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1 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

DSL El Sayed

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Page 1: DSL El Sayed

1 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Page 2: DSL El Sayed

2 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Agenda

Market Challenges

End User Applications and Traffic Model

Broadband Access Technologies

FTTX Deployment: Economic Considerations

Case Studies

Operators’ Experience

Q&A

Survey

Page 3: DSL El Sayed

3 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Market ChallengesBroadband Services

Access networks must evolve to support these services

High Speed Internet(HSI) Business

Access

FutureServices

Gaming, PC video, and

music streaming

Service Sophistication

Net

wor

k Im

pact

Blended ServicesBroadcast TV, HDTV, VoD, VoIP, P2P, ITV

Best Effort High AvailabilityIncreased Bandwidth

Low LatencyHigh Stability

Real time services require:Continuous monitoringAdvanced diagnostics

Increased QoS

Page 4: DSL El Sayed

4 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

North America Consumer Internet, PB per yr

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2006 2007 2008 2009 2010 2011

PB

per

yr

Internet Video to TV

Internet Video to PC

VoIP

Video Communications

Gaming

P2P (60%-70% video)

Web, email, file transfer

Total Video (incl 60% of P2P) ~ 19800 PB

Market ChallengesUS IP Video Traffic Volume Growth Estimates

US IP video traffic is expected to grow to over 20K PB/yr, or ~ 60% of the total IP consumer traffic, by 2012:

Video traffic is the main driver behind the Internet traffic growth of ~ 50% per yr, trending down to ~30% by 2012*

Video-to-TV accessibility will grow from 6% to over 50% (users)

60-70% of P2P traffic will be video

•Source: Alcatel-Lucent, Cisco, CIBC World Markets Corp and IDC, Emerging Media Dynamics,2008.

North America represents ~ 32% of Worldwide traffic, and US ~90% of NA.

Video communications will become important in the longer term-range (2012-2015)

Page 5: DSL El Sayed

5 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Market ChallengesIPTV Subscriber Growth

HS InternetTier 2

High Def

Standard DefStandard Def

TV 1

HS InternetTier 1

TV 2DVR 1

DVR 2

Data

20Mbps

StillMoreData!!

HSITier 3

MoreData

Standard Def TV 3

100+Mbps

50Mbps

High Def

Exponential growth!

Bandwidth per subscriber

(with MPEG-4)

Page 6: DSL El Sayed

Traffic Model

Page 7: DSL El Sayed

7 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Traffic ModelBroadband Applications

0.0640.064Emergency Communications0.3842Conference Video0.3842Video Telephony0.0640.064Conference Audio0.0640.064Telephony

Inter-personal communication

2020Premium Internet Service - Tier 3520Premium Internet Service - Tier 225Premium Internet Service - Tier 1

0.3842Best Effort Internet ServiceInternet Access0.3842Multiplayer GamingGames

00.128Music On Demand, PodcastMusic00.128Radio on demand00.128Live Streaming AudioRadio08VOD - HDTV08Broadcast Video- HDTV (H.264)019Broadcast Video- HDTV (MPEG-2)TV/Video HD

0.3842Streaming Video02Broadcast Video- SDTV (H.264)02VoD - SDTV04Broadcast Video- SDTV (MPEG-2)TV/Video SD

Upstream Peak (Mbps)

DownstreamPeak (Mbps)

Application NameCategory

Page 8: DSL El Sayed

8 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Traffic ModelKey Parameters

VoIP Parameters

Codec & BW

No of lines/HH

VoIP take rate

Voice calls/BH

HSI Parameters

BW/HH

HSI take rate

Concurrency rate

Stat Muxing factor

Video Broadcast Parameters

IPTV Take rate

No of SD channels

No. of HD channels

SD video codec

HD video codec

No of STBs/HH

% of active STBs/HH

% of active STBs changing channels simultaneously

% of active STBs using PVR

Channel change burst rate

VoD Parameters

VoD Take rate

No. of VoD assets

% of SD content

% of HD content

SD VoD Codec

HD VoD codec

Concurrency rate

Local server hit rate

Popularity curve parameters

Page 9: DSL El Sayed

9 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

2006 2007 2008 2009

30

25

20

15

10

5

0

Mb/

s

SD= standard-definition TV

HD= high-definition TV

HSI= high-speed Internet access

Introduction of VDSL2 bonding with bonding capable CPE

ASDL2+ bonding with bonding capable CPE, or VDSL2

Traffic ModelBandwidth Needed for Triple Play

SD

HD

HSI

HD

OH

SD

HD

HSI

HD

OH

SD

HD

HD

HD

HSI

OH

SD

HSI

HD

OH

SD

Service mix may vary and include, e.g. VoIP or all-SD with faster Internet service

Second HD channel typically to support concurrent home PVR recording

Assumes quality of picture competitive with digital satellite/cable

Page 10: DSL El Sayed

BB Access Technologies

Page 11: DSL El Sayed

11 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Broadband Access Technologies

Wireline Cable (HFC)

ADSL2+, VDSL2

GPON, EPON

Point-to-Point and Active Ethernet

Wireless CDMA (1xEV-DO rev A)

GSM (GPRS/EDGE)

UMTS

HSPA

WiMax

LTE

Page 12: DSL El Sayed

12 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Cable ArchitectureHeadend

The Basic Coax Based

CATV Network

Headend

The Basic HFC Based

CATV Network

CM

DOCSIS

Optical Rx/Tx

IPTelephony

Server

HFC

InternetInternetInternet

CMTS

NCS

PSTNPSTNPSTN

MTAMTA

Amplifier

Splitter

Subscriber Tap

Fiber Node

CMTS = Cable Modem Termination SystemNCS = Network based Call Signaling Protocol

MTA = Multimedia Terminal AdapterCM = Cable Modem

Page 13: DSL El Sayed

13 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Bandwidth Capacity of Today’s Cable Plant (with 500 Homes/Fiber Node)

Current cable plant may not be able to support the downstream BW needs over 5 years Incremental steps are needed to meet the demand, e.g.: Analog channels reclaim

Switched digital video

Node splits

Bandwidth expansion

DOCSIS 3.0

MPEG-4

Downstream Channel Capacity and Need

0

20

40

60

80

100

120

140

160

Today Future

6MH

z R

F C

han

nel

s

HSIA channels DS

HD BroadcastChannels

SD BroadcastChannels

Analog Channels

VoD channels

Channel Capacity

6 MHz RF channels with 38.8 Mbps capacity

750 MHz system can carry 117 downstream channels

Average 500 homes/fiber node (NA)

Page 14: DSL El Sayed

14 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

DSL

CO-Based ADSL2+ or VDSL

Distance limitation

Outdoor cabinets ADSL2+

VDSL

Bonded DSL

CO DSLAM

Remote DSLAM

Small DSLAM

Remote DSLAM

MDU

MDU

CO or Street

Cabinet

MDU = Multi-Dwelling Units

Page 15: DSL El Sayed

15 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Evolution of DSL Speeds

ADSL

VDSL

HDSL

ISDN

xDSL

V.26V.27

V.29 V.33V.34 V.34

V.90voice-band modems

ADSL2

ADSL2+

VDSL2100 Mb/s

2006

0.001

0.010

0.100

1.000

10.000

1000.000

1965 1970 1975 1980 1985 1990 1995 2000 2010

year

do

wn

stre

am r

ate

[Mb

/s]

Page 16: DSL El Sayed

16 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

1 2 3 4 Loop Length (km)

VDSL2

ADSL2+

ADSL2

ADSL

SHDSL

RE-ADSL2

8

3

11

24

50Mbps

100Mbps

VDSL2

DSL Reach vs Bit Rate

FTTB VDSL2offering up to 100Mbps symmetrical

Cost effective alternative for Ethernet CAT5

FTTN VDSL2Up to 50Mpbs

Most cost-effective OSP solutionin overbuild (reuse copper plant)

Page 17: DSL El Sayed

17 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

00

10

20

30

40

50

60

70

80

90

100

km

Per

cen

tag

e o

f C

us

tom

ers

Rea

ched

Source - IEEE

1 2 3 4 5 6 7

Italy

U.K.

