ZyXEL announces multi-service CPEs for FTTH deployments

ANAHEIM, USA: ZyXEL Communications Inc., a leading provider of secure broadband networking, Internet connectivity and routing products, announced several solutions for FTTH deployment, designed to enable telcos to offer multiple services including high-speed Internet, VoIP and wireless home networking in a single box.

ZyXEL’s FTTH line includes three new Ethernet-based devices - P-2612HW, NBG-420N and NBG-417N -- all of which connect directly to the Optical Network Terminator (ONT) and allow operators to equip residential subscribers with wireless home connectivity. The P-2612HW is an all-in-one wireless gateway with dual ADSL2 / Ethernet WAN, two VoIP ports and a four-port switch.

The NGB-420N is a high performance 11n wireless home gateway with four Gigabit Ethernet ports. Both the P-2612HW and NBG-420N have auto-provisioning and remote management with built-in TR-069 support and advanced QoS features for IPTV, making them a great choice for operators for deploying premium services at reduced cost.

Finally, the NBG-417N is an entry level 11n router with a four-port Ethernet switch that offers an economical home networking solution to subscribers.

With customizable services, features and levels of performance, ZyXEL’'s FTTH products allow operators to offer different service bundles to meet increasing demand for high speed Internet, home connectivity and premium services like IPTV.

Home networking and super high-speed connectivity are becoming increasingly important to residential and business customers, and operators are feeling pressure to deliver a breadth of top-quality broadband networking products in order to remain competitive.

By partnering with ZyXEL, operators benefit from exceptional US-based support, a familiar user interface and easy migration from one solution to another. End users enjoy solid performance, multiple service options and easy resolution of technical issues via remote device management.

“Now that families are placing a larger emphasis on home entertainment, and as homes and businesses alike rely on services that require super-high-speed connections, ZyXEL’s FTTH products allow telcos to offer a breadth of services to meet individual customer needs,” said Brian Feng, senior vice president, key accounts business unit for ZyXEL.

Sterlite wins Rs. 372 crore BSNL contract

PUNE, INDIA: Sterlite Technologies Ltd, a leading global provider of transmission solutions today announced that it has won a contract from BSNL, valued at Rs 372 crores ($ 77 million), for enabling a Fiber-to-the-Home (FTTH) Network based on Gigabit Passive Optical Network (GPON) technology.

Sterlite was awarded a major share of the total outlay of project, amongst competition from global players. Sterlite has streamlined its efforts to ensure that the contract is executed within FY10.

BSNL plans to implement similar FTTH networks at 25 cities across India by Year 2012, which would impact 2 million subscribers. This would provide subscribers access to never-experienced bandwidth and speeds (in excess of 100 Mb/s) as well as multitude of applications ranging from utility applications such as High-Definition Video Conferencing or entertainment applications as High-Speed Gaming.

The current phase of the FTTH network would be capable of providing high-speed internet, IPTV solutions, VoIP, and other Value Added Services to about 500,000 subscribers. BSNL, one of the largest telecom service providers globally, will be the first telco in the country to deploy commercial scale Fiber-to-the-Home network.

At the recent OFC/NFOEC 2009 in San Diego, California, Kuldeep Goyal, Chairman and Managing Director of BSNL, indicated that up to 5 percent of all Indian households could have FTTH by 2011 and IPTV would be one of the key drivers for uptake of FTTH.

Dr. Anand Agarwal, CEO & Director - Sterlite Technologies says: “India is at the cross-roads in telecommunication technology, with networks being rolled out for 3G, Wimax, NGN (Next Generation Networks) and FTTH.

"We believe FTTH will offer subscribers limitless possibilities by serving the requirements of bandwidth-hungry applications and this would revolutionize the way subscribers work, live and play. We commend BSNL’s relentless efforts in putting India on the telecom map of the world and we are honored to be chosen as a partner for this project.”

Emphasis shifts to fibre to the home

MELBOURNE, AUSTRALIA: In countries such as Korea and Japan, the rapid take-up of FTTH/B and subsequent decline of ADSL technologies is nothing new. However, this network evolution is now spreading outside of Asia, and a number of western countries will start to see a rapid increase in FTTH/B, and thus a decline in ADSL over the next couple of years.

