Why Europe is choosing point-to-point

May 1st, 2007

by Gerlas van den Hoven

As demand for bandwidth rises, network operators in Europe are choosing FTTH as the way to provide futureproof broadband communication. A number of large deployments have begun; for example, fibre is being deployed to 40,000 homes in the first phase of a project aiming to connect all of Amsterdam. Similar open-access networks already realised in the Netherlands are in Nuenen (7,500 homes), Eindhoven (7,500), Rotterdam (5,000), and Enschede (5,000), complemented by a number of projects by housing corporations (30,000).

Point-to-point Ethernet is the natural choice for such deployments, since it not only provides the bandwidth, but also scalability and manageability advantages over PONs. In the Netherlands alone, more than 100,000 homes will be added in 2007, making a total of 200,000 homes connected to point-to-point Ethernet FTTH networks.

The Amsterdam open-access business model consists of three layers. First is the passive “dark fibre” layer, installed by van den Berg-BAM and Draka. The passive network is leased to the network operator, composing the second layer of the business model. In Amsterdam, network operator BBned has been selected for this role. In the third layer, service providers compete to provide voice, video, Internet, and other services to the end users. The end users are able to choose their service providers. In this way the services are unbundled at the network level, rather than at the level of the physical cables, enabling maximum choice for the end users and the lowest cost for the network operator and service providers.

Ethernet-based point-to-point networks enable this approach. At each end user a Genexis FibreXport gateway provides a 100 Mbit/s symmetric connection to the FTTH network. The gateway provides several functions. It converts the optical signal on the fibre to an Ethernet signal, then separates the signals from different service providers. IP telephony is fed to an internal voice-over-IP (VoIP) gateway providing the customer with two voice ports to which standard telephones can be connected. The other data signals are separated per service and fed to one of the four Ethernet ports. Instead of a single connection for a single service provider, the gateway provides four or more connections to multiple service providers.

Through the passive fibre network, the gateways directly connect to Cisco switching equipment in the central office (CO; there is no active equipment in the field). The central network routes signals to service provider locations anywhere in the world. Since the network is Ethernet based, seamless communication with a multitude of service providers is no issue at all.

Point-to-point networks provide a number of network architecture advantages that suit densely populated areas such as found in most of Europe. Point-to-point is simple: Every end user gets a fibre connection. Ultimately, this is the most flexible and futureproof architecture. Taking into account that in densely populated areas the distance between end user and CO is small, the cost of such a network is low. In addition, the cost of fibre itself is continuously decreasing, making such “fibre-rich” deployments attractive.

Point-to-point networks are also scalable and upgradeable. Imagine two FTTH deployments, one point-to-point and the other a PON with 32 users on one fibre. Now imagine in a few years the demand for bandwidth rises to the gigabit-per-second level for the top 10% of end users (early adopters of bandwidth). Just like with DSL, these users pay the highest subscriptions and bring in the highest profit margins to the network operators.

To upgrade these users, the whole PON would need to be upgraded, since all users share the same network. Increasing the bandwidth requires changing everyone’s home gateway and replacing all CO PON equipment. In point-to-point, with every user on its own fibre, upgrading can be done on a per-user basis. New equipment can be gradually introduced to the most demanding, highest-paying customers, while maintaining the current equipment for “normal” users. The investment in equipment and technology is therefore much more effective than in PON, and the lifetime of the network is much greater.

At the FTTH Council Europe meeting recently held in Barcelona, technology and market development of FTTH in Europe were discussed. Although it is said that Europe lags behind Japan and the US, one can also say that Europe is choosing a different way to deploy broadband networks. For example, NTT of Japan gave an update on the fantastic rate of FTTH connections, exceeding the number of DSL connections this year. One of the new services introduced in Japan was high-quality telephony based on VoIP. While the European deployments are not (yet) as large, the level of services often exceeds that of deployments elsewhere in the world. In Europe, high-quality VoIP telephony has been standard already for years in addition to broadband data and high-quality broadcast and IPTV.

Taking things a step further, projects in Denmark, Sweden, and the Netherlands have not only focused on providing triple play but on enabling a host of services from various service providers. One could conclude from the FTTH Council meeting that Europe is not targeting fibre for the sake of fibre alone; rather, Europe is aimed at providing a real multiplay service model, where multiple providers complete to give the end user the best service.

This multiplay business model, used in Amsterdam and many other European deployments, creates a new view of how to provide broadband communication services to end users. Two roles must be separated: network operator and service provider. The network operator provides connectivity; the service provider provides content. Many incumbent operators combine these roles. However, creating services and content is completely different from building and operating networks. With point-to-point networks, this separation of roles comes naturally and is standards based.

Ethernet point-to-point networks have scalability and upgradeability advantages over PON networks. The benefit of a fully passive network holds for point-to-point, too, especially in densely populated areas where low-cost fibre cabling technology can be used. The maturity of Ethernet and the seamless connections to service providers result in the lowest operational cost. Taken together, point-to-point Ethernet is the best choice, business-wise and technology-wise, for European FTTH deployments.

Gerlas van den Hoven is chief executive officer of Genexis B.V. (www.genexis.eu).

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