Germany

India

U.S.

Sweden

Distance from CO to Subscriber

Subscriber Loops

Page 18: DSL El Sayed

18 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Averagereal

Conditions

DISTANCE ADSL ADSL2 ADSL2+VDSL2 PON/P2P

% subscriber from CO

(FTTN) (FTTU) (Europe) (NA)

Theoretical

Bandwidth 8 13 24 >50 >100

(Mbps)

0.5 km(1.7Kft) 8 10 18 32 >100

1 km (3.3Kft) 8 9 16 26 > 100 20% 10%

3 km (9.9 Kft) 7 7 9 - > 100 78% 38%

6 km (19.8Kft) 1 2 2 - > 100 97% 87%

Only a limited subscriber base can be served from the CO with DSL technology

Triple Play is Challenging CO-based Deployments

•Reference?

Page 19: DSL El Sayed

19 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

FTTN Considerations

Benefits

Provides target bandwidth with VDSL/VDSL2

Lowest CAPEX for evolution to next generation access, using existing copper assets

Street Cabinet DSLAM

Ethernet Switch(CO)

VDSL2

Need to determine optimal cabinet location and size

Challenges

Requires new IP/Ethernet DSLAMs

Civil work

Opex

Regulations for FTTN unclear

Upgradability

CO OSP

Page 20: DSL El Sayed

20 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

FTTN Deployment

*1 @ $300/site -- 10% change in cost/sub

Central Office / Co-Lo Access to unbundled loops High Density / Low Power

CO / CLECCO / CLECRegional CenterRegional Center

Remote Terminal Indoor or Outdoor

configurations Environmentally Hardened

for OSP ONU Host Applications

Fiber In the Loop via ONU Fiber deeper into the network Shorter Distances / Higher

Bandwidth Small / medium concentration

of Multi-service Subscribers

Page 21: DSL El Sayed

21 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

FTTN - Several Scenarios

CO Outside Plant (OSP) Homes

VDSL

VDSL

ADSL2+

splitter

ADSL2+

VDSL

GPON

+ DSLFTTN

FTTN

FTTN+ FTTH

splitterGPON

VDSL

FTTB

splitterGPON

VDSL

FTTC

+ FTTH

Cover short loops from the CO

Cover the rest with OSP deployment

Long loops

GPON for greenfield; VDSL for brownfield

GPON for greenfield;

VDSL for brownfield or when riser is an issue

Lower expected BW/sub

Page 22: DSL El Sayed

22 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Edge Routing

IP service termination Per-service QoS IPTV multicast routing Flexibility for DHCP and PPPoE for HSIA present mode of operation

Components of a Triple Play Services Delivery Architecture

SR

Aggregation

Ethernet aggregation Per-sub, per-service QoS Subscriber profile IGMP proxy Security Reliable Layer 2 forwarding model

Services and Servers

HSIA DHCP Policy Radius AAA

Home/Business RGs TR-069 Voice Data Video

Access

FTTN IGMP proxy/Multicast Security QoS VDSL2/ADSL2+

Internet

ESSVPLS/HVPLS

BRAS

IPTV

Internet

DHCP server

PPPoE

DHCP

IPTV

Phone

RG

SoftSwitch

SIP

IPTV

FTTN

SR – Service Router ESS – Ethernet Service Switch FTTN – Fiber-to-the-Node RG – Residential Gateway

Page 23: DSL El Sayed

23 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

FTTH

Passive Outside plantEthernet-only transport

In-band video Standardized form available today

Ethernet P2P – DF

100 Mbsper sub

IEEE 802.3ah EPON

EthernetSwitchOLT

Opt power splitter

t128.5 Mbps

per sub1 GbpsEthernet-only transport

In-band video Standardized form available today

tn

Ethernet Switch

100Fx

Active Outside plantEthernet-only transport

In-band video Standardized form available today

Ethernet P2P -AON

Active SwitchN x 1 Gbpsor 10 Gbps

100 Mbsper sub

Ethernet Switch

ITU G.984 GPON

Multi-serviceswitch OLT

t1 33.4-66.8 Mbps/sub

1.2 or 2.4 Gbps down,155 - 2488 Mbps up

Native protocol transport using GFP/SDH

In-band video Standardized form available todaytn 3.8-60.4 Mbps/sub

ITU G.984 BPON

ATM switch

Opt power splitter

t1 15.7-31.6 Mbps/sub1.2 G or 622 Mb/s down

Separate RF video overlayATM-only transport

Standardized form available todaytn 3.9-15.6 Mbps/sub

155/622Mb/s up

25.7 Mbps/sub

Page 24: DSL El Sayed

24 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Gigabit Passive Optical Networking (GPON)

Passive splitters used to share a single fiber among subscribers

Full downstream bandwidth is available dynamically to any endpoint, at any time

Upstream bandwidth is allocated to endpoints

No electronics in outside plant

Wavelength Splitter/Combiner

Optical Line Terminal (OLT) 1490nm l

1310nm l

Optical Network Terminals (ONTs)

SubscribersPros

Virtually unlimited bandwidth

Future proof investment

Standardized technologies

Optical components and fiber prices have been reduced substantially

Improvements in installation practices

Challenges

Investment in fiber for the last km

Choice of technology and topology

Regulations unclear (EU promoting open network model)

Page 25: DSL El Sayed

25 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Typical GPON Network Architecture

1,490 nm

1,310 nm

Central Office

Typically up to 20 km (28 dB)

Voice , data, and video

PassiveOutside Plant

2.5 Gb/s

1.2 Gb/s

splitters points

Single fiber infrastructure for all services(voice, data and video)

1,550 nm to support local CATV service If required

Application Servers

(voice, video, data

Edge Switch

OpticalLine Terminal

Single family homes

Multi-dwelling units

Small/medium enterprisesIP/MPLS

Page 26: DSL El Sayed

26 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

RF Overlay for Video with GPON

PROS

More than 4 Gigabytes of equivalent broadcast video on a separate wavelength No set-top boxes required for analog video