Most notable examples are the US, Sweden, Denmark, Finland and the Netherlands. Fig. 1 depicts the ‘global residential fixed broadband access forecasts 2006-2014’.

Fig. 1: Global Residential Broadband Access Forecasts, 2006-14Source: Ovum

Access-fibre deployment is not just confined to ‘developed countries’. A number of emerging markets such as China and Malaysia also have very ambitious FTTH/B projects. “Even if we take into account an element of government and vendor hype for these markets, Ovum still forecasts a rapid take-up of advanced broadband services in those countries,” Michael Philpott, Practice Leader of Ovum’s Consumer team.

This take-up of next-generation access technologies such as FTTH and FTTB will see traditional DSL technologies saturate at around 320 million lines in the residential market by 2014, with FTTH/B still growing fast at over 160 million lines by the end of the same year. In Asia-Pacific, the move to FTTH/B will be even more pronounced, with FTTH/B connections overtaking DSL to be the leading technology in 2014.

It’s not all bad news for DSL vendors
Although the worldwide market for at least ADSL technology will slow over the next five years, there are still significant opportunities for DSL vendors.

Not all countries have yet announced FTTH/B initiatives and so will see significant growth in DSL over Ovum’s forecast period. “Eastern Europe, South and Central America, and Middle East and Africa will still be good growth regions for DSL operators, and thus vendors, for some years to come,” adds Philpott, based in London.

Secondly, not all NGA developments are pure FTTH/B. A number, such as Japan, are actually a good mix of NGA technologies, with the advanced DSL technology VDSL2 often being used in the final few hundred meters to connect apartments and individual homes to the fibre network. Other NGA developments, such as in Belgium and the UK, will be predominantly fibre to the cabinet and then again VDSL2 in the final mile.

Such NGA deployments are actually good news for DSL-based vendors as they signify the upgrade of millions of homes from ADSL line cards located in local exchanges to VDSL line cards located in street cabinets.

Thirdly, although worldwide growth will come to a standstill, there will still be over 360 million DSL lines (including business lines) in operation in 2014, with maintenance contracts running for many years to come beyond that. In Asia-Pacific however DSL connections peak in 2011.

Mobile broadband also applies pressure
The migration to FTTH/B is not the only phenomenon to stall DSL growth. By the end of 2014 worldwide consumer fixed broadband penetration will have reached only 34 percent of households. In theory there should therefore be plenty of growth opportunity for all fixed broadband technologies including FTTH/B.

However, a large percentage of these remaining households do not have a fixed line, and whereas at one time it would have been assumed that investment in broadband would have pushed fixed lines out further, with mobile broadband devices and services becoming more readily available and affordable this will no longer be the case –- at least in the medium term.

Mobile broadband has in effect set a lower ceiling for fixed broadband than what would have been predicted only 12 months ago. Whether this ceiling is permanent or not is yet to be seen.

Although mobile broadband impacts fixed broadband in emerging markets more, it is not completely restricted to such countries. Western Europe, Austria, Finland, Italy and the Netherlands will all saturate at 65 percent of households or lower.

In Asia-Pacific, CAGR of consumer fixed broadband connections are as follows:

Diverging incentives emerge in Australia's NBN

David Kennedy, Research Director at Ovum

AUSTRALIA: The Australian government announced in April 2009 that it was abandoning its tender for the construction of an FTTN network, and would instead pursue an FTTH access network to reach 90 percent of the market within eight years.

The accompanying discussion paper sought recommendations for regulatory change both in the short term and in the long term. After the publication of the submissions on 12 June, the expectation was that the government would digest the submissions and develop draft policy proposals.

In fact, the relevant Minister issued a press release last Friday 3 July, seeking industry input on several specific issues related to the NBN:

* The optimal access regime for the NBN, including, for example, the legislative obligations that should be required to ensure the NBN company operates on a wholesale-only, open-access basis; the process for identifying services to be offered; how the prices and non-price terms and conditions of those services should be set, and for how long; and the role of the Australian Competition and Consumer Commission.
* The appropriate equivalence obligation for the company and the services it offers, and how this would operate in practice.
* The nature of ownership restrictions applied to private-sector investors to protect the government’s equivalence objective for the wholesale-only network.
* Arrangements for the government to sell its stake in the network in the future.
* Any other rights and obligations to be conferred on the company.

