Advanced Access Architectures 2008

SUMMARY

In addition to providing complete background on Advanced Access Architectures (AAAs), this report is going to focus on the progress to date of AAAs (or in some cases the lack thereof), changes in architecture, and especially how we are changing our forecasts (and why) for Advanced Access Architectures (AAAs) development. It is also introducing for the first time extensive cost analysis of the various forms of AAAs, and comprehensive traffic (bandwidth) requirements analysis and forecasts affecting AAAs.

(Please note that we will use the terminology Advanced Access Architectures (AAAs) throughout this report to refer to the collection of FTTx architectures and their variations. We feel that this is more comprehensive than simply FTTx.)

This report, more than any of our past five reports on the subject, will focus on:

• Bandwidth requirements, and options for obtaining that bandwidth
• Costs of alternatives in AAAs
• Forecasts for the acceptance of AAAs by customers
• The impact of AAAs on legacy high-speed access systems (e.g., xDSL)

TABLE OF CONTENTS

Table of CONTENTS

Table of Figures

The Lightwave Network Series of Reports

The Lightwave Network

The Lightwave Series of Reports

• General Reports on the Network
• General Market Reports
• Specific Systems Reports

Introduction

Reasons for a New Report

• Forecast
• Costs and Financial Impacts
• BellSouth Properties
• This Report

Background

• Why AAA?

Comments on Triennial Review Results

Original Schedule

Differences of the RBOCs

Market Competitive Analysis

AAA as the Light Sword of the RBOCs

• RBOC Loss of Main Lines

Post-merger Competition

RBOC Purchase of IXCs

RBOCs vs. Cable Companies

• New High-Speed Access Forecast

Cable Companies vs. Satellite Companies

The Need for Capacity

How Much Bandwidth Is Enough?

Basis for Estimating Needs

Meeting the Bandwidth Needs

The Current Options

• FIOS - FTTP Bandwidth Capacity
• Uverse

Alternatives to Achieve the Required Bandwidth

• Pair Bonding
• Reduce the Distance
• Hybrid FTTN - FTTC
• Compression

NGPONs - Advanced Options - 10-GPON and WDM-PON

• 10-GPON
• WDM-PONs
• Vendors of WDM-PON
  • Other WDM-PON Activities
• Vendors of WDM - Listing and Summary of Status
  • ADC
  • ADVA
  • Alcatel-Lucent
  • Ericsson
  • LG Electronics
  • Nortel
  • Novera
  • Pirelli
  • Tellabs

Cost Analysis of AAA

Costs of AAAs

• Uverse
• FiOS
• Qwest

Fiber Requirements for Various Advanced Access Architectures

• BellSouth's Fiber to the Curb (FTTC)
• AT&T's Fiber to the node (FTTN)
• Verizon's FTTP (Fiber to the Premise)

Analysis of Architectural Differences

AT&T's New Plans for BellSouth - a Hybrid FTTC/FTTN

Impact of Loss of High-Speed Access Lines

RBOC Plans- RBOCs' AAA Plan - The Lightwave Is Back!

Verizon Plan

• Verizon - Physical Description
  • Verizon Vendors
• Verizon - Size of Rollout
• Verizon - Services

Verizon as an Overbuilder

AT&T Plan

• AT&T - Physical Description
  • AT&T Vendors
• AT&T - Size of Rollout
• AT&T - Uverse Services
  • Video
  • Internet
  • Voice
  • AT&T U-verse Video Services
  • High-Speed Access U-verse Services

BellSouth Plan

• BellSouth - Physical Description
  • Pre-Merger
  • Post-Merger
  • AT&T's New Plans for BellSouth

Qwest Plan

• FTTN
• FTTP

Comparing the Plans of the RBOCs

• Operations Savings Estimates

Growth Comparisons

Summary of Announced Plans

• Verizon
• AT&T
• Bell South
• Qwest

Summary information on the Announced Plans

Announced Plans - Quantitative Analysis

• Announced Plans - Size
• Announced Plans - Costs
  • Announced Plans - Cost by Plant Segments
  • Announced Plans - Capital and Budget impacts
  • Announced Plans - Video Costs

Forecast for AAAs

Forecasts for Deployment

• AT&T
• Verizon
• BellSouth
• Qwest

Deployment Forecast Summary

• AT&T
• Verizon
• BellSouth
• Qwest

Forecast Size of Deployments

• Forecast of Homes Passed
• Penetration Rates
• Growth of AAA and Reduction in xDSL

Technology Forecast

• Forecast Technologies by Type
• Forecast PONs - GPON vs. BPONs

Forecast Costs

• Unit Cost Tables
• Forecast Plant Segment Cost
• Forecast Capital Costs and Budget Impacts
• Forecast Video Costs

