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1 © Calix – Proprietary and Confidential
The information contained in this presentation is not a commitment, promise, or legal obligationto deliver any material, code, or functionality. The development, release, and timing of any features or functionality described for our products remain at our sole discretion.
Why Fiber?
2 © Calix – Proprietary and Confidential2
Topics
Value of Fiber to the CommunityFiber Technology OverviewTrends in Fiber DeploymentsFiber Economics
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Why Fiber?Bandwidth growth is exponential
Fiber is the path to long-term sustainabilityOffers virtually unlimited bandwidthAllows network to be built “once”
VDSL2 FiberADSL/2/2+1.5-3 Mbps8-24 Mbps
50 Mbps
100 Mbps
500 Mbps
Mul
ti-P
air
Bon
ding
2-P
air
Bon
ding
Competitive Battleground (today)
20 Mbps service today will require 150 Mbps in 5 years, 1 Gbps in 10 years
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Peak Bandwidth Growth over Time?
Nielson’s LawInternet peak consumption doubles every 2 years
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Growth in Technology InnovationThe growth rate of Internet speeds has lagged behind Moore's
Law and rapid upgrades in storage capacity
Prior Momentum
Google Fiber Launch
*
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Fiber as a Community Asset?
Gives your community a competitive advantageBusinesses need high speed fiber optics to be competitiveYoung people won’t settle where they can’t get high speed broadbandCritical infrastructure for economic development
Why is fiber the technology of choice?The only technology that has the bandwidth and flexibility to keep up with projected consumer demandFiber has a high initial cost, but a low operating cost eliminating truck rolls and ongoing maintenanceProvides a communication infrastructure for grid modernizationFiber future proofs the network; bandwidths can scale with consumer demand
Fiber cable infrastructure has unlimited bandwidth potential
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Fiber Value Proposition
EnterpriseWorld-class infrastructure to collaborate, innovate and competeServing business of any size
CommunityEconomic development and vitalityWorld-class healthcare, enriched education and public safetyImproved public services and government efficiencies
ConsumersFreedom: no constraints, no boundaries, no limitsAccess to all the things you care about, anytime, anywhere.Highest quality communications: video, voice and data
Value to community stakeholders
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Broadband is the New Necessity
Broadband and Economic Development
Question 1: Would you rather have 100 five employee companies or a single 500 person company in your community?Question 2:Would the people running those five person companies be able to grow without adequate broadband?
High speed broadband is now considered a fundamental element of a community’s ability to compete in the global economy
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Communities and Fiber Access
Well served communitiesMinnesota has many communities well served with fiber by incumbentsTalk to incumbents
Public-private partnershipsTalk to nearby telecom operators that are looking to expand Private financing now becoming more available
Community ownedFew options for government help except in unserved or underserved rural areasMost have been done by municipal electrics
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Fiber Technology Overview
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Fiber Access StandardsDeployments for residential and small business
ITU Standards Deployment Status2.5G GPON Millions deployed worldwide
10G PON: XG-PON and XGS-PON Just starting
Multiple 10G PON: NG-PON2 Likely to start in 2017
IEEE Standard Deployment StatusPt-to-Pt GE Millions deployed-Europe and U.S.
10G Pt-to-Pt Just starting
1G EPON Millions deployed in East Asia
10G EPON Started in 2014
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GPON and Active Ethernet
FTTP Technologies
PON 16, 32 and 64-way splitBandwidth is allocated dynamically to ensure optimal user experienceFiber efficientDistances to 32km with
32 way split
Point-to-Point GE Dedicated bandwidth per homeFiber intensiveDistances to 50km
Both technologies can offer a Gigabit experience
PON Architecture
Ethernet2.4 Gbps
1.2 Gbps
Residential
Business
Point-to-Point GE / AE Architecture
Ethernet
1 Gbps
Residential
Business
OLT
OLT
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Gigabit Advantage Infrastructure designed for future decades
050
010
0015
0020
0025
0030
0035
0040
0045
0050
0055
0060
0065
000
200000
400000
600000
800000
1000000
1200000
DOCSIS 3(8 channel bonding)
Distance (ft)
Copper Technologies
Gigabit Fiber
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GPON StandardLight is shared, bandwidth is dynamic
GPON Bandwidth:Downstream: 2.5 GbpsUpstream: 1.2 Gbps
Bandwidth per ONTAny ONT can have 0 to 2.5 Gbps in D/SAny ONT can have 0 to 1.2 Gbps in U/SBandwidth oversubscription
Detailed specification of Dynamic Bandwidth Allocation (DBA)
GuidelinesGPON allows enormous flexibilityUp to 128-way split. Customers are only using 16, 32 and 64Optical budget of 28dB (20km distance, 12 miles) to 31dB with FEC enables distances out to 40km (24 miles)
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GPON Optical Network Architectures
1:32
CO
OLT Interface 32
• Home RunNAP
1
8NAP
NAP
NAP
Dist.
