in NBN Co eventually.
  • The "Fiber for Italy" project is a joint effort between several players, including Fastweb, Vodafone, and Wind.

Several start-ups that attended the conference are taking different approaches, for example:

  • Radius Infratel Private Ltd., based in New Delhi, is deploying the concept of an operator-neutral network, a network that can be used by multiple service providers but has a single, private-sector owner.
  • Fiber@Home in Bangladesh was granted a license to build a nationwide optical backbone. With financing by local investors, Fiber@Home’s neutral network is open to all access-network service operators.

The private network-ownership approach may avoid the bureaucracy of public ownership or the inherent issues from trying to cooperate with one’s competitors. However, it is much too early to assess the pros and cons of the business plans adopted by Radius and Fiber@Home.

The early lesson learned is there is no killer approach.Just as there is no killer application that guarantees a quick ROI for FTTx network builds, there is no easy and universal approach for bringing fiber to villages and even to some cities. We are going to see multiple approaches to network builds and network ownership. The common denominator is fiber's role in bridging the socioeconomic divide, whether in villages or cities, or both.

News from TelecomAsia.net

Verizon lets customers create customized FiOS bundles

Verizon (NYSE: VZ) has realized that in order to offer a more compelling reason to move away from cable to its Fiber to the Home (FTTH)-based FiOS service, they'll need to let customers choose how they want to structure their respective bundle.

Up until now, any customer that signed up for a FiOS bundle had a small amount of options for Internet speeds and the amount of TV channels assigned to specific FiOS bundles and price points.

Existing FiOS customers will now be allowed to build a custom bundle at an additional cost of $5 to $10 a month. Likewise, new customers will be able to get service discounts if they order a triple-play bundle online.

For consumers that crave higher data speeds, they can increase their speeds from 15/5 Mbps to a symmetric 25 Mbps tier for only $5 more a month ($104.99) or a symmetrical 35 Mbps data tier with 233 TV channels more than 50 in HD for an additional $10 a month ($109.99). Before this new offering was announced, customers that signed up for the 35 Mbps symmetric package would pay about $129.00 a month.

But if customer wants a triple-play package, Verizon's pricing continues to be competitive with cable offering 35 Mbps symmetrical data and 391 TV channels for $129.99 a month.

DT details fiber plans

Open access to existing infrastructure is essential in driving deployment of high-speed networks in Germany, a Deutsche Telekom board member states.

Niek Jan van Damme said fiber-to-the-home (FTTH) deployment in the country would happen faster if telcos are allowed to access existing infrastructure, including that of other industries, and through modern regulation that encourages investment.

“We…have to avoid a patchwork of local fiber-optic networks in Germany, which means the industry has to agree to mutual, open, network access,“ van Damme stated while revealing the telco’s fiber expansion plans this morning.

Deutsche Telekom plans to extend its FTTH network to 160,000 homes in ten major cities this year, and will back up the high-speed efforts by upgrading its current VDSL and DSL lines to handle 50 Mbps data rates, up from 16Mbps currently.

The telco also revealed that Cologne will be the first city to enjoy LTE services as it begins building networks in the 1800MHz and 2600MHz frequencies.

The combination of fixed and wireless technologies is necessary to offer “customers fast connections, high quality and attractive prices,” van Damme noted.

Home Internet May Get Even Faster in South Korea

SEOUL, South Korea — South Korea already claims the world’s fastest Internet connections — the fastest globally by far — but that is hardly good enough for the government here.
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Woohae Cho for the International Herald Tribune
Choi Gwang-gi is overseeing South Korea's plan to connect every home in the country to the Internet at one gigabit per second by the end of next year.
By the end of 2012, South Korea intends to connect every home in the country to the Internet at one gigabit per second. That would be a tenfold increase from the already blazing national standard and more than 200 times as fast as the average household setup in the United States.

A pilot gigabit project initiated by the government is under way, with 1,500 households in five South Korean cities wired. Each customer pays about 30,000 won a month, or less than $27.

