Fiber at any price

Staff Writer
10 Mar 2006


This is crucial in terms of cost management for both FTTN and FTTH systems, he says.

'In both cases, there are sufficient network elements involved that diagnosing them quickly and accurately is imperative. Mechanisms, such as TR-069 for FTTN and OMCI for GPON are essential for minimizing operational costs,' Van Den Abeele says. 'In addition, subscriber self diagnostics and repair become more important as home networks become more complicated. These represent the most challenging aspects of deploying FTTN and FTTH.'

The cost issues of deploying FTTN or FTTH can perhaps best be illustrated by comparing fiber rollouts in China and Japan. In China, China Telecom, China Netcom and ISP Great Wall have been deploying FTTN/C + LAN architectures and have found it a very cost-effective option since they're chiefly targeting multiple-dwelling units, says In-Stat's Liu.

'With FTTC or FTTN, you're just rolling one fiber cable to a residential building and then using it to serve many subscribers in the same building, so the cost is not all that high,' he says.

The fact that it's shared bandwidth across a LAN in the building means additional cost savings, he adds. 'A service provider will claim that they are offering 10 Mbps or 100 Mbps, but in reality that will depend on how many users are online. That makes it easier to control their bandwidth costs, and it also allows them to offer the service at an affordable price, around $10 a month.'

In Japan, where operators are deploying FTTH, it's a different story, Liu says.

'FTTH is expensive because you have to dedicate bandwidth to each customer, but they have to do it anyway because competition for broadband service is so fierce that a service provider has to be able to provide 100 Mbps if it wants to be competitive,' he explains. 'That makes it harder to keep the costs down.'

That said, Liu notes, Japanese players have the advantage of the Japanese government's initiatives to connect the entire country with fiber before the end of the decade. 'They offer a no-interest loan subsidy to service providers for network construction. That's why they can afford to roll out a more expensive network.'

Governments are playing an important part in driving fiber in other markets as well, such as South Korea and several European markets. But even in markets where regulators are neutral about technology, some service providers are opting for fiber regardless of the cost because of the competitive differentiation.

'In Hong Kong, PCCW has been quite aggressive with DSL and IPTV, so the other service providers must follow them but be able to compete against them, and FTTx is a way to do that. But they have to bear the cost of FTTx,' Liu says.

New revenues needed

That raises the question of how sustainable such expensive rollouts will be - hence the emphasis on keeping opex costs down as much as possible. However, that will be tricky as bandwidth demand - and thus the cost of provisioning it - continues to climb. As such, says Liu, FTTx operators will have to make up the difference with revenue-generating value-added services to cover their expenses.


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