PON for next generation applications: Focus on mobile backhaul (MBH)

Transcription

1 PON for next generation applications: Focus on mobile backhaul (MBH) Julie Kunstler, Ovum CIOE Shenzhen, China - September

2 Agenda Section Page # Introduction PON for mobile backhaul - why? Mobile data forecast Geographic fit Regulatory environment Monetization of FTTx network PON s ability to support mobile backhaul: Traffic management Timing synchronization Bandwidth support PON for mobile backhaul - case studies early deployments Selected PON market dynamics: Google Fiber PON market revenue and equipment Summary 2

3 Introduction tough environment for CSPs & vendors Wireline CSPs (communications service providers) are facing huge declines in voice revenues and commodization of data services while OTT (over the top) players are having a large, negative impact on network resources. Many governments have legislated national bandwidth goals but the costs of building FTTx networks are enormous. CSPs are concerned about network monetization. Many wireless CSPs are profitable but the costs of mobile backhaul are becoming a concern given the large increases in data traffic from 3G/4G/LTE. Many PON component and equipment vendors are facing declining revenues as ASPs continue to drop and as volumes shift from OLT ports to ONTs/ONUs devices. 3

4 Introduction PON has potential beyond FTTH PON supports different types of users running different types of applications with different bandwidth, latency and jitter requirements: Multiple residential consumers running bandwidth-intensive applications over multiple devices. Enterprises running low-latency, high-availability applications through the distributed cloud and supporting remote workers. Utility operators installing AMI (automated meter infrastructure) and smart grids. PON supports fixed-mobile convergence: PON meets the geographic and technical requirements for mobile backhaul. CSPs have begun to use PON for mobile backhaul. Fixed and mobile need to become complementary in the world of 3G/4G/LTE. PON supports diversity. PON enables faster network monetization. 4

5 PON for mobile backhaul why? 5

6 Phenomenal mobile traffic forecasts due to 3G and 4G Increasing demand for lower-cost MBH solutions given growth in mobile data traffic which directly impacts the MBH market. Source: Ovum Market Opportunity Analysis: Mobile Backhaul, TE , Jan

7 Definition of MBH macrocell MBH is the part of the communications network used to transport traffic from cell sites (macro and non-macro) to the CSP s mobile switching office. Source: Ovum 7

8 PON for MBH - geography, regulatory environment Geographic fit: PON deployments typically begin in urban/metro areas. Majority of mobile data is created in urban/metro areas. Source: Small Cell Backhaul Requirements, by NGMN Alliance, June Regulatory environment - some regulators requiring deployment of fiber as condition for securing LTE licenses. 8

9 Why PON for MBH - monetization of FTTx PON Slow ROI (return on investment) on PON network: Building an ODN (optical distribution network) is expensive. Residential ARPU (average revenue per month) is low in many countries. Wholesaling MBH services is profitable: Wholesale MBH customers require minimal support. Often support multiple MBH customers simultaneously. From the CSP perspective, use the same FTTx PON network for different types of customers: Residential, businesses/enterprises, institutions, MBH wholesale and utilities. Provide internal backhaul support for small cells and WiFi. 9

10 Monetization of PON ODN Revenue perspective: Time Warner Cable s 2012 annual ARPU by customer type - residential was $1,239 versus business of $3,377. Fixed mobile convergence leads to faster return on investment: 10 Source: Broadcom s presentation to Optinet Conference, Beijing, June 2013.

11 PON s ability to support MBH 11

12 PON has traffic management capabilities The technical standards for GPON and EPON were developed to support carrier Ethernet services. The standards bodies, ITU for GPON and IEEE for EPON, envisioned PON's use for business services, such as FTTbusiness and MBH. PON has traffic management tools. For example, dynamic bandwidth algorithms to support very fast changes to bandwidth requirements along with transmission permission settings managed by the OLT at the central office. PON supports Ethernet-based IP traffic. This is very important since 3G and 4G networks are based on IP/Ethernet backhaul. Carrier Ethernet has emerged as the preferred technology to support MBH growth from 3G and 4G because it is a standardized approach which can scale economically to meet demand. In early 2012, the MEF (Metro Ethernet Forum), an industry group dedicated to the adoption of Carrier Ethernet (CE) networks, announced guidelines (MEF 22.1) to support the migration of MBH from TDM-based backhaul to Ethernet/IP-based backhaul. 12

13 Timing synchronization Communication networks rely on the use of highly accurate clocks to ensure synchronization. Frequency and phase requirements for selected wireless interfaces: 13 Source: Ovum, interviews with PON component and equipment vendors