“South Korean homes now have greater Internet access than we do,” President Obamasaid in his State of the Union address last month. Last week, Mr. Obama unveiled an $18.7 billion broadband spending program.

While Americans are clip-clopping along, trailing the Latvians and the Romanians in terms of Internet speed, the South Koreans are at a full gallop. Their average Internet connections are far faster than even No. 2 Hong Kong and No. 3 Japan, according to the Internet analyst Akamai Technologies.

Overseeing South Korea’s audacious expansion plan is Choi Gwang-gi, 28, a soft-spoken engineer. He hardly looks the part of a visionary or a revolutionary as he pads around his government-gray office in vinyl slippers.

But Mr. Choi has glimpsed the future — the way the Internet needs to behave for the next decade or so — and he is trying to help Korea get there. During an interview at his busy office in central Seoul, Mr. Choi sketched out — in pencil — a tidy little schematic of the government’s ambitious project.

“A lot of Koreans are early adopters,” Mr. Choi said, “and we thought we needed to be prepared for things like 3-D TV, Internet protocol TV, high-definition multimedia, gaming and videoconferencing, ultra-high-definition TV, cloud computing.”

Never mind that some of these devices and applications are still under development by engineers in Seoul, Tokyo and San Jose, Calif. For Mr. Choi, nothing seems outlandish, unthinkable or improbable anymore. And the government here intends to be ready with plenty of network speed when all the new ideas, games and gizmos come pouring out of the pipeline.

“The gigabit Internet is essential for the future, absolutely essential, and all the technologists will tell you this,” said Don Norman, co-founder of the Nielsen Norman Group, a leading technology consultancy in Fremont, Calif. “We’re all going to be doing cloud computing, for example, and that won’t work if you’re not always connected. Games. Videoconferencing. Video on demand. All this will require huge bandwidth, huge speed.”

The South Korean project is also meant to increase wireless broadband services tenfold.

Even as South Korea aims for greater, faster connectivity, Internet addiction is already a worrisome social issue here. Deprogramming camps have sprung up to help Net-addicted youngsters.

One South Korean couple, arrested last year, became so immersed in a role-playing game at an Internet cafe that their 3-month-old daughter starved to death — even as they fed and nurtured a virtual, online daughter named Anima.

But industry executives are plowing ahead.

“The name of the game is how fast you can get the content,” said Kiyung Nam, a spokesman for the Korean consumer electronics giant Samsung Electronics. “People want to download and enjoy their content on the go. But right now it’s not seamless. It’s not perfect.”

The idea of the gigabit Internet is not a new one, said Mr. Norman, the American consultant. But large-scale adoptions have not yet taken hold, especially outside Asia.

Hong Kong and Japan offer gigabit service. Australia has a plan in the works for 2018.Google is drafting pilot programs for part of the Stanford campus and other locales in the United States. And Chattanooga, Tenn., has started a citywide gigabit service, reportedly at a staggering $350 a month.

Any technical hurdles in upgrading the existing South Korean infrastructure are minimal, according to engineers and network managers. DSL lines — high-speed conventional telephone wires — will have to be replaced. But fiber-optic lines already widely in use are suitable for one-gigabit speeds.

South Korea, once poorer than Communist North Korea, now has the world’s 13th-largest economy. It recovered from the ravages of the Korean War by yoking its economy to heavy industries like cars, steel, shipbuilding and construction. But when labor costs began to rise, competing globally in those sectors got tougher, so “knowledge-based industries were the way forward,” Mr. Choi said.

South Koreans pay an average of $38 a month for connections of 100 megabits a second, according to the Organization for Economic Cooperation and Development. Americans pay an average of $46 for service that is molasses by comparison.

Mr. Choi declined to guess what private South Korean service providers might charge for the one-gigabit service. But he said it would be nowhere near the $70 a month charged for gigabit rates in Japan.

“I can’t imagine anyone in Korea paying that much,” he said. “No, no, that’s unthinkable.”

