NSN dumps GPON, punts on next-gen optical

08 Aug 2008

Nokia Siemens Networks (NSN) posted a surprise financial result for Q2, with an 18% boost in revenue over last year to finish with a small loss.

That wasn't the only surprise. The vendor also unexpectedly announced its withdrawal from the GPON (Gigabit Passive Optical Networks) market, citing the slow market development.

NSN said it would 'limit' its investment in GPON because it did not expect a mass-market roll out of FTTH in the short term. Instead, it plans to turn its attention to ADSL-2+, VDSL and next-gen optical access (NGOA) technology.

'Our view is that mass market roll out of fiber-to-the-home is unlikely in the short term due to regulatory uncertainty and the operator's business cases,' said CMO Christoph Caselitz. 'This will be different with the NGOA technology, where we will target to take a leading role.'

According to Ovum-RHK, GPON accounts to just a 'small fraction' of the 28 million FTTx connections globally.

An Ovum research note said NSN was betting GPON would remain a niche until 2011, 'at which point NGOA technologies based on different network architectures will support more financially-viable FTTH networks.'

It was expecting that would put it in a stronger position 'when the NGOA train pulls out of the FTTH station in three or four years time', said Ovum-RHK VP of optical Dana Cooperson.

'All vendors must make tough choices of where to invest, but we think NSN's FTTH strategy is risky. NSN's GPON pessimism is unwarranted given competitive pressures pushing operators to extend fiber to the premise to support higher-bandwidth services,' he said.

Additionally, catching the next FTTH wave was unlikely to be as easy as NSN hoped, where things like field experience and early deployments counted as competitive advantage.

UK blogsite Telco IPTV View also described the move as a 'risky bet.'

If NSN can beat it its competition to these new PON technologies, it would be a winning bet, it said. 'On the other hand, it will be hard for the company to maintain a strong focus on PON when it is not actively participating in the market.'

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