Towards Competitive Universal High-Speed Broadband Access

Towards Competitive Universal High-speed Broadband Access

Dr. Sanjay S. Patel CTO, Wireline Networks Product Division WIK International Conference, Berlin, April 2010 Outline

FTTx market update

Next generation fixed access

Architectural/wholesale evolution

High-definition TV sets MP3 players (50% of TVs purchased are HD-ready (35 Mio sold in ’06, (5% in ’05)) 30% growth)

NG game consoles Digital photography w/Internet (20% of BB subs used (PS3, Xbox 360, Wii: Nintendo Internet upload services) forecasts 16M units in ’07) Multimedia-capable PCs Digital cameras (25 Mio sold in ‘06, (Owned by 60% of 10% growth) households end ’06)

Heavy Reading FTTH Market in Europe 2006-2011 Consumer-focus

Multimedia applications drive the demand for UHS broadband

~6.8M ~2.3M ~32.2M

Source: FTTH C NAR (Sept 2009); FTTH C Europe/iDate (Sept.2009 + including Russia); FTTH C AP/Ovum (Sept 2009)

12,0% Europe mid 2009

10,0% 2M FTTH/B

8,0% subscribers

6,0% 13M FTTH/B homes passed 4,0% 4M FTTx 2,0% subscribers

0,0% 30M FTTx

y d ia ia rra n s homes passed o Italy Latvia Norwa And Icelan erlands Finland Esto Rus Sweden Slovenia Denmark Lithuania h Slovakia Net Fiber To The Home Subscribers Fiber To The Building Subscribers Source: IDATE for FTTH Council Europe

The Nordics is taking the lead, with Central and Eastern Europe making good progress. Major European economies still not in top-10.

16 50% 45% 14 40% 12 South Korea 35% 10 Japan 30% 8 USA 25% WE 20% Japan 6 Japan

15% FTTH/B take rate FTTH/B subscriber [M] 4 Japan 10% 2 5% South Korea South Korea South Korea USA USA WE USA WE WE 0% Dec 07 June 08 Dec 08 Unclear regulatory framework? No local marketing? Unclear business case? Competition? Economic stimulus? Few nation-wide FTTH strategies? Good copper? End-user mentality?

FTTx market update

Next generation fixed access

Architectural/wholesale evolution

VDSL ~50 Mbps ADSL ~12 Mbps

GPON 100 Mbps+

VDSL P2P/AE ~50 Mbps 100 Mbps+ VDSL ~100 Mbps

Drivers: up-front CAPEX, competition, and time-to-market

Start with a 1st twisted Add a 2nd twisted pair – Create a 3rd virtual pair or Apply vectoring Bond the 3 links (2 physical pair – good for about good for another ‘phantom mode’ pair – another (crosstalk cancelation) pairs + phantom mode) 80Mbps. 80Mbps. 50Mbps. to boost bit rate by creating one big 300Mbps pipe. BUT: bit rates on pairs 1 & 2 approx 50%. drop due to Xtalk from phantom pair. 1 400m quad pair 0.6mm

2 4 5 3 4 300 Bonded 250 Phantom Mode 200 Line 2 3 150 Line 1 5 2 100

50 1 Downstream bit rate (Mbps) bit rate Downstream 0 First line + 2nd line +Phantom Mode +Vectoring +Bonding

Industry-first demonstration of 300Mbps@400m over 2 pairs Innovative combination of phantom mode + vectoring

Central Office Access loop Home Efficient Outside Plant More More concentrated distributed Point Passive OSP -to- IP Splicing Point Ethernet No remote powering switch

Cost-effective Feeder

Active IP Smaller duct sizes, Less RoW,… Ethernet Ethernet Ethernet switch CO consolidation switch

Wavelength per user

WDM IP Few fibers in feeder section PON Wavelength CO consolidation PON OLT Splitter

Best Scalability TDM PON IP Passive OSP, lowest CAPEX Optical splitter PON OLT CO scalability & Consol. (20+ km)

P2P scalability issues… …innovation areas to expect

4 Increased Capacity FE → GE → 10GE→ 100GE

3 High Density optics

2 Dual Channel SFP Quad SFP Power (W/user) 1 High Density fiber 0 Ribbon fiber p2p AE GPON Multi-fiber connectors Main area of innovation for P2P is higher density optics, fiber and connectors.

