Towards Technologically and
Competitively Neutral
Fiber to the Home (FTTH)
Infrastructure
Anupam Banerjee, Marvin Sirbu
Carnegie Mellon University
Pittsburgh, PA 15213 USA
1
Background
$ Telecommunications
Act of 1996
$ Competition
in the ‘Last Mile’
$ Broadband Access
$ Universal Access
In the context of FTTH, what does it take
to have competition in the ‘last mile’?
$
2
Models of Competition in
Telecommunications
$ Facility
Based Competition
Central Offices
Home 1
Service
Provider A
Network 1
Home 2
Separate Networks
Network 2
Service
Provider B
Data Link Layer Equipment
ATM, Gigabit Ethernet, SONET
3
Models of Competition in
Telecommunications
$ UNE
Based Competition
Central Office
Home 1
Service
Provider A
Network
Data Link Layer Equipment
Service
Provider B
Home 2
4
Models of Competition in
Telecommunications
$ Open
Access Based Competition
Central Office
Home A
Service
Provider A
Network
Home B
Common Data Link
Layer Equipment
Service
Provider B
5
FTTH Architectures
$ Home
Run
$ Active Star
$ Passive Star (Passive Optical Network PON)
$ Wavelength Division Multiplexed Passive
Optical Networks (WDM PON)
6
Home Run Architecture
ONU
C e n tra l O ffice I n fra stru cture
D e d i c a te d fib e r to e a c h H o m e
C e n tra l
O ffice
Equipm e nt
O L T P o rt
O N U O p tica l N e tw o r k U n i t
O L T O p tica l L i n e T e r m i n a t i o n
Dis tr ibu t io n
L o op
Fee der L o o p
Architecture
Brief Description
Shared Infrastructure
Home Run
Dedicated fiber from the Central Office to each Home
Central Office
7
Active Star Architecture
ONU
C e n tra l O ffice I n fra stru ctu r e
1
S h a r e d Fe e de r fib e r
C e n tra l
O ffice
Equipm e nt
OLT
32
R e m o te N o d e w ith
A c ti v e E l e c t r o n i c s
Equipm e nt
Dis tr ibu t io n
L o op
Architecture
Active Star
Fee der L o o p
Brief Description
Signals multiplexed at Remote Node that lies between
Central Office and Home
Shared Infrastructure
From theCentral Office to the
Remote Node
8
Passive Star Architecture (PON)
ONU
C e n tra l Office Infra stru cture
λ
1
S h a r e d Fe e de r fib e r
λ
λ
λ
C e n tra l
O ffice
Equipm e n t
OLT
32
λ
P a ssive S plitte r –
Com b i n e r
λ
Dis tr ibu t io n
L o op
Fee der L o op
Architecture
Brief Description
Shared Infrastructure
Passive Star
Signal’s power optically split at Remote Node; Remote
Node not powered
From Central Officet to Remote
Node
9
WDM PON
ONU
C e n tra l Office Infra stru cture
λ1
1
S h a r e d Fe e de r fib e r
λ 1, λ 2, λ 3, λ 4, λ 5
λ2
λ3
...
λ 32
C e n tra l
O ffice
Equipm e n t
OLT
32
λ4
P a ssive S plitte r –
Com b i n e r
λ5
Dis tr ibu t io n
L o op
Fee der L o op
Architecture
Brief Description
Shared Infrastructure
WDM PON
Signal’s power optically split at Remote Node; Feeder
fiber carries multiple wavelengths
From Central Officet to Remote
Node
10
Competition in FTTH
$ Facility
Based Competition
Central Offices
Home 1
Service
Provider A
FTTH Network 1
Home 2
Separate Networks
FTTH Network 2
Service
Provider B
Data Link Layer Equipment
ATM, Gigabit Ethernet, SONET
11
Non facilities based Competition in
Home Run Fiber
$ Individual
Fiber can be rented out as a UNE
Central Office
Home 1
Service
Provider A
Network
Data Link Layer Equipment
Service
Provider B
Home 2
= Home Run Fiber supports Competition at
the Data-Link layer and in Higher layers
services
12
Non facilities based Competition in
PONs and Active Star
Central Office
Home 1
Service
Provider A
Network
Data Link Layer Equipment
Home 2
Splitter
(Remote Node)
Service
Provider B
= PONs (and Active Star) do not support
Competition at the Data-Link layer; they
support Competition in Higher layers services
13
Non facilities based Competition in
WDM PONs
= Individual Wavelength can be rented out as a
UNE
Centra l Office
Hom e 1
λ1
Service
Provider A
Network
λ1 λ2
Data Link Layer Equipment
λ2
Splitte r
Hom e 2
Service
Provider B
AWG
= WDM PONs support Competition at the
Data-Link layer and in Higher layers services
14
What do we mean by Competition in
the ‘Last Fiber Mile’?
