Global Fiber Optics: Growing Access and Faster Backbones
The impact of fiber networks could potentially erode the business case for satellite going forward, but then how is fiber technology progressing? Here, we take a closer look at one of the key communications’ technologies and the latest developments in the fiber world.
Amidst global economic challenges, demand for fiber optics has remained relatively strong. The number of fiber-to-the-home/or building (FTTH/B) subscribers continues to grow, as does the need for increasingly fast data transmission rates in metro and core optical networks.
While far from the fiber frenzy — and crash of a decade ago — the industry today is humming along to its own tune. “There is plenty of fiber going on,” says Ron Kline, principal analyst, network infrastructure, at technology research firm Ovum. The number of fiber endpoints is growing at various places throughout the world, especially in Asia. As for transmission equipment, several applications already require speeds in excess of 10 Gbps.
One driver is wireless. “There’s been a huge build in all the metros for all of this cell tower business,” Kline says.
Global Fiber Access
Total estimates vary, but the trend is clear. According to ABI Research, the number of FTTH subscribers in mid-2011 was 69.6 million. The FTTH Council’s mid-2011 total was 66 million. More importantly, that’s 10 million, or about 18 percent, higher than in 2010. It’s a healthy clip, but looking just at the United States, one wonders.
In March 2010, Verizon quietly announced that it was ending its build-out of FiOS. In a deal to acquire spectrum from cable companies announced at the end of 2011, Verizon also agreed to co-market its own wireless services with cable’s video and broadband services. The upshot, according to Craig Moffett, Sanford Bernstein senior analyst, is that “Verizon has effectively validated (cable) as the superior set of ground facilities.”
There remain hundreds of small service providers deploying FTTH, supported in part by more than $2 billion in U.S. government broadband stimulus funds. Yet, at the end of Verizon’s costly builds, its concession to cable and focus on wireless is significant. Penetration of FTTH/FTTB (aka FTTx) subscribers in the United States was about 8 percent in 2011, which is essentially unmoved from 2010.
North America at large is looking somewhat stronger. A market analysis commissioned by the FTTC Council and released in September 2011 indicated that the continent had an 18 percent growth in subscribers from the previous year, largely because of activity in Canada, Mexico and the Caribbean.
Shipments of Gigabit and Ethernet passive optical networking (GPON/EPON) equipment, nonetheless, continue to grow. Julie Kunstler, Ovum principal analyst and author of a mid-2011 report on the market said it is no real mystery that, “China is the biggest consumer of FTTx equipment right now and that is set to continue.”
According to the FTTH Council, about 70 percent of the world’s FTTH subscribers currently reside in Asia. This is the result of top-ranking fiber penetration ratios in South Korea, Japan, Hong Kong and Taiwan. But the sheer size of China will shift the market even more toward the Pacific. China Telecom plans to pass 40 million households with fiber in 2011, 80 million by 2013 and more than 100 million by 2015, linking all of China’s major cities along the way.
But, an economic slowdown in China could shift resources away from these ambitious projects. That said, Ovum has predicted that by 2016 China would represent more than 50 percent of the world’s FTTx subscribers.
Deployments are occurring elsewhere, as well. The Council notes that from 2010 to 2011 the number of countries with measurable household penetration of FTTH subscribers increased by four, from 24 to 28.
Newcomers include Turkey, Ukraine, Hungary and the United Arab Emirates, the latter leaping to first place, with one-third of all homes in that Persian Gulf state taking fiber services. That ranking followed an aggressive rollout by UAE-based Etisalat, which gave Abu Dhabi bragging rights as the first capital city to have a complete fiber optic network. Another notable on the FTTH Council list was Russia. Installation of fiber in buildings across 31 Russian cities by cable TV operator ER-Telecom made it the fastest growing market on the European continent.
Singapore and Australia
Deployments tend to be deep in highly urbanized countries whose economies are characterized by close relations between government and industry. That is the case with two ongoing builds in the Pacific: Singapore’s Next-Generation Nationwide Broadband Network (NGNBN), which is implementing the city state’s Intelligent Nation (iN2015) blueprint; and Australia’s NBN Co., a government-supported open access network that is aiming to reach nearly all of the country with fiber by 2021. The NBN project is one of the most interesting network projects going on right now, and has a very clear satellite component. Companies such as Gilat Satellite Networks have already won key contracts here, as the Australian government aims to reduce digital divides across the country. Optus and Thaicom also are involved in the NBN project.
To realize the iN2015 vision, the Singapore government has committed up to SG $1 billion ($764 million) and established what Cesar Bechelet, senior analyst at advisory firm Analysys Mason and author of a report on the topic, calls “an innovative three-layer model.”
While attributing the rapid rollout of fiber to the country’s “high population density and level of urbanization,” Bechelet also notes that the joint venture responsible for building the NGNBN fiber platform was able to capitalize on the assets of SingTel, the incumbent telco, as that company’s broadband infrastructure was gradually divested to a neutral holding company.
The Australian project is also multi-pronged. According to NBN Co. CTO Gary McLaren, “the mission is two-fold – giving the country the latest broadband technology and restructuring the market.” But there are difficulties, as Australia’s opposition coalition party continues to lodge objections, making it no trivial task to align all stakeholders. In a recent holdup, Australia’s chief regulatory body failed to meet a December 2011 deadline to approve the A$30 billion ($31.96 billion) planned payoff to Telstra for its agreement to disconnect customers from copper and HFC networks.