Mr. Choi’s gigabit program is just one of several Internet-related projects being coordinated by the government here over the next four years. Their overall cost is projected to be $24.6 billion, with the government expected to put up about $1 billion of that amount, according to the Korea Communications Commission.

Private South Korean firms, notably KT (the former Korea Telecom), SK Telecom and the cable provider CJ Hellovision, are the principal participants in the gigabit project. The government’s financial contribution in 2010, Mr. Choi said, would be just $4.5 million.

For now, most Korean consumers use their blessings of bandwidth largely for lightning Internet access and entertainment — multiplayer gaming, streaming Internet TV, fast video downloads and the like. Corporations are doing more high-definition videoconferencing, especially simultaneous sessions with multiple overseas clients, and technologists are eager to see what new businesses will be created or how existing businesses will be enhanced through the new gigabit capability.

One of the customers already connected to Mr. Choi’s pilot program is Moon Ki-soo, 42, an Internet consultant. He got a gigabit hookup about a year ago through CJ Hellovision, although because of the internal wiring of his apartment building his actual connection speed clocks in at 278 megabits a second.

But even that speed — about a quarter-gigabit — has him dazzled.

“It is so much more convenient to watch movies and drama shows now,” he said.

GPON FTTH deployment contract from Rochester Telephone goes to Zhone Technologies

Zhone Technologies, Inc. (NASDAQ: ZHNE) says that Rochester Telephone Company, Inc. (RTC), a voice, video, and data services provider in Rochester, IN, will deploy Zhone’s MXK intelligent Gigabit Passive Optical Network (GPON) equipment to enable triple-play services for local residences and small businesses with a fiber to the home (FTTH) infrastructure. 

After the completion of a two-month trial in February 2011, RTC will use Zhone’s MXK gear to deliver high speed Internet access, VoIP and video services to its customers via GPON FTTH.

“With over 6,500 access lines in our network today, we needed a fiber access vendor with superior scale and effective network management capabilities. We were also looking for a partner that could help us seamlessly upgrade our existing Ethernet Passive Optical Network (EPON) network,” noted Joe McCarter, president of RTC. “Zhone was the right choice for us not only for the scale they offer with the high density eight-port GPON Optical Line Termination (OLT) card, but also for the added optimal benefit of recurring savings realized with the Zhone EZ Touch Provisioning system.” 

Zhone also will supply its zNID GPON Optical Network Terminals (ONTs).

Movistar se prepara para realizar un despliegue masivo de fibra óptica

Entre 2009 y 2011 la operadora presidida por César Alierta abrió únicamente 18 centrales colectoras de FTTH, la mayoría en Barcelona, Madrid y Valencia. Este año Movistar quiere dar el empujón definitivo a la fibra óptica y se prepara para abrir más de 50 centrales, el objetivo es superar el millón de hogares en cobertura.

Despliegue de FTTH en 2011

 febrero, la operadora abrirá32 centrales nuevas, Bajadoz, Mérida, Burgos, Córdoba, León, Santiago, Málaga, Gijón, Valladolid.. son algunas de las ciudades donde próximamente llegarán las ofertas de 50 y 100 megas con fibra óptica hasta el hogar.  Hasta julio se abrirán otras 20 centrales más y el despliegue seguirá acelerando hasta que finalice el año.

Movistar se ha dado cuenta de que los operadores alternativos están empezando a crecer en zonas de acceso directo y por ese motivo el ex monopolio quiere preparar el terreno para liderar en los próximos años en ofertas de banda ancha ultrarrápida. Según fuentes del sector, la operadora ha adquirido material suficiente como para cablear más de un millón de hogares durante 2011.

Portfolio de ofertas

En los últimos días ha habido cambios en el portfolio de ofertas de fibra óptica. Lo primero que hizo Movistar fue eliminar la oferta de 6 megas dejando únicamente los 10 megas como modalidad de entrada en el FTTH. Además, esta semana ha lanzado comercialmente los 100 megas que estaban previstos para el pasado otoño. De este modo, los usuarios en cobertura pueden contratar, 10, 50 o 100 megas en función de sus necesidades y lógicamente de su bolsillo.