Voice
Network & Higher
Layers
Data Link
Layer
Video
Data
ATM
Ethernet
SONET
AM for Analog
Video
Multiple
Optical Layer
Wavelengths
§ Traditional Open Access can
support competition for Voice and
Data and Switched Digital Video
§ Broadcast Video is most
economically delivered using a
wavelength running Multiplexed
Multichannel Video
§ Competitors can choose different
data link layer technologies to run
over a particular fiber (or a
particular lambda) rented out as a
UNE
•Competitors can use different
wavelengths to provide service
§ Competitors use different Fibers;
Physical Medium
Multiple Fibers
§ Multiple fibers running to the home
15
Architectures and Competition
Home
Run
Competition in Data Link
Layer Services
Competition in Voice, Data,
Digital Video
Competition in Broadcast
Video
Cost per Home Served
Easy
PONs
Active
Star
WDM
PONs
Hard
Hard
Easy
Neutral Neutral Neutral Neutral
Easy
Hard
Hard
Easy
?
?
?
?
16
Economic Feasibility of
Competition
$ General
Perception: Home Run Fiber is more
expensive than PONs; WDM PONs are not
economically feasible today
$ Our
arguments: Home Run Fiber enables Data-
Link layer competition while PONs do not
$ Research
Questions:
$ By
how much is Home Run Fiber more expensive
than PONs?
$ Which forms of competition are Economically
Feasible?
17
FTTH Engineering Cost Model
Deployment
Homes per
sq. mile
Urban
Suburban
Small Town
Rural
Remote
Rural
3389
1602
217
85
20
Homes
served per
CO
16,135
16,201
10,184
5,871
3,018
18
FTTH Engineering Cost Model
Architecture
Home Run
Active Star
PON
WDM PON
OLT Interface
100 Mbps Fast Ethernet per Home
Gigabit Ethernet Interface per 32 Homes
Gigabit Ethernet Interface per 32 Homes
100 Mbps Fast Ethernet per Home
ONU Interface
2 POTS ports, 10/100 Base T, RF
Video
19
Capital Cost per Home Served
(Urban Deployment)
FTTH Capital Cost per Home
Served
Capital Cost per Home Served (Urban Deployment)
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
0
20
40
60
80
100
Percent Penetration
Home Run Fiber
Active Star
Passive Star (PON)
WDM PON
20
Capital Cost per Home Served
(PON Deployments)
FTTH Capital Cost per Home Served
PON deployment in Urban, Suburban, Small Town, Rural
and Remote Rural Areas
10000
9000
Remote Rural
8000
7000
Rural
6000
Small Town
5000
Suburban
4000
Urban
3000
2000
1000
0
0
20
40
60
80
100
Percent Penetration
Urban
Suburban
Small Town
Rural
Remote Rural
21
Capital Cost per Home Served
FTTH Capital Cost per Home Served
Urban and Rural Deployments
10000
9000
Rural
Deployment
8000
7000
6000
Urban
Deployment
5000
4000
3000
2000
1000
0
0
10
20
30
40
50
60
70
80
90
100
Percent Penetration
Home Run Fiber (Urban)
PON (Urban)
Home Run Fiber (Rural)
PON (Rural)
22
Competition in FTTH: Economic
Feasibility
n
n
n
n
Facilities based Competition is unlikely as
FTTH is a decreasing cost industry
Wavelength based competition is infeasible in the
near future
Data Link Layer Competition (and competition
in Broadcast video) is easy in Home Run
architecture and hard in PONs; and therefore
has an economic premium
Competition in Data, Voice and Switched Digital
Video is easy in all architectures
23
The ‘Cost’ of Data-Link layer
Competition..
$ Cost Difference (per Home) between
Home Run Fiber and PON
Deployment Scenario
Urban
Suburban
Small Town
Rural
Remote Rural
Cost of Competition per Home Served ($) @ 100%
penetration
270
350
510
690
560
24
Towards Economically Efficient
and Competitive Neutral FTTH
Infrastructure
$ Home
Run Fiber is Competitively Neutral..
$ But is it 'economically efficient'?
$ Can we have Data-Link layer at a lower cost
than Home Run Fiber?