Vendors of the Light Sword

Requirements for a Successful Vendor

Possible Consortiums

Selected Vendors

Vendors of GPONS

Vendors Listing

• Summary of Vendors

Detailed Listing of Vendors

• Acterna (acquired by JDSU)
• ADC
• Adtran
• Advanced Fibre Communications Inc. (AFCI) (Now Tellabs)
• Alcatel-Lucent
• Alloptic Inc
• Amino Technologies plc
• AOC Technologies
• Avanex Corporation
• Broadlight
• Calix
• Cisco
• Conexant
• Corrigent
• Entrisphere Inc. (Acquired by Ericsson)
• Ericsson
• Fiberxon (Now Source Photonics combined with Luminent)
• Finisar Corporation
• FlexLight Networks (Defunct)
• Fujitsu
• Genone3 Technologies Inc.
• Hitachi Communication Technologies Ltd.
• Humax USA Inc.
• Iamba Networks
• JDS Uniphase
• Kreatel Communications AB (Acquired by Motorola)
• LG Electronics
• LightComm Technology
• Marconi
• Microsoft
• Motorola
• NeoPhotonics
• Nortel
• Novera Optics (owned by Nortel / LG JV)
• OFS
• O-Net Communications Ltd
• Oplink Communications, Inc.
• Optiviva Inc.
• Optical Solutions (Acquired by Calix)
• Osaki Electric Co. Ltd.
• Paceon (Mitsubishi)
• Passave (Acquired by PMC-Sierra)
• PMC-Sierra
• Quantum Bridge Communications (Acquired by Motorola)
• Salira Optical Network Systems
• Scientific-Atlanta (Cisco)
• Siemens
• Source Photonics (Combined with Fiberxon and Luminent)
• Tandberg Ltd. (Ericsson)
• Tellabs
• Terawave (Acquired by Occam Networks)
• Tut Systems (Acquired by Motorola)
• Vinci Systems, Inc. (Acquired by Tellabs)

Appendix I - Equipment and Fiber Requirements

Equipment

PONs - OLTs, Splitters, ONUs

• Equipment Requirements - PONS, OLTs, Splitters, ONUs - RBOC Plan
  • BPONS - RBOC Plan
  • GPONS - RBOC Plan
  • Total PONs - RBOC Plan
• Equipment Requirements - PONS OLTs, Splitters, ONUs - IGI Forecast
  • BPONs - IGI Forecast
  • GPONs - IGI Forecast
  • Total PONs - IGI Forecast

Equipment for FTTN

• FTTN Equipment Required - Plans
• FTTN Equipment Required - Forecast

Fiber Needed

Fibers - Current RBOC Plans

Fibers - IGI Forecast RBOC Plans

Fibers Required - Summary and Comparison of Plans vs. Forecast

Appendix II - Access Architecture

Various Approaches for Fiber-based Access Architecture

Fiber to the "X"

xDSL Versions

Design Details for Current Plans

• Fiber to the Neighborhood (FTTN)
• AT&T's Fiber to the node (FTTN)
• BellSouth's Fiber to the Curb (FTTC)

The RFP - PONs Will Set Us Free

• What Are PONs?
  • The PON Design
• Status of PON
• Advantage and Disadvantages of PON
• Types of PONs
  • BPON
  • EPON
  • GPON
• The PON in the First RFP
• GPONs

Architectures to Meet the Needs

Appendix III - Approaches to Video Delivery

Broadcast

IPTV

• IPTV Architecture
  • IPTV Global Architecture
    • Super Hub Office
    • Video Hub Office
    • Serving Offices
• IPTV Distribution and Access Architecture
• IPTV Channel Selection