¿Qué harán los operadores alternativos? Todo apunto a que Ono y las compañías de cable locales son las únicas que podrán competir en el segmento de la velocidad ultrarrápida.

First Fibre-To-The-Home offering in Sub-Saharan Africa

Kenya’s Jamii Telecom to launch Sub-Saharan Africa’s first Fibre-To-The-Home offering

Jamii Telecom is breaking the mould by launching a GPON network that will deliver Fibre-To-The-Home for the first time in Sub-Saharan African. It plans to deliver a host of services on it including, VoIP, Internet, video and security applications. This will give the Kenyan market two players at the high-bandwidth end of the market: Jamii Telecom and Wananchi. On a recent trip Russell Southwood spoke to Jamii’s General Manager John Kamau  and Wananchi’s CEO Richard Bell about their respective ambitions.

Five years ago it would have been hard to imagine that there would be two high-bandwidth players vying for consumers attention in Kenya. You would have assumed that Telkom Kenya or Kenya Data Networks (KDN) would have been the natural players to emerge in this part of the market. But Telkom Kenya’s management from Orange is struggling with getting it right in the mobile market and KDN which seemed to have the wind in its sails, now seems becalmed.

Jamii Telecom has steadily built itself a set of fibre metronets and connecting pieces of national backbone. So why Fibre-To-The-Home (FTTH)? According to General Manager John Kamau:”We asked ourselves what is the next big application? We can’t go for more spectrum (to deliver wirelessly). The mobile operators already have an edge there. So we though a GPON network enabling FTTH would draw new excitement.”

The network will be able to deliver 2.4 Gbps downstream and 1.25 Gbps upstream. The residential or SME customer will get a CPE that has 5-6 ports, delivering video content, VoIP, Internet, and a Wi-Fi hot-spot (just for your own house or flat):”It will enable the user to have massive bandwidth of over 100 mbps. It will deliver Video On Demand and be able to power 3-4 TVs, offering HD delivery. It will offer things like plug-and-play VoIP, video conferencing and security cameras. The network can provide an ecosystem for IPTV and this presents a considerably opportunity. Also you can do things like remote teleworking.” Many of these services and applications are things that WiMAX simply cannot support.

Jamii Telecom’s stated aim is to “bulletproof the future” and it has been doing trials for 18 months with 200 households, all in Nairobi:”These people are so happy with the service that they don’t want to be cut off as we put up the new network.” The vendor for the project is Chinese-owned ZTE. The aim is to invest US$15 million in stages, targeting 100,000 households and to have the service ready to launch in Q2, 2011. It will cost between US$100-150 to connect each household. Rates will be benchmarked against prevailing rates which are currently between US$5,000-7,000 for between 512 kbps to 1 mbps:”The most expensive component of building the network is the civil works.”

It sees itself as a “transport company” carrying other people’s signals, rather than a vertically integrated company offering content as well as networks. It is in discussion with DStv and others on the content side and has a relationship with Safaricom to deliver data that is causing some nervousness in the market. But Kamau says:”Our philosophy is open access. It’s a whole new market and it needs a new philosophy. It’s a mass market that needs a head-end, a call centre and a web portal to deliver.”

In the other corner of this particular ring is Wananchi led by long-time industry veteran Richard Bell. It has rolled out an HFC cable network which will has already passed 45,000 households in Nairobi and the this figure will rise to 100,000 in three years time. The ultimate target is a million households by 2015. According to Bell:”The HFC network can deliver 250 channels, 50 in HD and 120 mbps into every household.”

In technology terms, the strategy also has two other prongs to reach those beyond the cable network: WiMAX for voice and data and DTH satellite for television:”Half our channels will be in HD and we’re enhancing HD on our satellite platform.”