Instant compatibility with in-home coax and TV sets

Proven technology with economies of scale

CONS

No IP convergence

Limited differentiation from existing cable service

Overlay network for video transport must be deployed

OLT

OutdoorONTs

Voice

BusinessONTs

Multi-dwellingONTs

Class 5voice

splitters

20 km

2.5 Gb/s

1.25 Gb/s

IPTVInternet

IP/MPLS

VPLS

ManagementSystem

VoiceGW

EDFARF

Video

WDMESS

OLT

OutdoorONTs

Voice

BusinessONTs

Multi-dwellingONTs

Class 5voice

splitters

20 km

2.5 Gb/s

1.25 Gb/s

IPTVInternet

IP/MPLS

VPLS

ManagementSystem

VoiceGW

EDFARF

Video

WDMESS

Page 27: DSL El Sayed

27 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Optical Patch Panel

Outside Plant Splitter Cabinet

Distribution Cable

Drop CableFeeder Cable

Fiber Splice Closures

Optical Taps

Optional Video Amplifier

Optical Line Terminal

Optional Video Coupler for RF overlay

Optical Network

Terminals

Typical GPON Components

Central Office Passive Outside Plant (OSP) Subscriber Premise

Page 28: DSL El Sayed

28 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

GPON: Bandwidth Allocation

GPON LT

GPON OLT

Central Office Primary Fiber Flexibility Point Drop

1.25G Sustained + 1.25G excess BWbandwidth flexibility

up to 1Gbps

GPON LTGPON LT

1:32-64 split

Residential Triple Play • 2HDTV+1SDTV 20Mbps for each 64 subs

• Represent 1.25Gbps Sustained Bandwidth

• Remains 1.25Gbps Excess Bandwidth

• Dynamic Bandwidth Allocation: Excess can be allocated instantaneously to anyone

User Bandwidth flexibility ++100 Mbps

Residential Triple Play • 2HDTV+1SDTV 20Mbps for each 64 subs

• Represent 1.25Gbps Sustained Bandwidth

• Remains 1.25Gbps Excess Bandwidth

• Dynamic Bandwidth Allocation: Excess can be allocated instantaneously to anyone

User Bandwidth flexibility ++100 Mbps

100MBps Fixed BW

1:24 split

2.5G Fixed Allocate BW

Page 29: DSL El Sayed

29 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

GPON: Different Scenarios for Network & Subscriber Growth

GPON LT

GPON OLT

Grow

th

Central Office Primary FFP Drop

1 fiber 8 fibers

8 fibers

GPON LTGPON LT ducts

8 fibers

8 fibers

1 fiberImproved

penetration

1 fiber

New areabuild out

8 fibers

•FFP = Fiber Flexibility Point

Page 30: DSL El Sayed

30 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

PON Evolution Options

PON Evolution towards 40G…

2.5 GPON

TDM: 10G PON

CWDM:4 x 2.5 GPON

4 x 10G PON

•1

•10

•100

•0 •1 •2 •3 •4 •5

•Downstream Wavelengths

•Total PON downstream Bandwidth (Gbps)

...with TDM and WDM

Backwards

Compatible

More capacity to

existing ONTsONTs

Reuse splitters

or ONT filtersOSP

High DensityMore

TransceiversDensity

Maintained

or increased

Better link

budgetReach

DL & UL

increase

DL

increaseCapacity

TDM:10GCWDM: 4

Page 31: DSL El Sayed

31 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Point-to-Point and Active Ethernet

Best of Both Worlds Passive OSP

CO scalability & Consol. (20+ km)

Fiber Cost & Management (P-to-MP)

Cost-effective Fiber Feeder Few fibers in feeder section

Smaller duct sizes, Less RoW,…

CO consolidation

Efficient Outside Plant Small street/pole cabinet

No remote powering

Less maintenance, truck rolls,…

Best of Both Worlds Passive OSP

CO scalability & Consol. (20+ km)

Fiber Cost & Management (P-to-MP)

Cost-effective Fiber Feeder Few fibers in feeder section

Smaller duct sizes, Less RoW,…

CO consolidation

Efficient Outside Plant Small street/pole cabinet

No remote powering

Less maintenance, truck rolls,…

Point-to-

Point

ActiveEthernet

Ethernetswitch

Central Office Access Loop Home/MDU

IP

IP

Ethernet switchEthernetswitch

Splicing

CPE

CPE

Page 32: DSL El Sayed

32 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

PON vs Optical Ethernet

CPE

CO CPE

CPE

CPE

CO CPE

CPE

SW

CPE

CO CPE

CPE

Dedicated linksDedicated linksShared medium

Medium CAPEXLow CAPEXHigh CAPEX

Maximum upgradabilityMedium upgradabilityPoor upgradability

Low OPEXHigh OPEXLow OPEX

Cheap interfaces (standard

Ethernet)

Cheap interfaces (standard

Ethernet)

Expensive PON interface (optics

and electrical)

More fiber

2N transceivers

Less fiber

2N+2 transceivers

Less fibre

N+1 transceivers

PassiveActivePassive

Point-to-Point EthernetActive Ethernet

Optical EthernetPON

Page 33: DSL El Sayed

33 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Broadband Access Technologies

Base Station

PDSN

Base Station

PCF

Cache

Server

DHCP

NMS DHCP Server

Local Cache Server

Internet

AAA

•CDMA 2000 EVDO Rev A

Base Station

SGSN

Base Station

BSC/RNC

Cache

Server

DHCP

MS DNS DHCP

Internet

GGSN

HLR VLR

BSC = Base Station Controller (GSM)

RNC = Radio Network Controller (UMTS)

GSM/UMTS

PCF = Packet Control Function

PDSN = Packet Data Server Node

Page 34: DSL El Sayed

34 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Evolution of 3GPP Radio Rates Peak Network Data Rates

1

10

100

1000

10000

100000

GPRS EDGE WCDMA HSPA HSPA+ LTE

Technology

kb

its

/se

c

UL

DL

Actual user rate will be substantially less, depending on many factors:

Fixed vs mobile

No. of simultaneous users

Distance from BTS

Channel conditions

Fixed wireless can prove in in certain cases vz wireline

Services definition (especially BW) different from wireline

Page 35: DSL El Sayed

35 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Home Networking

Several Wiring Situations

Coax

Twisted pair

Wireless

Several choices of Layer 1 Technologies

MoCA (Multimedia over Coax)

HPNA (HomePNATM – Home Phoneline Networking Alliance)

HomePlug (networking over in home power wiring)

Unlicensed Wireless

NID

Garage Bed Rm #1 Bed Rm #2 Bed Rm #3

Bed Rm #4Study Family Room

X

Voice

IPTV+Data

NID

Garage Bed Rm #1 Bed Rm #2 Bed Rm #3

Bed Rm #4Study Family Room

X

Voice

IPTV+Data

Page 36: DSL El Sayed

36 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Home Networking Technologies

MoCA

29 channels, 25 Mhz steps, 800-1500Mhz (860-950Mhz common)

LAN throughput of 100-135Mbps could be typical (can get as low as 50Mb/s)

In the upper reaches of CATV spectrum (above 860MHz)

Coexists with analog and digital channels on CATV

HPNA

Works over Coax or twisted pair to provide a LAN of 128-320Mb/s

Will not coexist with upstream of CATV

HomePlug

Leverages existing AC wiring to create a 200Mb/s LAN (150 Mbps usable throughput)

Doesn’t impact anything on coax or twisted pair

Good for instances where coax isn’t readily available (Europe)