Consensus may be harder to reach in Australia than elsewhere, but NBN Co. is forging ahead, continuing work on a wholesale access network that it started two years ago. And while not as dense as Singapore, Seoul or Shanghai, Australian cities constitute home for most inhabitants. To reach 93 percent of the country’s homes and offices with fiber, McLaren says that the project will likely not cover even 2 percent of the landmass. “We’re a very urbanized country, despite perception around the world,” he says.
NBN Co. is all the same extending its reach to some 600 smaller communities, concentrating those fiber runs back to 121 points of interconnect. “The actual transmission from all of those remote (sites) still needs about 50,000 km of backhaul fiber,” McLaren says.
Reaching the 93 percent with fiber is a hard stop. “Once we go past that, we can see that it becomes too costly,” McLaren says. “Then we look to LTE wireless as a next step.” Beyond that NBN Co. will enlist satellites. “We expect we’ll need eight to 10 of our earth stations to get the capacity we’ll need, (then) backbone fiber network to get those points of interconnect.”
NBN Co. is expected to spend hundreds of millions of dollars on two new high-speed broadband satellites.
Speeds Beyond 10 Gbps
The underlying drivers of fiber builds — growth of video, data and mobile services — have led to switch and router interfaces and transport equipment that handle throughputs in excess of 10 Gbps. That evolution is several years in the works, but the need for more speed, up to 100 Gbps, is accelerating.
“The interesting thing about 100 Gbps is that it is coming to market a lot faster than 40 Gbps did,” says Kline. “40 Gbps was around in 2000, but it took six years for people to commercialize it, and it didn’t hit its stride until 2010.”
Kline estimates shipments of 40 Gbps equipment annualized during the past four quarters at $1.8 billion and 100 Gbps at only $80 million. In 2012, he expects 100 Gbps to ramp up quickly. By 2016, the two categories could approach parity, with 40 Gbps at $3.4 billion and 100 Gbps at $3 billion. Given that 100 Gbps trials (at Verizon and Comcast) began about three years ago, 100 Gbps will have reached $3 billion in half the time as 40 Gbps.
The uses to which the faster optical transport has been put include core backbones, video distribution, enterprise data, mobile backhaul, subsea transport, cloud-based services and content distribution. “We are 40 Gbps on our core network, on the DWDM (dense wavelength division multiplexing) links,” says McLaren. “We are actually quite sophisticated, looking to update to 100 Gbps in the next year or so.”
Comcast’s national backbone, anchored by two master media centers, led it to become a natural promoter of 40 Gbps transmission equipment and a leader in 100 Gbps standards development. One requirement for Comcast and other major MSOs is to distribute large files of video on demand (VOD) content. A related video transport application is the evolution of Internet-based content distribution networks (CDNs).
One trend that has appeared in the data space is the growing need of enterprises. At the SuperComputing 2011 event last December, a team of scientists and network engineers used a 100 Gbps circuit to demonstrate a combined bi-directional, two-day transfer of data across a wide area network at a rate of 186 Gbps. An extreme example, but companies serving enterprises and large data centers need to provide throughput that matches increasingly large, internally generated volumes of data.
For mobile, Kline says that 10 Gbps would work fine in the first part the backhaul network at the base of the tower. “When you get back to the second part of the tier, to the aggregation to a single point where the switch is, those tend to be fiber-based wavelengths,” he says. “In China, those numbers are big. They use 40 Gbps on those aggregation networks that are the backbones of mobile.”
The business case for 40 Gbps, however, is not universal. “On the pure terrestrial side, 10 Gbps is still the unit cost leader,” says John Hayduk, president, product management and service development at Tata Communications. In response to several RFPs issued in early 2011, Tata had one vendor offer 40 Gbps at 92 percent of the cost of four 10Gs. “For everyone else, 40 Gbps was still a premium,” he says.
Where Tata has deployed 40 Gbps in production is its undersea network. “We were able to apply 40 Gbps terrestrial unit costs to subsea segments where we got a material unit cost advantage,” Hayduk says. In its subsea deployments, Tata has used 40 Gbps/100 Gbps coherent optical technology from Ciena. (Coherence allows a receiver to detect phase and amplitude of a signal and then process it.) In the next year Tata will begin evaluating the use of 40 Gbps or 100 Gbps in a few fiber-constrained cases. “That’s where we see that technology, at least until the unit cost barrier it broken,” he says.
Tata is not the only network operator waiting for prices to drop. “The economics still favor 10 Gbps, and vendors are making a lot of improvements,” says Paul Savill, senior vice president, core product management at Level 3.
Savill says that Level 3, which closed its acquisition of Global Crossing in October 2011, is engaged in 100 Gbps, with one deployment for a large research and development customer and another for its own backbone and use. But when prices become competitive, Global Crossing may act boldly. “We’re going to leapfrog 40 Gbps and jump right into 100 Gbps and convert our backbone,” he says.
So how do these deployments and trends influence the satellite industry? Accelerating speeds and declining costs on core backbone and metro links will shape content and distribution partner relations. A lot will also depend on telcos’ willingness to invest in next generation networks. Advances in fiber network speeds, however, are happening at a dizzying pace. Satellite must look to find its niche on the future communications landscape. While it may never match-up in a speed race, it can bring other advantages to bear, such as comprehensive coverage. In Australia, the fusion of satellite, fiber and wireless could be a sign of things to come.
The role of new wholesale access networks, such as those being built in Singapore and Australia, will have the most impact on the companies being restructured in the process. The impact of FTTH around the world will depend upon positions of comparable services being offered in particular markets — both country-specific and urban vs. rural — over fiber and satellite networks.