8
8
1:8
CO
OLT Interface
• Distributed Split1x8-to-1x4 or 1x4-to-1x8
1:41
32
1:4
1:4
1:4
1
8
1
1:32
CO
OLT Interface
• Centralized Split w/ hand hole for drops (aka Network Access Point or NAP)
NAP1
8NAP
NAP
NAP8
8
1
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Comparing GPON and Active Ethernet
GPON is more flexible, lower cost to deploy
2.5 Gbps of shared bandwidthOptical network can be point-to-point or split in the fieldOutside plant architecture can be active or passiveStandard supports legacy services: RF video and TDMCan be deployed in areas with limited fiber cable or conduitConsumes much less CO space and 1/3 as much power at the COGenerally 20-30% cheaper to deploy
AE has higher, dedicated bandwidth
Delivers up to 1 Gbps to every home and business servedFiber network is dedicated point-to-pointSymmetrical bandwidth better suited for SLA based services (100 Mbps+) to medium and large businessesOptical reach beyond 40 kmFamiliar to IT staff at enterprise customers
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Outside Plant Design is KeyActive Ethernet must have dedicated fibers in the feeder plant, so all fibers are home run to the OLTWhen feeder fibers or conduit are plentiful, AE or GPON can both work
In higher density areas the sheer number of fibers favors GPONExample: Imagine putting 2300 fibers on a pole versus 72 fibers
When feeder fibers or conduit is limited, GPON is favoredPassive splitting in the outside plant is cheaper than placing cabinets with active electronics
Video
PSTN
ISP
VideoHeadend
Voice
Data
Central Office
Homerun
Aggregate
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Trends in Fiber Deployments
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FTTH Map of the USA
Source: http://www.broadbandmap.gov/
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The Internet of Things is GrowingNew generations of “connected” devices will change home networking and bandwidth consumption
By 2020, some are projecting average U.S. internet connected home could have as many as 50 internet connected devices
Source: Gigaom, Parks Associates, The Wall Street Journal, stltoday.com
95% of U.S. broadband homes are projected to have home networks by 2016
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Device Enabled SubscribersThe revolution is here. Are you ready?
The device-driven subscriberExplosion of devices throughout the homeWireless becoming ubiquitous and preferred in-home networkDevices, applications, video increase complexity for subscriberNew services and applications contend for bandwidth and priority
EntertainmentHome securityHome automation Game Console
Wireless Printer
Laptop Smartphone
Wireless TV
Tablet
Security Camera
Thermostat
CameraFemtocell
StorageCard
OTT Stick
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Google Fiber Experience ProviderA “clean-sheet” approach to communications
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The Gigabit Phenomenon
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Creating Gigabit communities
Gigabit Residential Announcements
Cedar Falls, Iowa
Bristol, VA
Ten Cities
Red Wing, Minnesota Rural Vermont
100 Cities
Multiple Cities
Rural Missouri
Burlington, Vermont
Multiple CitiesChattanooga, Tennessee
Lafayette, Louisiana Longmont, Colorado
Leverett, MA
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Where Does the Network Begin ?Here
Here
Here
NID
Here
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Carrier Class Wi-FiComplete the gigabit experience with Carrier Class Wi-Fi
STB
Data
Data STB
GEDVR
Phone
New Wi-Fi delivers extraordinary coverage and speed Optimized for IPTV video and video streaming Dramatically lowers cost of wiring homes and accelerates IPTV service velocity
STB STB
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Obama Visits Cedar Falls
Some significant recent eventsRural Broadband Experiments - $100M … fiber participants offered CAF II opportunity Call for Title II treatment for broadband … it will happen, but when?Definition of broadband increased to 10/1 …soon may be 25/3CAF programs embrace utilities, MSOs, Munis … not just for ILECs anymore$40M new dollars added into RUS loans … expanded for MunisE-Rate significantly expanded … $1.5B for fiber infrastructureA new ROR algorithm solidified … Price Cap nextA shift from wireless to fiber … Obama get a Calix gig demo!
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Fiber Economics
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Fundamentals of FTTH Success
Key FTTH success factorsHigher penetration rateHigher ARPULow operating costs Faster service velocity (speed of deployment)
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Cost study done by FTTH Council and CSMG for the FCC Cost per home passed is all OSP construction labor and materials, based on all aerial construction (engineering and make ready costs are not included)Cost per home served is around $650 for each subscriber served-includes OLT, ONT and subscriber drop costs
Cost to Pass a Home Based on Housing Density
• 5X difference in FTTH costs per HH passed over the range of HH densities with publicly reported data
• Range of densities represents a wide spectrum of HH densities from rural (5 HHs per sq. mile) to urban (1,375 HHs per sq. mile)
Source: FCC Filings, SNL Kagan, CSMG Analysis
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Cost per Home Passed FormulaCost per home passed @ 14 homes per square mile
Formula: y= -467.24 Ln(x) + $3658.9
Calculation: =-467.24 Ln(14) +$3658.9=-467.24 X 2.64 +$3658.9= $2,425 per home passed
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Cost Case Study: Town of 3600 Homes*Average density of 851 per square mile
30% Take Rate 50% Take Rate 70% Take RateCost per Home Passed
$550 $550 $550
Incremental Cost per Home Served $650 $650 $650
Meters served 1,080 1,800 2,520
Total Cost $2.7 million $3.2 million $3.6 million
Actual Cost per Home Served
$2,500 $1,800 $1,400
*Assumes all aerial construction. Does not take in to account make ready costs, IPTV headend or engineering costs
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Fiber: The Optimal New Build Technology Rural FTTH deployments, with up to 1 Gigabit symmetrical, are being deployed in areas as low as under 10 homes per square mile-without any government subsidyWith government support even lower density areas are being served by fiberLTE and fixed wireless do not have the bandwidth or data usage cost structure to be competitive with an all fiber network or to provide consumers and businesses with the bandwidth they need
Question: What does 212 Gigabytes per month of use cost over a wireless network? This is the amount of bandwidth consumed by the average consumer using streaming video, not on a cable or satellite system
Fiber deployed in small rural towns can be as cost effective as urban and suburban areas