Inherent problems with noise immunity

Unlicensed Wireless (e.g. 802.11n)

Not a contender for whole house video because of reliability and spotty coverage

2450

950

860

54

950

–2

450 Mh

z8

60

–9

50

M

hz

54-8

60 M

hz

Mhz

SatelliteDownstream

OpenSpectrum

CableDownstream

CableUpstream

5 –

42

Mh

z

2450

950

860

54

950

–2

450 Mh

z8

60

–9

50

M

hz

54-8

60 M

hz

Mhz

SatelliteDownstream

OpenSpectrum

CableDownstream

CableUpstream

5 –

42

Mh

z

•MoCA Spectrum

Page 37: DSL El Sayed

FTTX Deployment: Economic Considerations

Page 38: DSL El Sayed

38 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Fiber to the Most Economical Point

Provide DSL and FTTH solutions for triple play

Deep fiber placement of ADSL2+ and VDSL2 using fiber-to-the-node (FTTN)

Deeper fiber placement using fiber-to-the-home (FTTH)

High-density placement using FTTB for multi-dwelling units (MDUs)

An optimized access solution for every deployment strategy

CO

FTTN

FTTP

MDU

CO – Central Office

MDU – Multiple Dwelling Unit

FTTN – Fiber to the Node

FTTP – Fiber to the Premises

Page 39: DSL El Sayed

39 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

FTTN/FTTH: Network Cost Components

Fiber Flexibility Pointwith Splitters

Central Office with GbEEthernet Aggregation

Fiber Feeder

Copper or Fiber (point-to-point) Distribution

Copper or FiberDrop

CLE / CPE(ONT / ONU)

Fiber Feeder

IP DSLAM or Ethernet Switch

Ethernet Switchor DSLAMFiber Feeder

FTTN (active Ethernet or DSL)

PON

FTTB-MDU

Fiber Drop

FiberDistribution

TapFiber Drop

CO Electronics(e.g., PON OLT, DSLAMs, Ethernet switches)

Customer Located Equipment (e.g., PON ONTs, DSL modems, Ethernet media converters, residential GWs

Outside Plant (OSP)(e.g., FTTN systems, cabinets, splitters, drop boxes, splice closures, fiber taps, power supplies & batteries, power cables, power distribution)

OSP Labor(e.g., trenching, pulling, splicing, boring)

CO Labor(e.g., patching, inserting, testing)

Customer Premise Labor(e.g., wiring, connecting, testing, answering questions, PC set up)CLE / CPE

(NID or media converter)

Drop Cabling Wiring (e.g., fiber, CAT5/5E, copper).

NT or DSL Modem

Page 40: DSL El Sayed

40 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

FTTN vs FTTH : Typical Capex Breakdown

Typically 70% of Greenfield construction costs are in distribution cable, drop,

customer located equipment, and installation of these

F3 Distribution(Optional)

21.8%

Central Office0.3%

OSP Distribution17.0%

CLE/CPE28.6%

F1 Fiber Feeder1.6%

F2 Fiber Feeder2.6%

Drop28.1%

Distribution of FTTN Costs Distribution of FTTN Costs

F3 Distribution(Optional)

23.9%

Drop30.9%

F2 Fiber Feeder1.7%

F1 Fiber Feeder1.1%

CLE/CPE26.3%

OSP Distribution7.2%

Central Office8.8%

Page 41: DSL El Sayed

41 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

The main FTTH barriers are civil work & indoor cablingCivil work is 50-80% of the total cost. Indoor cabling is 150-300 Euro/sub

FTTN vs FTTH: High Level Capex Comparison

CAPEX (Index)

Ref = 1

FTTN VDSL

FTTHsingle homes

FTTH apart-ments

FTTB

ADSLCO

0

5

10

15

20

Civil works

Cabinet install

Access HW

CPE

Fiber

Home/MDU cabling

CAPEX comparison FTTH/B (Paris Case )

- 15%

- 15%

Page 42: DSL El Sayed

42 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

GPON – 2 levels of split – 64 usersGPON – 2 levels of split – 64 users Point-to-point – 64 usersPoint-to-point – 64 users

GPON = 2,5 less fiber connections per user

with HW (Patch Panel, Splitters) & labor (splice, test): GPON savings $$ per connected user

1:4

1:4

1

16

1

16

patch panel

patch panel

1:16

patch panel patch

panel

1:1 1:1

1:1

1:1

64 = 991616111 64 = 256646464

Cable to switch

Cable toswitch

FTTH : GPON vs Pt-to-Pt Ethernet

GPON = 3 to 4 times less fiber.km

CAPEX impact: Fiber ODF, space at PoP & Fiber cost ; OPEX impact: Right of ways & Fiber mgmt

1MDU16HH

CO

CO

Page 43: DSL El Sayed

43 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

GPON: Greenfield vs Overbuild

$0

$200

$400

$600

$800

$1,000

$1,200

Greenfield Overbuild

Outside Plant ConstructionExample based on the Cost of PON Facilities per Subscriber

Cost of Facilities Labor

Cost of FacilitiesMaterial

Primary cost of network construction is labor

On a cost-per-bit connected, system electronics is fairly comparable(same speed = same memory, same processing, same lasers)

Difference: 20-30%

Page 44: DSL El Sayed

44 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Cabling buildings with Fiber is a challenging task

Dwelling Type

Other

Single Family House: Detached

Single Family House: Semi-detached

Building (< 10)

Building (> 10)

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SP IT GER GR AU FR DK LUX PT NL BE UK IRL

0%

Importance of private owners and real estate companies for Fiber

Cabling methods progressing fast and well

• Indoor• Outdoor / façade• Infrastructure re-use

(power, gas, sewer,)

BUT some critical issues

- Landowner ascent

- Building protection

- Multi-operators?

- Access chambers

- Floor connect. box

Page 45: DSL El Sayed

45 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Micro-trenching

Traditional Cable Laying

Installation Complete

4 cables sitting on top of each other, each with 100 fibers. Each cable is about 10 cm high

Significant optimization advance for ‘last mile’ Optical Fiber networks

High cost reduction

Faster city planning approval

Less city surveyor overhead

Significantly less disruption

Significantly less man-hours labor

Page 46: DSL El Sayed

46 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Summary

FTTN-VDSL2:

Technology of choice in overbuild distribution provided loop lengths can be managed

Ideal in multi-dwelling overbuild situations where CAT5 does not exist or cannot reach

In overbuild : up to 50% cheaper than all other alternatives

• Key advantage versus FTTN/B Active Ethernet

• This advantage is negated in Greenfield situations (new facilities)

FTTU-GPON: Technology of choice in Greenfield distribution of 100Mb/s to single family residences

Advantages because of line rate, passive OSP, no-power, low-cost multiplexing deep into distribution network

Has financial edge in greenfield SFR applications due to speed and distribution gain

2.5Gb/s doubles capacity of 1.25Gb/s solution (EPON)

Splitting 2.5Gb/s in distribution is 32 times more efficient than dedicating single fibers to each user (P2P is no option)

Active Ethernet:

• Falls in-between

• Too expensive compared with FTTN-DSL in overbuild

• Less performing than GPON for greenfield

Page 47: DSL El Sayed

Case Studies

Page 48: DSL El Sayed

48 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Outline

FTTH architectures compared— Point-to-Point (P2P), Active Ethernet (AE), and Gigabit Passive Optical Network (GPON)