25
A Traditional PON Deployment
Neighborhood 1
Central Office Infra structure
Splitter 1
PON1
PON2
Central Office
OLT Equipment
Central Office
OLT Equipment
Splitter 2
Neighborhood 2
26
Lowering the Cost of Competition:
‘Home Run PON’
Neighborhood 1
Central Office Infra structure
Splitter 1
PON1
Central Office
OLT Equipment
Central Office
OLT Equipment
Splitter 2
PON2
Neighborhood 2
27
Lowering the Cost of Competition:
‘Aggregation PON’
Neighborhood 1
Centra l Office Infra structure
Splitte r 1
PON1
Central Office
OLT Equipment
Central Office
OLT Equipment
PON2
Splitte r 2
Neighborhood 2
AGGREGATION
of Splitters
28
Capital Cost premium for an
architecture that enables Data-Link
layer Competition
‘Home Run PON’ vs. Traditional PON
Deployment Scenario
Urban
Suburban
Small Town
Rural
Remote Rural
Cost of Competition per Home Monthly Cost of Competition @
Served (Capital Cost) ($)
20% discount rate ($/Month)
Penetration
Penetration
100%
65%
30%
100%
65%
30%
100
180
480
2
3
9
180
260
670
2
4
12
340
530
1140
6
9
19
530
730
1460
9
12
24
420
660
1570
7
12
26
29
Real Option to Scale Bandwidth..
= In addition to foreclosing competition
at the Data-Link layer, PONs also impose
bandwidth sharing
= Incremental Cost of Home Run fiber
may be viewed as a Real Option to
unlimited bandwidth (by scaling
bandwidth independently of homes
sharing a feeder fiber in a PON / Active
Star)
30
Is it worth paying the economic
premium..
.. Or should we achieve a ‘Static Efficiency’ by
choosing the ‘least cost’ alternative?
$ .. And thereby foreclose a possible ‘Dynamic
Efficiency’ resulting from the innovation that is
driven by Competition that the Competitively
Neutral architecture enables?
$
31
Competition in FTTH & depends
on…
FTTH Architecture
Ownership and
Industry Structure
First Mile Costs
Community and
Market
Characteristics
Competition in
FTTH
Second Mile Costs
32
The ‘Second’ Mile Problem!!
$ The
viability of competition in the last mile
also depends on:
$ The
cost of bringing voice, video and data services
to a Central Office (The second mile costs) from a
Regional Node
$ The number of subscribers served by a Central
Office
$ Distance between Central Offices
$ Demand for Services
$ ..
33
Non Facilities based Competition
Central Office
Home 1
Service
Provider A
Network
Data Link Layer Equipment
Service
Provider B
Home 2
34
Vertical Integration and
Anti-competitive Behavior ?
Central Office
Home 1
Service
Provider A
Network
Data Link Layer Equipment
Service
Provider B
Home 2
35
Industry Structure and Competition..
$ Desired Industry Structure
$ Neutral Infrastructure owner providing non-discriminatory
access to Higher Layer Service providers
$ Ownership Alternatives
$ Private Enterprise
$ Subscriber (or Community Ownership)
$ Local Government
$ Jointly owned common carrier
$ Power Utility
$ Migration
to Desired Industry Structure?
36
Conclusion..
$ PON
is the most economical infrastructure
$ Home Run Fiber is more expensive, but
Competitively Neutral
$ 'Home Run PON' and 'Aggregation PON'
are Competitively Neutral and Economically
more Efficient than Home Run
$ A Competitively Neutral architecture is a
necessary (but not sufficient) condition for
data link layer competition
37
Contribution of this paper
$ Defined
taxonomy of competition in FTTH
$ Clarified relation of architecture to Data Link layer
competition
$ Understood the economics of FTTH architectures
in different deployment scenarios
$ Estimated “Cost of Data-Link layer Competition”
$ Devised compromise architectures to enable
competition at lower first capital cost
$ Identified institutional and economic issues for
further study
38
.. and Future Work
$ Continue
to explore implications for
Competition of:
$ Second Mile Costs
$ Ownership options
$ Operations Costs
$ Market Characteristics
39
Engineering Cost
Model Assumptions and
Results
40
Engineering Cost Model
$ Estimates
Capital Cost per Home Passed
and Capital Cost per Home Served for
FOUR architectures and FIVE deployment
contexts
$ Aerial Fiber deployed on poles
$ Sufficient Feeder and Distribution fiber for
the entire community installed regardless of
the number homes that sign up for service
41
Cost Model
CPE Cost
Assumptions
FTTH Loop
Infrastructure
Cost
FTTH Capital
Cost per
Home
Passed
Total FTTH
Capital Cost
FTTH Capital
Cost per
Home Served
Local Loop
Cost
Central
Office Cost
FTTH
Architecture
Deployment
Scenario
42
Local Loop Costs
F e e d e r
L o o p C o sts
D istrib u ti o n
L o o p C o sts
D ro p L o o p
C o sts
Total Local
L o o p C o s ts
O th e r
D e p lo y m e n t
C o sts
O u tsid e
P la n t
E q u ip m e n t
43
Data from HAI Model 5.0 A
Cluster 5
Cluster 4
R5
Cluster 6
R6
R4
Central Office
R1
Cluster 3
R3
R2
Cluster 1
Cluster 2
44
Data from HAI Model 5.0 A
Central Office (CLLI)
PITBPASQ (Urban)
HMSTPAHO (Suburban)
CHTTPACT (Small Town)
TNVLPATA (Rural)
CCHRPAXC (Remote Rural)
No. of
Clusters
23
23
14
10
18
Total
no. of
Homes
16,135
16,201
10,184
5,871
3,018
Housing Density
(Homes/sq. mi.)
