PON Coming into Its Own As SPs Compete for SMBs

Paul Whittlesey, director, product management, access network solutions, Aurora Networks

Paul Whittlesey, director, product management, access network solutions, Aurora Networks

December 7, 2010 – Fiber access is at last coming into its own as a major factor in service providers’ competition for business customers, thanks in part to the emergence of EPON as a force in cable as well as to cost-reducing access platform advances on the part of traditional telco suppliers.

Developments in cable are especially notable as MSOs prepare to respond to advances that are driving costs out of the use of passive optical network technology in conjunction with existing HFC infrastructure. Strategists say these steps have freed operators to be more aggressive in using fiber rather than coax to reach SMBs (small-to-medium businesses) just as bandwidth demand in the business sector is threatening to outstrip the usefulness of HFC as a conduit for business services.

One such development is CableLabs’ plans to adopt specifications promoted by Time Warner Cable, Comcast and Bright House Networks that will enable provisioning of Ethernet over PON through use of DOCSIS back-office processes. The soon-to-be-released DPoE (DOCSIS Provisioning of EPON) specifications provide “a much higher level of service velocity and scaling of commercial services over IEEE standards-based EPON while making an efficient use of outside plant fiber assets,” says Shamim Akhtar, director of network architecture and engineering at Comcast Cable Communications.

While momentum behind EPON has been building in cable for some time, in contrast to U.S. telcos’ commitment to GPON (Gigabit PON), the formal endorsement of EPON as a cable solution awaited agreement on specifications for provisioning PON within the existing DOCSIS back office. Now there’s little doubt the cable industry will take this route to using fiber as telcos step up their use of GPON.

“We’ve embraced DOCSIS and EPON technologies and are focused on delivering IP and MEF (Metro Ethernet Forum) -based services for business and commercial applications,” says Craig Cowden, vice president of network engineering and operations at Bright House. “The DPoE specifications give us the ability to support multiple products and services based on those foundations.”

With the specs nearly complete MSOs are now testing various vendor solutions in preparations for rollouts in the coming year. “From an MSO perspective, we see PON utilized for commercial services as being the most cost effective as compared to point-to-point Ethernet,” says Paul Whittlesey, director of product management for access network solutions at Aurora Networks, which is marketing what it calls a “node PON” solution. “There’s a significant play in the medium-range business area for services at less than a gigabit with EPON. And that opens a migration path to offering higher bandwidth over PON when the market is ready for 10GEPON.”

One of the first of what promises to be a new crop of large-scale PON commitments in cable was announced in October by Cox Communications, which said it has already deployed both switched-Ethernet and EPON optical connections in several markets using gear supplied by Calix. “The modularity of the [Calix] E7 is well-suited to our operational model, allowing us to pay as we grow as we pull fiber to fiber access nodes deeper in the network and incrementally add new customers,” says Dan Estes, executive director of technology at Cox Business.

Calix has created a one-rack unit high cabinet for packaging what it calls the “Fiber Access Node” to house its E7 line card, which supports point-to-point Ethernet to businesses and PON connections to up to 256 premises on the access side and, on the metro backbone, interfaces with 10 gigabit Ethernet transport rings. The company says its premises-mounted optical network terminals (ONTs) can support both passive and active optical line terminations, along with time-division multiplexing (TDM) and pseudowire emulation edge-to-edge (PWE3) T1s.

Interestingly, the EPON trend is taking hold in cable just as GPON is catching up to EPON in terms of global spending on PON technologies. According to Dell ‘Oro Group, in the first quarter, revenues for GPON central office optical line terminals (OLTs) and ONTs for the first time surpassed EPON equipment revenues. China, a bastion of EPON deployments, also was a major contributor to the GPON surge as its leading telecoms moved to offer both platforms in different markets, the research firm says.

As for PON growth in general, Global Industry Analysts in a recent report said the PON equipment market will hit $7.62 billion by 2015, more than tripling the $2 billion registered for 2009 and presumably increasing the number of connections, now at over 10 million globally, by a similar if not greater margin, given the rising number of connections per unit of cost that is to be expected with falling equipment prices. North America and Asia will be the most favorable markets for PON equipment over that time frame, the firm says.

Suppliers of GPON as well as switched gigabit Ethernet connections over fiber in North America are already experiencing the uptick in the pace of deployments, thanks in part to the impact of the spending by the federal government on the Broadband Initiatives Program. For example, among a spate of second-half announcements of BIP awards was a $21.6-million stipend granted to Yadkin Valley Telephone Membership Corp. in rural North Carolina to extend GPON connections to 5,783 homes, schools and businesses.

The project expands on the telephone coop’s ambitious regional fiber-to-the-premises project, which envisions connectivity to all its 39,000 customers using Zhone Technologies’ MXK intelligent GPON solution and zNID ONTs. With 16,000 homes and businesses already passed by the network, the telco will be able to complete the project by 2015, four years ahead of schedule, says Mitzie Branon, general manager of Yadkin Valley Telephone. “With the receipt of the broadband stimulus funding and the support of Zhone as our GPON partner, we will be able to overcome the anticipated cost challenges and time-to-market requirements for the rural fiber extension,” she says.