Input assumptions

Modeling Parameters

GPON vs P2P

Reference urban network

Capex/Opex modeling results

Sensitivity Analysis (Tornado, MonteCarlo)

GPON vs AE

Two cases: Re-use DSL OSP and deploy new OSP cabinets

Capex/Opex modeling results

Sensitivity Analysis (Tornado, MonteCarlo)

Summary and Comments

Page 49: DSL El Sayed

49 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Introduction

A detailed economic analysis of FTTH across a range of different scenarios and parameters assuming Triple Play services (Voice, Data, Video)

Three scenarios: multi-dwelling units (MDU), Single Family Residences (SFR) and Enterprise

Task based operations model

Point-to-

Point

ActiveEthernet

GPON

Ethernetswitch

Central Office Access loop Home

IP

IP

Ethernet switchEthernetswitch

PON OLT Optical splitter

IP

Splicing

ONT

CPE

CPE

Page 50: DSL El Sayed

50 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Traffic Assumptions

It is assumed that all FTTH technologies support current and short-to-mid term growth for

residential subscriber applications

High-level bandwidth requirements per subscriber used in the model

* Assumes max of 2 TV sets per home

Standard GPON at a 2.5Gbps line rate and a split ratio of 1:64 provides about 35 Mbps

(committed) per user

Active Ethernet switches are also configured to provide this bandwidth

384 Kbps2 MbpsGaming

64 Kbps64 KbpsVoIP

2.448 Mbps32.6 MbpsTotal

210 MbpsHigh-speed Internet Access

020 Mbps2 HDTV or 2 VoD (MPEG-4)*

Upstream BWDownstream BWService Type

Page 51: DSL El Sayed

51 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Customer Type: Single Family Residential Multi-Dwelling Unit Enterprise

Applications IP-TV Voice, HSI PTP, Business

Housing Density No of buildings/sq. km Loop length to CO/POP

Construction Greenfield Brownfield

Transport Facilities Fiber owned Leased

Outside Plant Aerial Buried Conduit

Drop Cat5/DSL Fiber

Splitting Levels One Two

Scenario Variables Technologies

GPON/EPON

-------------------

Pt-Pt Ethernet

-----------------

Active Ethernet

Fiber Cables: Feeder Distribution Drop

Civil Work (Feeder, Distribution): Structures/trenches Splicing, Installation

OSP costs Cabinet, Splitters Fiber Management Point Patch Panel

Power and Space Power node (Active) AC Floor space costs

Equipment CO (shelf, packs, SFP) ODF ONT CPE

Activation Truck roll to OSP Customer service visit Service activation in CO

Other Operation Costs Searching for POP Provisioning activities Maintenance activities etc

Cost Elements

FTTH: Key Modeling Dimensions/Parameters

Page 52: DSL El Sayed

52 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Example Study: Key Parameters

105 km2, 1.12 M HHP, 72K buildings

HHP=100% , Take Rate Varies (10-100%)

P2P : 80 Active PoP

GPON : 8 CO (Active), 200 Passive PoP

Civil Works = fiber cables, In-building

BW/sub ~ 35Mbps

P2P GPON (2-Tier)ODF1

Fiber

Trunk

ODF1

Splitters

Fiber

BH

ODF1ODF2

80 x P2P PoP

200 x FFP8 x GPON CO

Fiber Distribution

CPE ONT

Urban MDU Case: Reference Network Architecture

•Core

•Core

OLT

Ethernet Switch

16Fibres 4 Fibers

~ 16HH

1:4splice

Page 53: DSL El Sayed

53 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Distribution

Drop

P2P PoP

GPON FFP

(splitter)

Feeder

SecondaryFeeder

General OSP Modeling Assumptions

Assumes PoP and FFP located on

circumference of circle from CO

Assumes within each PoP and FFP

serving area—homes are also on a

circle

Actual number of FFPs/PoPs

depends on availability of real-

estate, street-layouts, density

etc; model is generic to study

effect of different parameters

Assumes existing civil structures

(e.g., sewers, ducts) are used

Focus on the differences

between the technologies; civil

works costs assumed to be the

same

PON Geographical Model

Page 54: DSL El Sayed

54 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

GPON-Tier 1 GPON-Tier 2 P2P

Urban MDU: Capex/sub

GPON 1-Tier saving = 11-15%

GPON 2-Tier saving = 14-20%

Take Rate (TR)

Cap

ex/s

ub

(euro

)

P2P

2-Tier GPON

1-Tier GPON

Page 55: DSL El Sayed

55 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

200

400

600

800

1000

1200

OSP Manpower Floor Space Buildingconnection cost

Fiber cost ODF related Active NE CPE (incl.installation)

Spares

Urban MDU: Capex/sub Breakdown (20% TR)

Key CAPEX differences are in OSP manpower, fiber cost, ODF, CPE

•Cap

ex/s

ub

(euro

)

P2P

2-Tier

GPON

1-Tier GPON

Page 56: DSL El Sayed

56 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Capex Breakdown at 20% Take Rate

ODF1

CPE

Ethernet

Switch ODF2Metro

Office

POP 4%MDU

splice

Fiber Distribution : 27%

9%MDU wiring:

38%

7%0.5%4%

Feeder: 0.5%

CPEMDU wiring: 48%

1:4

14%

1:16

splice

Fiber Distribution:37%

GPON

OLT ODF1ODF2 ODF1ODF2

CO

splittersplitter

2%

2%4.8%0.48%0.2%

Feeder: 1% FFP 0.3 %

P2P

GPON

0.2%0.02%

180

72K

72K

2008* Blue indicates # of units

Page 57: DSL El Sayed

57 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25%

ODF2 : Cost of patch panel per user {15}

Xconnect ODF/Active NE {8}

Cost to equip a POP office {15000}

P2P: CPE erosion per year {5%}

Passive POP: Cost per sq-m {2000}

Splitter: 1:16 {288}

Cost to test a fiber {8}

GPON: CPE erosion per year {5%}

Cost of splicing a fiber to patch panel {13}

ODF1 : Cost of patch panel per user {15}

Splitter: 1:4 {100}

Sewer-civil works cost per m {23}

P2P: CPE cost {60}

Active POP: Cost per sq-m {4000}

GPON: switch cost per sub {36}

P2P: switch cost per sub {90}

GPON: CPE price {140}

Fiber cost per m {0.02}

Urban MDU: Sensitivity Analysis— Capex/sub (GPON - P2P), 20% TR

0.01

210

45

2000

54

30

35

150

8

7

3 %

8

4

432

3000

8%

7500

4

0.03

70

135

6000

18

90

12

50

23

20

8 %

23

12

144

1000

3%

22500

12Capex Saving (GPON-P2P)/P2P

Page 58: DSL El Sayed

58 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

20

40

60

80

100

120

140

9%

10

%

11

%

12

%

13

%

14

%

15

%

16

%

17

%

18

%

19

%

20

%

21

%

22

%

23

%

24

%

25

%

26

%

27

%

28

%

29

%

Urban MDU: Monte Carlo (1000 iterations) — Capex/sub (GPON - P2P), 20% TR

Capex Saving (GPON-P2P)/P2P

His

togr

am F

requen

cy

Page 59: DSL El Sayed

59 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Opex Model Components

Unplanned Maintenance: Repair activity based on equipment quantities and typical FIT data

Operation Tasks included: Testing, Fault isolation, Equipment Repair (Truck roll)

Planned Maintenance: Calculated based on equipment quantity, maintenance interval and effort, equipment clustering and

location density

Fiber maintenance based on total length of cables and typical yearly per meter cost

Operation Tasks included: Battery replacement, Fan Filter replacement, Drive time and paperwork to document preventative maintenance, Fiber inspection/cleaning and debris removal

Centralized NOC Staffing: Surveillance staff estimated based on total number of active devices.