These are all very good questions, but why are they being asked now, and in this manner?

Diverging incentives
When the industry submissions were released on 12 June, it became apparent that most industry operators, particularly Telstra’s competitors, were focused on the short-term structural separation of Telstra’s copper access network. In contrast, scant attention was paid to the regulatory requirements for an NBN. This is why the government has been forced to seek further input.

We believe that this reflects a gap between the industry and the government. While the government is committed to the long-term goal of building an FTTH access network in Australia, Telstra’s competitors have far more interest in the regulation of the existing copper access network than in an FTTH network that will take years to build.

So far, this is mere short-termism and therefore unsurprising. However, there are deeper forces at work that are setting the government and Telstra’s competitors more seriously at odds.

Telstra’s competitors are currently abandoning DSL resale and are generating good operating margins on their installed DSLAMs. The NBN threatens this arrangement because it will ultimately force them off regulated ULLS into the uncertainty of a wholesale fibre network, where wholesale pricing and their ability to differentiate may be less favourable.

We think these fears are well-founded, because the NBN will be far more viable if ULLS is actually cut off as FTTH is rolled out, avoiding revenue fragmentation and reducing the need for government subsidy of the NBN.

There is also a real prospect that the current de-averaged prices for ULLS access, with lower prices in the cities, will give way to uniform national wholesale pricing and push up access seekers’ costs in their key markets.

Transition management will be key
This problem underlines how tricky the transition from copper to NGN will be. In fact, the policy challenge can be summed up as a complex process of transition management.

The apparently minor incident of a press release points to the more substantial reality: that the government, Telstra’s competitors and Telstra itself do not have the same incentives in this process. As a result, the Minister cannot assume that he will have the automatic support of either side of the industry for the government’s NBN objectives.

FTTH networks: no sure bet

Here is an Ovum comment from David Kennedy, Research Director.

UK: A basic policy model seems to be emerging in these three countries:
* A preference for FTTH technology, with a recognition that this cannot be extended to 100 percent of the population. FTTH is supplemented in larger countries with rural wireless proposals.
* A ‘wholesale-only’ operator for the fibre access network. All three countries are aware of the danger of recreating a vertically integrated monopoly.
* In both New Zealand and Singapore, the importance of access to raw ‘dark fibre’ is also clear. This is consistent with experience in other Asian markets such as Japan.
in all three markets, substantial government investment is being committed.

Lessons learned
The key lesson that has emerged from these initiatives is the importance of a thorough policy development process to underpin commercial investment in FTTH networks. Singapore ran a time-consuming but structured process which ensured that commercial and regulatory issues were addressed before tender bids were solicited. New Zealand is also pursuing this structured approach.

In contrast, the Australian government pressed ahead with an FTTN tender process in advance of any public policy development process, and paid a heavy price as the process was aborted in April 2009.

The jump to a full FTTH network will only make the issues harder. A host of complex regulatory issues must be addressed. Should the geographically de-averaged wholesale ULL price be carried over into wholesale access to the FTTH network?

How can the USO be funded on the new network? Will customers in the FTTH footprint be encouraged to move to the new network, and if so how? How will the transition between the old and the new be managed smoothly? Detailed answers will be needed before private investors will be able to make substantial investments.

In particular, the ‘wholesale-only’ model preferred by the Australian and New Zealand governments is still an experimental approach. Incumbent profit and growth have been hit hard by the strict structural separation applied in the UK and New Zealand, and it is still not clear whether incumbents placed in these dire straits will be able to afford to make major investments in FTTH networks.

Finally, the idiosyncrasies of different markets are important. Singapore is a city-state where the cost of FTTH rollout is relatively low. In contrast, Australia and New Zealand are characterised by sprawling low-density suburbs. To make matters worse, both governments envisage public contribution in the form of commercial investments, not the grants being offered in Singapore.