3,389
1,603
218
86
20
Average Radial
Distance from CO
to each cluster (ft)
4,730
9,089
15,165
18,662
32,763
45
Cost Model Assumptions
Deployment
Homes per
sq. mile
Urban
Suburban
Small Town
Rural
Remote
Rural
3389
1602
217
85
20
Homes
served per
CO
16,135
16,201
10,184
5,871
3,018
Ave. Feeder
Loop length
(feet)
6,960
12,396
24,012
37,054
42,084
Average
Distribution
Loop length
377
521
1,472
2,434
5,791
Drop Loop length
Uniform(50,75)
Uniform(75,150)
Uniform(100,200)
Uniform(150,300)
Uniform(200,600)
46
Equipment and Costs
Architecture
Home Run
Active Star
PON
WDM PON
OLT Interface
100 Mbps Fast Ethernet per Home
Gigabit Ethernet Interface per 32 Homes
Gigabit Ethernet Interface per 32 Homes
100 Mbps Fast Ethernet per Home
Architecture
Central
Office Central Office
Equipment (per 32 Equipment (per
Homes)
Home)
$375
$800
$25
$2,375
$75
$20,000
Home Run
Active Star
PONs
WDM PON
ONU Interface
2 POTS, 10/100 Base T, RF Video
2 POTS, 10/100 Base T, RF Video
2 POTS, 10/100 Base T, RF Video
2 POTS, 10/100 Base T, RF Video
Optical Network Remote
Node
Unit (ONU)
Equipment (per
Home)
$550
$550
$250
$650
$25
$1,500
$25
47
Capital Cost per Home Passed
Capital Cost per Home Passed
7000
6212
5790
USD per Home
6000
5000
4000
3483
2954
3000
PON Architecture
2211
1869
2000
1000
Home Run Architecture
812 715
1119940
Urban
Suburban
0
Small Town
Rural
Remote
Rural
Deployment Scenarios
48
Fiber Loop Cost Breakdown (Home
Run Fiber)
Capital Cost per Home Passed (Home Run Fiber)
6000.0
USD per Home
5000.0
Feeder Loop
4000.0
Distribution Loop
Central Office Building
3000.0
Pole Make Ready Costs
2000.0
1000.0
0.0
Urban
Suburban Small Town
Rural
Remote
Rural
Deployment Scenario
49
Fiber Loop Cost Breakdown (PON)
Capital Cost per Home Passed (Passive Optical Network)
6000.0
USD per Home
5000.0
4000.0
Feeder Loop
Distribution Loop
3000.0
Central Office Building
Pole Make Ready Costs
2000.0
1000.0
0.0
Urban
Suburban
Small Town
Rural
Remote
Rural
Deployment Scenarios
50
Capital Cost per Home Served
(Urban Deployment)
FTTH Capital Cost per Home
Served
Capital Cost per Home Served (Urban Deployment)
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
0
20
40
60
80
100
Percent Penetration
Home Run Fiber
A c tive Star
Passive Star (P O N)
WDM PON
51
Capital Cost per Home Served
(Suburban Deployment)
FTTH Capital Cost per Home
Served
Capital Cost per Home Served (Suburban Deployment)
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
0
20
40
60
80
100
Percent Penetration
Home Run Fiber
Active Star
Passive Star (PON)
WDM PON
52
Capital Cost per Home Served
(Small Town Deployment)
FTTH Capital Cost per Home Served
C a p ital Cost per Home Served (Small T o w n D e p loyment)
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
0
20
40
60
80
100
Percent Penetration
Home Run Fiber
A c tive Star
P a s s ive Star (P O N)
WDM PON
53
Capital Cost per Home Served
(Rural Deployment)
54
Capital Cost per Home Served
(Remote Rural Deployment)
55