Operation Tasks included: 24X7 fault Monitoring, remote diagnostics, trouble ticket creation

Customer Care: Estimate based on failure incidence (calculated for unplanned maintenance) and # of customer

impacted/incident.

Operation Tasks included: customer care call handling

Differences in Customer Provisioning and Disconnect Scenarios: Cost of connecting/disconnecting a customer based on equipment locations and utilization

Disconnect cost based on churn rate that are hinged on the number of providers in sharing scenarios

Operation Tasks included: CPE installation, in-building fiber connection, POP/FFP connections, Testing, Inventory updates

Page 60: DSL El Sayed

60 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

50

100

150

200

250

300

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

GPON-Tier 1 GPON-Tier 2 P2P

Urban MDU: Opex/sub/ year

GPON has significant Opex/sub savings compared to P2P

GPON 2-Tier saving = 50-56%

GPON 1-Tier saving = 41-48 %

Opex

/sub

(euro

)

Take Rate

P2P

2-Tier GPON

1-Tier GPON

Page 61: DSL El Sayed

61 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

20

40

60

80

100

120

RoW Fibermaintenance

(planned,unplanned)

PoP floorspace

Powerconsumption

AC Activemaintenance

Othermaintenance

Customercare

Urban MDU: Opex/sub/year Breakdown (at 20% Take Rate)

Key difference between GPON and P2P are RoW charges (sewer ducts, per cable, building), floor space (active + passive), power and customer care

Opex

/sub

(euro

)

Note: Services operations costs not included

P2P

2-Tier GPON

1-Tier GPON

Page 62: DSL El Sayed

62 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

€ 887

€ 176 € 168

€ 996

€ 205

€ 388 € 388€ 388

€ 76 € 56

€ 568

€ 150

€ 288

0

500

1000

1500

2000

2500

SFR-GPON MDU-GPON 1-Tier MDU-GPON 2-Tier SFR-P2P MDU-P2P

OSP Manpower Floor Space Building connection cost Fiber cost ODF related Active NE CPE (incl. install)

Urban MDU vs SFR: Capex/sub

OSP manpower + fiber cost per sub lower for MDU

•Cap

ex/s

ub

(euro

)

Page 63: DSL El Sayed

63 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

GPON-Tier 1 P2P

Suburban SFR Study: Capex/sub

Assumptions: 20,000 HHP/ CO or PoP; Area = 10 km2, 10 FFP

GPON > P2P ~ 20-23%

GPON 1-Tier cheaper than P2P for an average sub-urban SFR case

Loop lengths are longer compared to MDU case benefiting GPON

•Cap

ex/s

ub

(euro

)

Take Rate

P2P

GPON

Page 64: DSL El Sayed

64 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

500

1000

1500

2000

2500

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

GPON-Tier 1 P2P

Suburban Study: Opex/sub•O

pex

/sub

(euro

)

Take Rate

Assumptions: 20,000 HHP/ CO or PoP; Area = 10 km2, 10 FFP

GPON savings compared to P2P~ 42-45%

P2P

GPON

Page 65: DSL El Sayed

65 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

GPON vs AE Study: Urban MDU

Scenario/Assumptions: The operator has deployed DSLAMs to provide ADSL/VDSL broadband access to

some end users

A number of fiber loops can be provisioned to provide FTTH access to users. Which technology is more economical to deploy Ethernet or GPON?

For Ethernet deployment:

o Ethernet card can be installed in existing (DSLAM) street cabinets

o Civil work for distribution network only (cabinet to sub) is included

o New fiber from cabinet to CO using existing civil work – only new fiber installation

o 4500 cabinets to cover an urban area

o Two Cases

Case 1: Reuse existing DSLAM shelf to install AE cards

Case 2: New OSP cabinets for AE – no DSL

For GPON deployment:

o Splitters installed in some of the street cabinets and OLT in the COs; 200 FFPs for GPON

o Civil work and fiber installation in the feeder and distribution network assumes mostly greenfield buried installation

Page 66: DSL El Sayed

66 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

500

1000

1500

2000

2500

3000

3500

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

GPON vs AE Case 1: Reuse Existing DSLAM Shelves - Capex/sub

Active Ethernet

2-Tier GPON

1-Tier GPON

For TR <50%, Active Ethernet Capex/sub is lower than 2-Tier GPON (~5%); 1-Tier GPON (~10%)

For high TR (>70%), GPON and AE have similar Capex/sub (better utilization of GPON OLT ports & splitters)

•Cap

ex/s

ub

(euro

)

Take Rate

Page 67: DSL El Sayed

67 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

200

400

600

800

1000

1200

OSP Manpower Building PoP Buildingconnection cost

Fiber cost ODF related Active NE CPE (incl.installation)

Spares

GPON vs AE Case 1: CAPEX Breakdown, 20% TR

AE

2-Tier GPON

1-Tier GPON

Active Ethernet saves on total fiber because of aggregation in the OSP cabinet

zero for AE

•Cap

ex/s

ub

(euro

)

Page 68: DSL El Sayed

68 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

20

40

60

80

100

120

140

160

180

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Active Ethernet

2-Tier GPON

1-Tier GPON

GPON vs AE Case 1: Opex/sub•O

pex

/sub

(euro

)

FTTH Take Rate

GPON 2-Tier saving = 5-58%

GPON 1-Tier saving only for TR > 20% (up to 50 % savings at 100%TR)

Page 69: DSL El Sayed

69 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

10

20

30

40

50

60

70

80

RoW (fiber) Fibermaintenance

(planned,unplanned)

Cabinethousing(RoW)

Powerconsumption

AC Activemaintenance

Othermaintenance

Customercare

•opex

/sub

(euro

)GPON vs AE Case 1: Opex/sub Breakdown –20% TR

Active Ethernet

2-Tier GPON

1-Tier GPON

For low TR (<20%) Active Ethernet and GPON 2-Tier are close

Page 70: DSL El Sayed

70 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

500

1000

1500

2000

2500

3000

3500

4000

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

GPON vs AE Case 2: New OSP Locations for FTTH – no DSL – Capex/sub•C

apex

/sub

(euro

)

Active Ethernet

2-Tier GPON

1-Tier GPON

Take Rate

GPON 2-Tier saving = 5-8%

GPON 1-Tier saving = 1-5 %

Additional capex to build OSP locations Capex includes new civil works cost

Page 71: DSL El Sayed

71 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

200

400

600

800

1000

1200

OSP Manpower Construction ofOSP cabinet

Buildingconnection cost

Fiber cost ODF related Active NE CPE (incl.installation)