Such projects mark a real sea change in the history of PON deployments, notes Brian Caskey, CMO at Zhone, which now counts about two dozen stimulus projects ranging in population coverage from 500 to 200,000. “This has most certainly been the year that FTTH and GPON have become the technologies of choice for service providers globally,” Caskey says. “In North America, Zhone has specifically seen the broadband stimulus initiative fuel an uptick in the number of fiber projects we have been asked to support, and we anticipate this trend will grow more as operators experience first-hand the increased speed, bandwidth and overall flexibility of fiber technologies.”

Partially because of the stimulus there’s been an increase in the entry of municipalities into the networking business. “Many communities haven’t gotten the service they wanted from their service providers, and they see fiber connections as a way to help their economies,” Caskey says.

He cites Salisbury, North Carolina, a town of about 26,000, as an example of the aggressive economic development efforts some localities are undertaking with use of fiber networks. The city’s Fibrant FTTH utility, which is using Zhone’s OLT and ONT products, last month began beta testing a $97-per-month triple-play service that features 100 mbps broadband connectivity and four dedicated HDTV streams per household. .

“We don’t want to rely on the technology or timeline of existing carriers to meet our goals for a communications network that gives us a competitive advantage in attracting new businesses to our city,” says Mike Crowell, director of broadband services for Salisbury. Fibrant plans to enhance its 120-channel TV service with new features, including Internet/TV integration, video-conferencing and high-speed gaming, Crowell adds. He says the city also sees telemedicine, advanced emergency services and greater community cohesion as potential differentiators in attracting knowledge workers and seeding new business growth.

Where the demand for commercial services is concerned, the limitations of copper- and coax-based connectivity are opening a big opportunity to providers who can deliver fiber cost effectively. With the ability to leverage the DOCSIS back office and the fiber infrastructure supporting HFC, EPON potentially affords cable a big cost advantage over telcos who can’t integrate GPON with existing infrastructure, notes Aurora’s Paul Whittlesey.

Using Aurora’s EPON solution, operators can mount the OLT right at the existing node location, either using the existing node housing if they have deployed an Aurora node or installing a similarly sized Virtual Hub, the versatile field unit Aurora offers for extending fiber deeper in a wide range of residential and business applications, including EPON. “The cost of setting up the Virtual Hub node for PON is pretty close to the cost of a traditional HFC node,” Whittlesey says.

By delivering the gigabit Ethernet stream over a dedicated wavelength on the existing backbone and distribution fiber to the OLT, operators need only incur the costs of installing fiber to the premises. The end-to-end costs of the entire EPON platform are such that the operator can generate ROI with just a fraction of the customers that could ultimately be served from a single 64-way splitter out of the OLT, Whittlesey notes. “Some customers find that with a half dozen businesses connected on the PON node, the system pays for itself,” he says.

Robust performance with network monitoring and service flexibility on par with dedicated switched services are fundamental requirements for any EPON solution, of course. Route diversity from the cable perspective is achieved through connectivity from the OLT back to the headend over a separate wavelength over the same or a different fiber, Whittlesey explains.

The IEEE standards underlying EPON assure service providers they’ll be able to support “all the sophisticated carrier Ethernet features you’d find in a point-to-point topology,” adds Shridehar Kulkarni, product manager for access solutions at Aurora. “You can incorporate all the service OAM (operations and maintenance) protocols and technologies that help service provider technicians perform diagnostics. If a certain service is down for a certain subscriber, they can remotely diagnose the network and figure out where the fault in the network lies.”

As things stand now, many business customers who have outgrown T-1, DSL or DOCSIS connections “are burning dedicated gigE links to provision 100 to 200 mbps,” Whittlesey says. “The opportunity for cable operators is they can put a PON node in place near an industrial park and offer a much lower-cost service that satisfies current demand.” At the same time, he adds, they can be assured that, with the emergence of 10GEPON in the years ahead, they’ll be able to keep up with bandwidth needs in the PON mode without having to incur dedicated gigE costs or replace their PON infrastructure.

Chip vendors are currently supporting 10GEPON in FPGAs (field programmable gate arrays) for trial purposes but are moving to commercial availability of the platform in ASICs (application-specific integrated circuits), most likely in the second half of 2011, Whittlesey notes. “We see demand a couple of years out,” he says. “When we talk to operators they tell us over 80 percent of the time a gigE port on a dedicated link is provisioned for 100 mbps or less.”

Major technology advances among traditional suppliers of access platforms in telecom promise to improve the competitive standing of telcos as their need for low-cost PON solutions that can compete with cable intensifies. Zhone, for example, has seen sales take off since it upgraded its MXK platform to terabit-level density. Caskey says sales have gone from 50 units a month earlier this year to 150 per month, with 750 units now deployed in the field, each of which serves up to 10,000 customers. Where all-fiber access is concerned, the platform provides non-blocking capacity for up to 3,600 100 Mbps GPON subscribers or 360 1G Active Ethernet subscribers, he notes.

The high density allows for cost-saving scalability where the operator hits ROI long before the unit is fully utilized, Caskey adds. “It may go out one third or one half full, but you can justify it at that level of penetration,” he says. Adding to the cost savings, Zhone has just introduced what it calls “EZ Touch” provisioning, where the ONT activates service within three to four minutes of being connected to the fiber. “That compares to three to four hours in the past,” he adds.