1 10 Gb/s PON Extended 10 Gb/s PON 2010-2011 Three target applications 10 Gb/s RE 1.FTTB backhaul

2.Business RE Access 2.5 Gb/s 3.Fiber to the GPON B+ GPON C+ Extended GPON base-station: Today 2 2009-2010 3 2009-2010 LTE backhaul Reach 20km 30 km 60 km

Split 32 64 128

Less dense areas addressed and central office consolidation

WDM to split Many GPON ONTs today have WBF GPON from No changes to 10 Gb/s GPON OSP, including GPON fiber and splitter GPON

10 Gb/s 10 Gb/s GPON 10 Gb/s on different wavelengths GPON (up and down)

XGPON up GPON up GPON down CATV XGPON down

1260 1290 1480 1550 1575 λ -1280 -1330 -1500 -1560 -1580 (in nm)

No stranded investments: GPON OLT, ONT and OSP can be reused

CAPEX Operations

TDM PON WDM PON GPON 10G PON WDM PON (10Gb on top of 2.5Gb) (Everyone Gets a Lamda) CAPEX Lowest cost FTTH x3-4 TDM PON CO Power, Low OLT OPEX CO floor space Lowest power High power Splitter Eco consumption consumption ONT Standardized Yes Not started Dynamic BW Yes Not possible Based on a Video overlay Yes Not possible 1:32 split Temp controlled or GPON Passive splitters Today Over Time Today Long term Passive OSP temp extended AWG Complex, many Straight forward System Design dependencies AWG needs to be Excellent Reliability athermal & reliable

WDM PON (as P2P) solutions are subscriber density ‘challenged’

FTTx market update

Next generation fixed access

Architectural/wholesale evolution

End-user

Retail Services (residential, public & business) Active Network (network equipments, business & operation support) Passive Infrastructure (trenches, ducts, fibre)

Retail Service Provider Retail Service Provider Active Network Provider Integrated or separated? Active Network Provider Passive Infrastructure Provider Passive Infrastructure Provider

WDM GPON P2P Content Provider PON

Service SLA “Open Access” Application Provider Open Access (Packet) IP & Ethernet Wholesale Active Network Provider “Unbundling” Open Access (Wavelength) Wavelength Dark fiber Open Access (Fiber) Passive Dark Fibre Provider Ducts, Sewers, Poles “Infrastructure Open AccessFeeder (Duct) filling Competition” Passive Infra. Provider

Sharing can take place at many layers, independently of technology

Vertically Passive Active Full separation Integrated Sharing Sharing Retail Service Retail Retail Service Retail Service Retail Retail Service Retail Service Retail Retail Service Retail Provider Provider Provider Provider Provider Provider Integrated Operator Integrated Operator Integrated Operator Vertical Service Vertical Service Vertical Vertical Service Vertical Provider Provider Service Provider Vertically Vertically Vertically

Network Active Vertical Operator Infrastructure Infrastructure Provider Infrastructure Passive Owner Owner

Competition Infrastructure Service Competition Competition “Open Access”

Regulated Regulated Access to public Regulated active Regulation passive passive & active infrastructure wholesale wholesale wholesale

18 | Sanjay S. Patel - WIK Berlin, April 2010 All Rights Reserved © Alcatel-Lucent 2010 General principle, based on lessons from DSL: Prepare for competition on the lowest feasible layer Merits of infrastructure based Competition on lowest possible layer competition for DSL is gaining ground 5 Differentiation Capacity Local loop unbundling QoS/QoE 5 Innovation 5Technology agnostic: Bitstream P2P GPON WDM PON 5Independent migration to NGA 5End-to-end fiber trouble shooting Lesson learnt from DSL: Infrastructure based competition prevails. Bitstream: Entry strategy & When infra competition not feasible