Spares

GPON vs AE Case 2: Capex Breakdown –20% TR

P2P2-Tier GPON

1-Tier GPON

•Cap

ex/s

ub

(euro

)

Significant Expense for AE

AE still saves on total fiber because of aggregation in the OSP cabinet

Page 72: DSL El Sayed

72 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

50

100

150

200

250

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

GPON vs AE Case 2: Opex/sub•O

pex

/sub

(euro

)

Active Ethernet

2-Tier GPON

1-Tier GPONGPON 2-Tier saving = 37-58%

GPON 1-Tier saving = 25-50 %

Take Rate

Lower OPEX/sub favors GPON

Page 73: DSL El Sayed

73 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

GPON vs AE Case 2: Opex/sub Breakdown, 20% TR•o

pex

/sub

(euro

)

0

10

20

30

40

50

60

70

80

RoW (fiber) Fibermaintenance

(planned,unplanned)

Cabinethousing(RoW)

Powerconsumption

AC Activemaintenance

Othermaintenance

Customercare

Active Ethernet

2-Tier GPON

1-Tier GPON

Active Ethernet has higher Opex due to large # of active OSP elements (4500 cabinets for AE, 200 FFP for PON)

More points of failure, risk of vandalism

Page 74: DSL El Sayed

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Impact of Fiber Sharing - Assumptions

If the Primary Operator (operator laying the infrastructure) is GPON-based: provides the other operators (competitors leasing fiber) with fiber access at either the last mile drop, FFP or CO.

For e.g., if the Primary Operator deploys 2-Tier GPON in an MDU, w/ a splitter in the basement of the building and shares at the building, the other Operator (if GPON) installs a new splitter at the basement to connect to the customer

If the Primary Operator is P2P-based: always shares at the POP (a distinct fiber to each customer terminates only at the POP)

The other operators deploy their own equipment (ODF, splitter, Active NE etc.) at the site where sharing occurs and connect to the customer’s fiber.

It is assumed that the 3rd party operator pays leasing costs for fiber/space/co-location etc., but these tariffs are not modeled here.

The goal of the model is to compute “additional fiber capacity” needed to be deployed by the Primary Operator, and up to 4 PON/4 P2P

Page 75: DSL El Sayed

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Impact of Sharing Fiber Infrastructure

GPON LT 1

Operator A1x64 Splitter

Fiber Flexibility Point

PON 1

PON 1

Point to Point Ethernet

Operator A

Operator B

Operator C

PON operator A

Operator B1:64 Splitter

PON operator B

P2P operator C

Sharing at CO/POP

Sharing Drop Cable

How much additional fiber should Primary Operator deploy?

What is the impact on GPON vs. P2P economics?

Sharing at FFP

Operator A Splitter

Operator B Splitter

GPON LT 1

MDU

Share in-building wiring

Page 76: DSL El Sayed

76 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

2000

4000

6000

8000

10000

12000

4% 8% 13% 17% 21% 25% 29% 33% 38% 42%

G-2T-No Share G-2T-FFP G-2T-CO P2P

Sharing Case 1 (Urban MDU)Primary Operator Shares w/ 3 Other PON Operators

Assumptions: Market shares– Primary Operator (42%), PON Op 2 (33%), PON Op 3 (17%), PON Op 4 (8%)

Cost advantage of GPON over P2P is maintained even when Primary Operator over provisions network for other GPON operators

Above result holds independent of where sharing occurs in the network

•CAPE

X/su

b in

Eur

os

Primary Operator Take Rate

P2P

2-Tier GPON (No sharing, Sharing at FFP, Sharing at CO

almost overlap)

Page 77: DSL El Sayed

77 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

100

200

300

400

500

600

OSPManpower

PoP FloorSpace

Fiber cost ODF related Active NE CPE (incl.installation)

Spares RoW Powerconsumption

Sharing Case 1: Breakdown of Capex Components (20% TR)

Cost advantage of GPON is maintained when sharing w/ other GPON operators, due to “incremental” changes in OSP manpower, fiber and ODF costs

•CA

PEX

/sub

in E

uro

s GPONNo sharing

GPON-FFP sharingGPON-CO sharing

P2P

Page 78: DSL El Sayed

78 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

3% 6% 9% 12% 15% 18% 21% 24% 26% 29%

G-2T-No Share G-2T-FFP G-2T-CO P2P

Sharing at CO, GPON < P2P by 3%

Sharing at FFP, GPON < P2P by 12-15%

Hence, ideal situation for GPON operator is to share fiber at the FFP

Sharing Case 2 (Urban MDU) CapexPrimary Operator Shares w/ 4 Other P2P Operators

•Cap

ex/s

ub

(euro

)

Primary Operator Take Rate

No sharing

Sharing at FFP

Sharing at CO

P2P

Page 79: DSL El Sayed

79 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

0

100

200

300

400

500

600

OSPManpower

PoP FloorSpace

Fiber cost ODF related Active NE CPE (incl.installation)

Spares RoW Powerconsumption

Sharing Case 2: Capex Impact of Sharing w/ 4 Other P2P Operators

Additional OSP fiber, RoW and manpower costs diminishes advantage of GPON compared to P2P when sharing at the CO

•Cap

ex/s

ub

(euro

) GPONNo sharing

GPON-FFP sharingGPON-CO sharing

P2P

Page 80: DSL El Sayed

80 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

SummaryGreenfield & Overbuild FTTH deployment:

GPON provides lower Capex and Opex/sub compared to P2P across all take-rates.

Significant Day 1 OSP investment and higher Right-of-Way (RoW) Opex for P2P

Average savings: Capex ~ 20% (MDU/SFR); Opex = 55-60% (MDU), 40-45% (SFR)

2-Tier GPON cheaper than 1-Tier (for MDU) by 0-10% (function of take rate)

Hybrid Deployment (using DSLAM cabinets):

Overall, GPON and AE Capex are similar, but GPON provides significant OPEX savings

Small Capex savings for AE vs. GPON (0-5%) in areas with existing DSLAM cabinets. However GPON offers Opex savings of 5-58%

In areas with no DSLAMs, GPON Capex savings of 5-8%. However, GPON Opex savings are 37-58%

Key sensitivity analysis parameters impacting GPON Capex savings:

Fiber cost/meter; GPON CPE cost; Ethernet switch cost; remote Ethernet switch housing cost; andGPON OLT cost

Increased GPON deployment by major carriers should further lower GPON costs

Key sensitivity analysis parameters impacting GPON Opex savings:

Right-of-Way; Cost of energy and Fiber maintenance costs

Energy costs are projected to increase in the future; further increasing GPON savings

Page 81: DSL El Sayed

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Other Comments

Fiber sharing:

Cost advantage of GPON over P2P is maintained even when Primary Operator over-provisions the network for other GPON or P2P operators

Sharing at FFP is less costly for the primary GPON operator than sharing at the CO

Another study shows that there may be some special situations where P2P Capex is similar to GPON Capex for non-large scale deployments (outside scope of this paper)

For a very small # of HHPs (<3K) or small serving area/CO (<1km2) like an island;

however such deployments tend to be very small

Newer, more cost-effect fiber deployment technologies such as micro-trenching will help reduce overall FTTH deployment costs, but will not make P2P cheaper than GPON