Wananchi’s strategy differs from Jamii in that it sees content as the cornerstone for its success and has its own content division:”We will be offering 10 new channels for general African entertainment, documentary and sports. These will be launched between September and December of this year. We’re offering the first multi-channel African content since M-Net. Our strategy is around localizing content and we have a platform to produce our own content and it won’t be copied in a hurry. So our mission is both to find and make rich local content”.

“We’ve made a decision not to go after premium sports rights as we believe the market will always want alternatives. We’re going to go out of our way to be strong in the family and childrens’ space. South Africa’s Top TV is making significant inroads into that market and Nigeria’s HiTV is still getting subs on a different positioning. Women are the decision-makers and the education of children is the biggest draw.”

The Programming Group is headed up by Hannelei Bekker, a South African who formerly worked for Telkom Media and the Retail Group is headed by Peter Reinertz who used to be at Orange Kenya:”Currently we’re doing double play (voice and Internet) and triple play (adding television) will come on stream in Q3 this year.” It also plans to roll out a similar networks in Dar es Salaam and Kampala. So far it has invested US$120 million:”It’s an infrastructure business with a need for continuous additional investment.”

It is a sign of how fast the market is changing that two seasoned independents have seized the initiative by investing in the high bandwidth space.

FTTH in Southern African << Comment and Vodacom

Source:  Balancingact-Africa

Alcatel-Lucent unveils XG-PON1 version of ISAM for 10G GPON apps

By Stephen Hardy — Alcatel-Lucent (Euronext Paris and NYSE: ALU) announced last week that it plans to add XG-PON1capabilities to its Intelligent Services Access Manager (ISAM) IP access platform. XG-PON1, the first version of 10G GPONapproved by FSAN, supports 10 Gbps downstream and 2.5 Gbps upstream.

According to Stefaan Vanhastel, marketing director, wireline access at Alcatel-Lucent, the company plans to provide a four-port XG-PON1 line card for use in Alcatel-Lucent’s existing ISAM platforms within the ETSI market, plus release new platforms with expanded 2×100-Gbps capacity per slot that will be marketed globally. The new technology will be generally available early in 2012. However, Vanhastel expects limited deployments by what he called “select customers” by the end of this year.

Vanhastel says that XG-PON1 10G GPON will see a variety of applications, including mobile backhaul, DSLAM backhaul, and fiber to the building (FTTB). However, the greatest interest in the technology focuses on expanding split ratios, Vanhastel remarks.

Alcatel-Lucent has already launched carrier trials of XG-PON2, which offers symmetrical 10-Gbps capabilities in both the upstream and downstream directions (see “Portugal Telecom, Alcatel-Lucent to trial symmetrical 10G GPON” and“Verizon field trials XG-PON2 from Alcatel-Lucent”). Vanhastel would not say when Alcatel-Lucent will offer this technology commercially, particularly since FSAN has not yet ratified the standard.

Partnerships key to FT's fiber plans

France Telecom will seek partnerships to finance fiber rollout in the market, the first detailed breakdown of its plans reveal.

The incumbent stated cooperation with other potential fiber operators and co-investment deals will be major elements in achieving ambitious goals for fiber coverage in the country.

It is investing €2 million to deploy fiber to ten million homes by 2015, and aims to pass 15 million homes by 2020, the plans show.

The French government asked the carrier to supply a detailed breakdown of its plans as part of its program to deploy very high-speed broadband in the country.

In response, the telco revealed it will deploy fiber in all large and medium-sized towns and cities by 2015, with 15 cities already covered.

However rural areas will have to make do with interim technologies including fiber to the curb or satellite, as France Telecom said plans for full fiber would depend on “application of the regulatory framework outside very dense areas,” – an apparent swipe at ARCEP rules covering shared networks.

Chief Stéphane Richard said the fiber plans were ambitious, but noted they would help the carrier consolidate its position in its domestic market, and maximize the “growth potential that this network can offer for the years to come.”

The telco is currently pursuing a strategy of aggregating and distributing content, recently striking teaming with broadcaster Canal+ and acquiring online video firmDailymotion.