Ethernet in the First Mile makes inroads in Asia
Nippon Telegraph and Telephone (NTT West and NTT East—Tokyo) ignited the hopes of Gigabit Ethernet (GbE) passive-optical-network (PON) vendors in August when it issued a request for proposal for GbE PON technology compliant with the IEEE 802.3ah Ethernet in the First Mile (EFM) standard, which supports a 1:32 split or higher. The EFM specification, expected to become final next year, is still in the early stages of the ratification process (working-group ballots on draft 2.1).
Ethernet PON (EPON) vendors may have good reasons to get excited. As the forerunner of fiber to the home (FTTH) deployments worldwide, Japan's attempts to develop next-generation broadband access technologies are closely monitored by other nations: Korea, China, and even the United States and many countries throughout Europe. And unlike the former Bells, which in May issued common technology RFPs for fiber to the premises based on the ITU G.983 Recommendations for ATM-based PON (APON), NTT is likely to implement GbE PON technology—if it measures up—relatively quickly.
A member of both the Full Services Access Network (FSAN) initiative that led to the ITU Recommendation and IEEE 802.3ah standards bodies, NTT is aggressively developing PON technology for FTTH deployment, driven partly by government subsidies. In March 2002, NTT introduced its own lab-developed broadband PON technology to test optical video distribution in partnership with SKY Perfect Communications, a Tokyo-based digital satellite broadcasting company, using WDM to offer 100-Mbit/sec Internet access and one-way multichannel digital video simultaneously on a single fiber. NTT West is deploying a low-cost, point-to-point gigabit PON (GPON) using Hitachi APON equipment and optical-to-electrical media converters. NTT is considering GbE PON as a potential next-generation access technology corporate-wide, according to some EPON vendors.
GbE transmission downstream and upstream is desirable, especially in Japan, because of a shift in the type of applications used. "There is a lot more peer-to-peer networking," says Ariel Maislos, president and founder of EPON chip developer Passive Technologies (Tel Aviv and Sunnyvale, CA). "They don't know what the killer app is, but they want a very-low-latency service. They are looking for a very good customer experience, which means that customers are willing to pay more for the services than [for] services offered over traditional networks."
As carriers upgrade their networks to support IP-based service models, EPON makes sense in the access, according to proponents, because it handles data services more efficiently and cost-effectively; it doesn't have ATM's cell tax or require cell-to-packet conversions.
Ethernet's cost-effectiveness, however, depends on multiple variables, including the type of traffic. Most carriers interested in FTTH intend to transmit high-quality video, believing that they can tap into new revenue streams. "Traditional data services such as e-mail and Web browsing have irregular traffic loads, which lends itself to very efficient multiplexing," says Gartner Denmark principal analyst Peter Kjeldsen, who analyzes FTTH business models. High-quality video connections, on the other hand, require a more constant bit stream. "It's a fairly complex issue," he explains, "but at the end of the day, there are assumptions related to Ethernet economics that supporters have heralded as being almost proven, and certainly Ethernet technology offers a lot of advantages, but one should be very cautious about how much can be gained by statistical multiplexing, if the majority of the traffic will be driven by video applications."
Vendors bidding on NTT's RFP must support multigrade quality of serve (QoS) and operations, administration, and maintenance (OAM) functionality. Unlike ATM, QoS and management capabilities are not inherent in native Ethernet—traditionally a LAN protocol. The EFM alliance is working to standardize some of this functionality in the IEEE 802.3ah specification, and Japanese carriers are watching these efforts closely, say analysts.
"I think that all of the carriers in Japan wonder if PON systems at present, such as EPON and GPON, are operated easily by advanced OSS [operational support systems]," says Akiyoshi Ishiwata, principal analyst, telecommunications industry services, Gartner Japan (Tokyo). "If it is the case that the Ethernet PON system with IEEE 802.3ah standard is cheaper than [broadband] PON and single star, I think Japanese carriers will select it."
Takehito Ichida, an analyst at RHK (Tokyo), agrees that NTT issued the RFP in an effort to lower networking costs. But in his view, it doesn't necessarily mean that the carrier is abandoning alternatives such as GPON and WDM PON. "The total number of subscribers at this first phase will be hundreds of thousands at best," he says.
"I think [NTT's RFP] is showing the value of a point-to-multipoint system for residential and small-business deployments. Point-to-point just does not appear to be economical," says Jim Diestel, vice president of product marketing at EPON vendor Salira Optical Network Systems (Santa Clara, CA) and Salira Shanghai. Salira has announced multiple EPON contracts in China and Korea, including a partnership with China Netcom. "[NTT] really needs a way of allocating bandwidth in a much lower increment, to uniquely bill for that, and to find some way of building something that is variable in bandwidth."
China is getting increasing pressure leading up to the Olympics in 2008 to have the entire country equipped with Internet access. "It means deployment into the western provinces of China, and they just can't afford to deploy the massive amounts of fiber that they have in Shanghai, Shenzhen, and the major centers," says Diestel. "So there is a tremendous interest in PON. There is very little ATM infrastructure in the country, so they're not looking at APON per se; they are trying to leapfrog the technology and go to IP."
NTT's perceived move toward GbE PON may serve as the technology roadmap for future PON deployment in other Asian countries, especially China and Korea, which are also quickly adopting IP-based service models. However, the lack of an advantageous regulatory framework and funding constraints in the United States and much of Europe are hindering widespread deployment of fiber to the X, making the choice of PON technology at this point almost a secondary issue for many carriers.