Page 82: DSL El Sayed

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GPON vs EPON Study - Assumptions

25% TR

20% TR

20% TR

Objective: Compare GPON vs EPON Capex/Opex

investments (e.g. China)

5 year (2007-2011) deployment

period in an Asian metro area

Customer types:

− Single Family Residential (FTTH)

− Multi-dwelling Units (FTTC+VDSL2)

− Enterprises

Each type modeled independently

Services bandwidth:

− Grows from 10 Mbps to 50 Mbps

Cost items modeled:

− Active NE (CO switch, CPE)

− Passive elements (splitter, ODF, fiber)

− OPEX (space, power)

Figure: Subs and growth forecast

Page 83: DSL El Sayed

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Network Modeling Assumptions for SFR, MDU and Enterprise

SFR: FTTH

Enterprise: FTTBusiness

Fiber Flexibility Pointwith Splitters

Fiber Feeder

CLE ONT

MDU: FTTBasement

Fiber DropDistribution Fiber

TapFiber Drop

Business ONT

Tap

Tap

MDU ONU +12 p VDSL2

Central Office

ODFOLT

Notes:

− OSP: Feeder fiber material cost only; Distribution and civil works cost same for EPON and GPON

− CO: ODF connects to OLT, GPON ,and EPON

~ 2km~ 1km

200 fibers/cable

~1000 max subs/ FFP

EPON: 1:32; GPON: 1:64

EPON: 1:32; GPON: 1:64

EPON: 1:4; GPON: 1:8

Cost OLT: GPON/EPON = 2

Cost ONT: GPON/EPON=1.3

Cost 12 VDSL2 ONU: GPON/EPON=1.03

Page 84: DSL El Sayed

84 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Single Family Residential (SFR) : PV of GPON Cost Savings

BW (Mbps):10 20 30 40 50

Breakeven in mid 2010

PV of savings ~ 13.2 Mil RMB

Present

Value

(RMB)

Page 85: DSL El Sayed

85 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

SFR : Breakdown of Cost Difference (EPON-GPON)

GPON:

− OLT breakeven in 2009, splitter savings in 2009

− Significant savings in OLT, fiber, splitters in 2011

Cost

(RMB)

Page 86: DSL El Sayed

86 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Single Family Residential (SFR) : Sensitivity Analysis

Sensitivity Analysis of GPON savings

over EPON (+- 20%)

17.0% ¥13,175,709

Page 87: DSL El Sayed

87 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

BW (Mbps):10 20 30 40 50

Multi-Dwelling Unit (MDU) : PV of GPON Cost Savings

Breakeven in early 2009

PV of savings ~ 80.8 Mil RMBPresent

Value

(RMB)

Page 88: DSL El Sayed

88 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

MDU: Breakdown of Cost Difference (EPON-GPON)

GPON:

− OLT breakeven in 2009, fiber savings start in 2009

− Significant savings in OLT, fiber, splitters in 2010 and 2011Cost

(RMB)

Page 89: DSL El Sayed

89 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Multi-dwelling Unit (MDU): Sensitivity Analysis

Sensitivity Analysis of GPON savings

over EPON (+- 20%)

18.4% ¥80,875,553

Page 90: DSL El Sayed

90 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

EPON vs GPON Study – Summary

EPON provides a lower start-up cost, but requires significant investment in future years

All cases show that GPON has lower Present Value than EPON and is more future proof against BW and subscriber growth. Savings = 17% (SFR), 19% (MDU) and 30% (Enterprise)

Sensitivity analysis indicates the key parameters impacting investment are

− Subscriber Bandwidth: If BW stays below 20 Mbps, EPON becomes more economic than GPON

GPON ONT and ONU costs are expected to go down relative to EPON >> higher PV

Page 91: DSL El Sayed

Operators’ Experience

Page 92: DSL El Sayed

92 | September 28, 2008 Networks 2008 Mohamed El-Sayed All Rights Reserved © Alcatel-Lucent

Top BB countries end ‘07 (>2 M BB subs)

Broadband subscribers (% Households)

FTTx home passed (% HH)

5Mio BB Subs

Tbd

Source: Alcatel-Lucent

FTTN VDSL / FTTA

FTTBuilding / FTTA

FTTHome / FTTA

40% 60% 80% 100%

AustraliaSpain UK

Netherlands

TaiwanUSA

CanadaDenmark

Italy

Germany

France

Sweden

South Korea

Switzerland

Japan

Belgium

Hong Kong

20%

0%

20%

40%

60%

80%

0%

China

TurkeyPoland

ArgentinaMexico BrazilRussiaIndia

Page 93: DSL El Sayed

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FTTX Strategy for Major Operators

Source: public announcements

CountriesAustraliaBelgiumChina

DenmarkFrance

GermanyHong Kong

IcelandIreland

ItalyJapanKorea

New ZealandNorway

SingaporeSpain

SwedenSwitzerland

The NetherlandsUK

USA and Canada

Cable

CableCable

Incumbent Alternative Munis/util.

Cable

Cable

Cable

PON

FTTN

P2P/AE

N/A or TBD

Public announcements in top BB countries

II

FTTAmplifier

Cable

Cable

Cable

Cable

Cable

Page 94: DSL El Sayed

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Verizon

Competition with MSOs, subscribers retention

Started with BPON but now deploying GPON with RF Overlay

Home networking based on MoCA but plans to use HPNA

Complete bundled offer of network and services

Recently eliminated all analog TV and is now offering 100 HD channels and 50/30 Mbps Internet service

Penetration rate is now 20%; planning to go up to 40%

10,4M connected Households mid-’08, 23M planned end 2010

Cost per HHP: $782 (website article and consistent with Verizon FIOS briefing)

Cost per HH-connected: $718

Cost per sub (at 50% TR) = $782 x 2 + $718 = $2282 (consistent with expectation of $2000-$2500)

Page 95: DSL El Sayed

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AT&T

Deploying ADSL2+, VDSL, GPON

Triple Play service

GPON in greenfield locations

Now has 21.8M million primary residential lines

Planning to pass 18 million homes by 2008

1M will be FTTP

Rest is FTTN – mix of ADSL2+/VDSL/bonding with $4-5 billion in capex investment

Fiber is deployed within a few thousand feet of the home, readying the neighborhood for FTTH at some point

Estimated expense of $360 per home passed; $150 per home connected

Cost per sub (at 50% TR) = $360 x 2 + $150 = $872

Plans call for deployment completion in 2-4 years

Page 96: DSL El Sayed

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Other Worldwide FTTH Activities

NA

AT&T: FTTN, GPON

VZ: GPON

Bell Canada – FTTN >> GPON

Qwest: BPON – looking at FTTH options

Numerous municipalities deploying P2P Ethernet, GPON

LAM

Telefonica in Argentina in lab trials Telmex

EMA

Telefonica has announced lab trials

GPON in Nordics

KPN: VDSL/AE >> GPON

Kuwait MOC deploying GPON

Free deployed AE in Paris

APAC

China – field trials

Japan – Volume deployment of EPON; NTT testing GPON

Taiwan – EPON; testing GPON

India – Bharti & BSNL decided on GPON

Australia – GPON evaluation

Singapore – In field trials