SLA Application Provider

IP & Ethernet Wholesale Multi-fiber to the Central Office/Metro PoP Network Provider Multi Wavelength Dark fiber fiber Dark Fibre Provider has CAPEX, OPEX and reliability issues Ducts, Sewers, Poles Passive Infra. Provider Multi-fiber Multi-fiber in feeder segment in terminating segment Central Offices Infra Sharing Point Fiber Mangement Point CO 1 WDM PON CO2 GPON

CO3 P2P

Filling ratio: New ducts needed? Synchronous Significant Fiber mgmt in CO co-investment probability CAPEX fiber CAPEX floor space Limited competition: of mis- Reliability: fiber cut # competitors ≤ # fibers connection Multi-fiber to the metro PoP is expensive, with severe operational hurdles and not necessary to stimulate infrastructure competition

20 | Sanjay S. Patel - WIK Berlin, April 2010 All Rights Reserved © Alcatel-Lucent 2010 Content Provider SLA Application Provider IP & Ethernet Wholesale Dark Fiber Sharing in the Terminating Segment Network Provider Dark Wavelength Dark fiber fiber Dark Fibre Provider Fiber Flexibility Point Supports Any Technology Ducts, Sewers, Poles Passive Infra. Provider Duct/sewer/trench sharing Dark Fiber Sharing in the horizontal OSP in terminating segment Central Offices Infra Sharing Point Fiber Flexibility Point CO 1 WDM PON

CO2 GPON

patch CO3 panel P2P Fiber mgmt Rural Urban optimum

€2,000 CPE €1,500 €1,000 Civil Work Terminating Segment CO equipment Fiber

CAPEX per Subscriber €500 & floor space Civil work OSP Duct/sewer sharing in horizontal OSP & dark fiber in terminating segment is optimal from a techno-economic point of view

Reduced telecom costs E-learning Innovation in public services: Healthcare Elderly care Rural GDP Reversed urbanization trend Simulate collaboration: between municipalities, public bodies and communities ICT innovation/R&D

22 | Sanjay S. Patel - WIK Berlin, April 2010 All Rights Reserved © Alcatel-Lucent 2010 FTTH policy of competition on lowest feasible layer Public investment model should consider geographical segmentation

100 % Market Driven Risk Driven Policy Driven

Services Private € Fraction Village public to private Kilafors Lindefallet investment ActiveSmall town Hudiksvall

Medium-size town Jönkoping Dense city Passive Stockholm Public € 0 % Low Socio-economic impact of fiber High Socio-economic impact Low/Medium Medium High Investor Payback Time ~5 year ~10 year ~20 year

Public Sector Access to infra, RoW, Ducts, sewers, Passive, active. Intervention in-house labeling.. dark fiber. Active? Utility services?

Consumers benefit from competition where they can independently choose ISPs, ACPs , and, can easily switch between providers Promote competition at the lowest possible layer Remain technology neutral

y Promote innovation y Let providers compete on the merits of their innovation y Do not impose regulatory burden on one technology over another Apply graduated remedies /public investment based on geographic segmentation in case of market failure to promote Universal Broadband Access When multiple Retail SPs per subscriber are allowed, the Wholesale SP must coordinate resources among RSPs and resolve conflicts.

y Likely that static partitioning among RSPs will be required (e.g., bandwidth per VLAN) A technology-agnostic, graduated regulatory environment can promote Competitive Universal Broadband Access

SLA Application Provider

IP & Ethernet Wholesale Sub local-loop unbundling Network Provider Wavelength SLU Dark fiber Dark Fibre Provider Widespread agreement that complexity outweighs benefits Ducts, Sewers, Poles Passive Infra. Provider

Central Offices Unbundling cost: Infrastructure SC1 Mini Sharing Point MDF •Must be regulated CO1: •SLU<

SC2 CO2:

patch CLEC panel

•Difficult collocation or sharing •Duct space issues •High OPEX (maintenance) & CAPEX •Extra Fibers seldom available •Prevents NGN DSL: Vectoring •Regulated wholesale offer needed •Partially filled DSLAM are not green In reality, sub-local loop unbundling is not taking place. 26 | Sanjay S. Patel - WIK Berlin,Regulated April 2010 bitstream Allwholesale Rights Reserved © Alcatel-Lucent offer 2010 may be necessary.