Table of Figures

• Figure 1: Lightwave Network
• Figure 2: Five Reasons for 'Why AAA Now?'
• Figure 3: FTTP Schedule
• Figure 4: Summary of Competitive Position
• Figure 5: Verizon Wireline vs. Data Revenues
• Figure 6: Verizon Loss of Main Lines vs. Data Revenue
• Figure 7: Revised Competitive Structure Due to IXC Purchases
• Figure 8: RBOCs Subsume IXCs and CLECs
• Figure 9: RBOCs vs. Cable Companies
• Figure 10: New (2008) High Speed Forecast
• Figure 11: Adoption Rates of PCs and High-Speed Access
• Figure 12: Cable Companies vs. Satellite Companies
• Figure 13: Bandwidth Needs - MPEG4 Compression Technology
• Figure 14: Forecast Access Bandwidth Requirements 2010
• Figure 15: PONs' Bandwidth Capacity
• Figure 16: VDSL2 Bandwidth vs. Distance
• Figure 17: Predominant Advanced Access Architectures
• Figure 18: BellSouth FTTC
• Figure 19: AT&T Uverse (FTTN)
• Figure 20: Verizon FiOS (FTTP)
• Figure 21: Amount of Fibers for the Architectures
• Figure 22: Length of Fiber for the Architectures
• Figure 23: Fiber Costs of the Three Architectures
• Figure 24: Fiber Cost per customer - Each Architecture
• Figure 25: AT&T - BellSouth Hybrid FTTC
• Figure 26: Fiber Required Upgrading to Hybrid FTTC
• Figure 27: Verizon High-speed Access Lines - By Quarter
• Figure 28: AT&T H-S Additions
• Figure 29: FiOS States - 2008
• Figure 30: Verizon Services
• Figure 31: AT & T U-verse Video Services
• Figure 32: North Texas U-verse Service Offering
• Figure 33: AT&T U-verse High-speed Access Services
• Figure 34: Comparison of Internet Access Speed Offered
• Figure 35: Growth of AAAs thru mid-2008
• Figure 36: Announced Plans Summary Chart
• Figure 37: Announced Plans - Annual HPs
• Figure 38: Announced Plans - HPs Cumulative Passed vs. Served
• Figure 39: Announced Plan - Comparison to High-speed Accesses
• Figure 40: FTTP Served Customer Cost Assumptions
• Figure 41: FTTP Cost per Unserved (but passed) House
• Figure 42: Assumed Cost for FTTN and FTTC
• Figure 43: FTTP Announced Plan - Costs by Segments
• Figure 44: Announced Plan - Capital Costs and Budget Impact
• Figure 45: Segment Costs Including Video
• Figure 46: Forecast Homes Passed Cumulative - All Technologies
• Figure 47: Forecast Homes Passed Annually - By Company - All Technologies
• Figure 48: FTTX vs. High-speed Accesses vs. US Households
• Figure 49, AAA Growth vs. Legacy XDSL
• Figure 50: Technology Type Cumulative - Forecast
• Figure 51: Forecast Technologies - Homes Passed - Annual
• Figure 52: Forecast Homes Passed - PONs vs. Other Technologies
• Figure 53: Total PONs Forecast - RBOCs - Cumulative
• Figure 54: Moving from BPONs to GPONs
• Figure 55: Forecast BPONs vs. GPONs by Year
• Figure 56: Verizon PON Forecast
• Figure 57: AT&T PON Forecast
• Figure 58: Served Customer Cost Assumptions
• Figure 59: Cost per Unserved (but Passed) House
• Figure 60: Assumed Cost for FTTN and FTTC
• Figure 61: Forecast FTTP Costs by Plant Segment
• Figure 62: Forecast Plan Costs by Architecture
• Figure 63: Forecast Cumulative Cost and Annual Budget Impact
• Figure 64: Video Costs as Related to Total Plan
• Figure 65: Requirements for Successful RFP Vendor to First FTTP RFP
• Figure 66: Possible Consortiums
• Figure 67: Originally Selected Vendors
• Figure 68: Newly Selected Vendors
• Figure 69: GPON Selected Vendors
• Figure 70: Summary of Vendors
• Figure 71: Currently Planned PONs
• Figure 72: Forecast for PON Implementation
• Figure 73: Forecast Access Networks By Architecture
• Figure 74: Chart of Equipment Requirements - BPONS - Plan
• Figure 75: Chart of Equipment Requirements - GPONs - Plan
• Figure 76: Chart of Equipment Requirements - all PONs - Plan
• Figure 77: Chart of Equipment Requirements - BPONs - Forecast
• Figure 78: Chart of Equipment Requirements - GPONs - Forecast
• Figure 79: Chart of Equipment Requirements - All PONs - Forecast
• Figure 80: Equipment Requirements - FTTN Plans
• Figure 81: Equipment Requirements - FTTN Forecast
• Figure 82: Fibers Needed Current Plans
• Figure 83: Forecast Fiber Used By Technology
• Figure 84: Comparison of Plan vs. Forecast for Fiber Strand Requirements
• Figure 85: Fiber to the 'X' Varieties
• Figure 86: Chart of Various xDSL Technologies
• Figure 87: Fiber to the Neighborhood
• Figure 88: Fiber to the node
• Figure 89: Fiber to the Curb
• Figure 90: PON Basic Arrangement
• Figure 91: RFP PON - Central Office Portion
• Figure 92: RFP PON - Outside Plant Portion
• Figure 93: RFP PON Service Assignments
• Figure 94: BPON/GPON Comparison
• Figure 95: Typical GPON
• Figure 96: Bandwidth Needs vs. Capabilities
• Figure 97: Broadcast TV on BPONs
• Figure 98: Broadcast TV
• Figure 99: IPTV General Architecture
• Figure 100: IPTV Global Architecture
• Figure 101: IPTV Access Architecture
• Figure 102: FTTP Architecture for IPTV
• Figure 103: IPTV Hub Office Architecture
• Figure 104: IPTV Channel Selection