European municipalities lead FTTH charge
According to a recent KMI Research (www.kmiresearch.com) report, FTTH deployments will compose 65% of Europe’s fiber-optic market in 2010, with fiber-to-the-node, -building, or -basement (FTTN/B) composing the remaining 35%. However, unlike in the U.S. where the incumbent Verizon is leading the FTTH charge, the technology is experiencing greater traction among the European municipalities and municipal utilities, particularly in the Nordic and Benelux regions.
Rural municipalities in Europe are deploying their own FTTH networks largely for the same reasons as their U.S. counterparts. “They want to provide high-speed data access because it’s not being provided today by the local incumbent carriers in many of these areas,” reports Jack Bryant, vice president of sales at Wave7 Optics (www.wave7optics.com), which counts several Scandinavian municipalities among its customers. In Scandinavia, in particular, “there is broad government support, and the local utility companies and municipalities are very supportive of the desire to locally stimulate economic development,” he says.
One of the earliest FTTH implementations was Stokab (www.stokab.se), founded in 1994 by the City of Stockholm to promote economic growth and stimulate IT development in the region. The 1.2 million fiber-km network links all the municipalities in the county and greater Mälar region. According to Stokab’s annual report, approximately 8,000 households were connected via fiber by the end of 2005.
Stokab has served as a model for other municipalities in the Scandinavian region, many of which-like Stokab-are open access networks. An open access network is operator-neutral, supporting multiple service and content providers.
Bhavani Rao, senior product marketing manager at Alcatel (www.alcatel.com), compares the open access network model to a highway or toll road. One company builds the road (or network), and another company manages the toll road. “Then you have the buses, who are the service providers delivering services to the end customer, the passenger,” he explains. “The passengers pay a fee to ride the bus, and the buses, in turn, have to pay a toll to use the highway. Open access enables multiple service providers or multiple bus companies to share the same transport network.”
The preponderance of open access networks has influenced technology choice among the European municipalities, many of which have opted for a point-to-point active Ethernet architecture. According to Robert Whitman, manager of global broadband market development at Corning (www.corning.com), a point-to-point architecture more easily facilitates the sharing of a network; each customer has a dedicated laser in the central office or some point in the field. While it is technically feasible to support an open access network via PON, the point-to-point architecture is far less complex, he says.
Moreover, in the early days of FTTH deployments in Europe, municipalities were chiefly concerned with delivering high-speed data services, and point-to-point Ethernet represented the easiest and least expensive method for delivering those services. By contrast, early U.S. FTTH deployments also have had to support video services. Because IPTV has only recently proven its viability, early deployments were based on RF broadcast technology, the mainstay of cable multiple-system operator (MSO) networks. “We went with PON here in the U.S. because video was a driver for FTTH, and IPTV wasn’t ready yet,” notes Whitman.
But the maturity of IPTV and increasing popularity of GPON among incumbent carriers leads one to wonder if the European municipalities will consider other technology choices now. Many U.S. municipalities are opting for GPON to take advantage of the economies of scale afforded by Verizon’s FiOS initiative.
It is logical to assume that the incumbent carriers heavily involved in the ITU’s FSAN Committee-among them British Telecom, Deutsche Telekom, France Telecom, and Telecom Italia-may back GPON, just as the incumbents in the U.S. have done. But for his part, Whitman does not believe European municipalities will make a wholesale switch to GPON. Point-to-point Ethernet is not markedly more expensive than PON, and with the emergence of IPTV, “I don’t see a compelling reason for them to switch, especially if they are going to maintain open access networks,” he contends. “And you expect any municipality that builds in Europe will probably build open access.”
Of course, every system vendor has its unique perspective. The folks at Alcatel believe that “the battle lines have been drawn between active Ethernet and GPON,” in the words of Rao, while Wave7’s Bryant asserts that EPON is a viable candidate. Bryant calls Wave7’s Trident7 platform “the Switzerland of PON technologies” because it supports both GPON and EPON, and he reports greater traction for EPON.
Steve Kemp, product marketing manager in Alcatel’s Access Networks Division, cautions that there may not be a single technology winner. He notes that the U.S. and Canada adhere to the Carrier Serving Area (CSA) topology in which customer traffic in a given geography is consolidated into a single digital transmission and served by a digital loop carrier (DLC), which multiplexes all the analog lines into one high-speed digital transmission. The topology of Europe is not amenable to such a configuration, he says. “The way the cities grew up, the way the populations are clustered and the central offices laid out, there is no single answer in any of these situations that works for everybody,” admits Kemp. “So you will have fiber to the most economic point and a combination of DSL, active, and PON. Everyone is looking for a single horse to win the race, but that’s not likely in a market this big.”
The municipal FTTH market in Europe has taken off faster than the PTT market in part because there is little incentive for the incumbents to embark on such projects. European PTTs are not facing the same competitive pressure that the cable MSOs are putting on incumbent carriers in the U.S. “Where you see strong competitive activity, that’s where you see major, facilities-based build-outs of telecom networks,” says Whitman.
Moreover, says Alcatel’s Rao, video service delivery is not the big driver in Europe as it is in the U.S. European operators are more concerned with offering high-speed Internet access, which can be delivered via their existing copper infrastructure.
For many European incumbents, the tipping point between copper and fiber has not yet occurred. Thanks to a more densely clustered population, European networks feature shorter loop lengths between central offices and subscribers, which enable relatively higher data rates for xDSL compared with the U.S. And without the consumer demand for video, there is less incentive to build out more than a DSL network.
That said, some of the European incumbents are taking strides toward FTTH, most notably France Telecom, which last January announced FTTH trials in six Paris districts and six cities in the Hauts-de-Seine region. The carrier’s previous trials of VDSL technology indicate that it could support 100-Mbit/sec traffic upstream and downstream only on short copper links of 200 m or less. As such, France Telecom says it will employ GPON technology to deliver 2.5 Gbits/sec to residents and businesses in and around Paris for the duration of the trial, expected to last one year.
For his part, Rao believes incumbent providers like France Telcom should consider FTTH for more than just the obvious bandwidth benefit. “When you have such short loops, there is, with the potential of fiber, the possibility to actually consolidate your offices,” he says. “It is theoretically possible with the capabilities of PON to actually remove a number of central offices and just have a very centralized function and save some serious money. That’s a good driver for PON.”
Finally, the regulatory environment in Europe is not favorable to the incumbents. They must share their infrastructure, making a return on investment more challenging. Whitman cites the recent decision by Telestra, the incumbent carrier in Australia, to cancel its FTTN project as proof that you need “the right market dynamics and the right regulatory environment to promote deployment of fiber to the home,” he says. “And I don’t think Europe is quite ready for that. Until there’s a little more competitive pressure, more demand for video-high-definition video, in particular-then I think it’s going to be a little bit slower.”
As a result, some European incumbents actually encourage municipalities to build out FTTH networks because it is less expensive for them to lease capacity on that network rather than build out their own, reports Whitman. “European incumbent carriers are willing to ride other people’s networks to get to customers,” he says, “which is a very different mindset from the United States. Here, our cable companies and telcos are just not going to do that.”
For now, all eyes will be on France Telecom’s GPON trial as well as an announced municipal FTTH network in Vienna, to serve somewhere around 960,000 homes. Amsterdam also is building a municipal network, dubbed CityNet Amsterdam, which is expected to reach 420,000 homes and businesses by 2013. “Europe is very well aware that it is a little bit behind compared to America and Japan, so they are really concerned about trying to speed that up,” observes Rao. “It’s on their agenda, but they are trying to get some sort of regional consensus together, especially when it comes to regulatory issues.”