14 PON supports timing synchronization Early PON standards encompassed the ability to distribute timing. IP-network synchronization solutions include IEEE 1588v2, IEEE 802.1AS, 1PPS (pulse per second)+tod (time of day). Clock synchronization had to be developed for IP-based networking where clock transmission is not inherent in the physical layer. Consequently, PON component and equipment vendors are adding clock frequency and phase synchronization into their products. Many small cell deployments will be indoors, meaning that using line-of-sight to GPS for timing and phase synchronization is either impossible or prohibitively expensive. PON vendors are assuming that GPS-based solutions are not practical. 14

15 PON supports timing synchronization chip example Many PON MAC chip vendors support timing synchronization for MBH at 1G EPON, 10G EPON and 2.5G GPON. Cortina Systems 10G EPON OLT and ONU: Source: Cortina Systems 15

16 PON supports redundancy PON equipment vendors have developed redundancy scenarios. Ring protection scheme: Scenario A feeder fiber is protected by use of multiple fibers from OLT to splitter. Scenario B multiple distribution fibers from different splitters to cell site backhaul unit. Source: Ovum, interviews with PON equipment vendors 16

17 PON support redundancy - continued Non-ring protection scheme: Source: Ovum, interviews with PON equipment vendors 17

18 Redundancy - risks versus cost Many factors influence decisions regarding redundancy evaluation of network failure, amount of traffic being carried, etc. Macrocell failure leads to network outage. Small cells: Network coverage similar to macrocell scenario. Improve capacity network impairment but not outage. Ovum view - redundancy is unlikely to be deployed for most small cells due to costs of redundancy versus total cost of small cell deployment: Adding $1000 for redundancy compared to cost of small cell (equipment, power, site acquisition) is significant could represent 20% to 25% of total cost. Redundancy for macrocell represents a smaller percentage of total cost. 18

19 Sufficient bandwidth - existing PON, 10G PON Existing PON meets MBH bandwidth requirements of macrocells, small cells and WiFi. 1 Gbps PON ONT/ONU CPE devices are available. Typical MBH bandwidth required LTE Macrocell per sector (now) LTE Macrocell per sector (future) Femto/pico WiFi (.11ac) WiFi (.11n) 100 Mbps 1Gbps 100 Mbps 1 Gbps 300 Mbps 10G PON would enable more cells or nodes to be supported simultaneously. Table below is based on 10G EPON, assuming 8.7Gbps availability since FEC accounts for approximately 13% overhead: # cells or nodes that can be backhauled LTE Macrocell per sector (now) LTE Macrocell per sector (future) Femto/pico WiFi (.11ac) 87 8 to to 9 29 WiFi (.11n) Source: Ovum and Broadcom presentation at Optinet Conference, Beijing, June

20 PON for small cell MBH - sufficient bandwidth Traffic model for small cells - Cloud-service file transfer take-rate has significant impact on bandwidth. (bandwidth expressed in Mb/s) SIMPLE TRAFFIC MODEL Assumptions: Scenario A People per cell during periods of peak demand: Take rate (customers of a particular wireless service provider) 40% 40% Average simultaneous utilization rate 30% 50% Average number of simultaneous customers per cell Scenario B Active service breakdown and SLAs: Mb/s Mb/s Phone call 60% % 0.1 Streaming video 29% 8 29% 8 Gaming session 10% 3 25% 3 Web page download (500 kbyte page) 0.9% 10 16% 10 Cloud-service file transfer (10 mbyte file) 0.1% % 1000 Simultaneous services & bandwidth per cell: Phone calls Streaming videos Gaming sessions Web-page download Cloud-service file transfer AVERAGE PEAK-PERIOD BANDWIDTH PER CELL Source: Ovum Prepared for FTTH Council Asia Pacific.

21 Focus on small cells and WiFi PON architecture is a good fit for numerous endpoints in a small geographic area such as small cells and WiFi access points. Application uses for small cells and WiFi: Indoor spaces wireless network coverage can be difficult. Many indoor areas that need coverage have high capacity demands, such as convention centers, retail malls, airports. Outdoor public spaces often need additional capacity. Downtown areas where there is a high concentration of smartphone users. Indoor and outdoor small cell deployments often begin in urban areas due to capacity and coverage demands along with availability of infrastructure, such as power. Most FTTx PON deployments begin in urban areas, taking advantage of point-to-multipoint architecture, building density, proximity to COs, skilled technicians. 21

22 PON for MBH case studies early deployments 22

23 Bright House Networks EPON for MBH 6 th largest cable system operator in US. Began FTTx EPON deployment in Business model: Leasing of MBH services to multiple mobile CSPs. Providing FTTx services primarily to business subscribers. Initial focus on macrocells, considering expansion of MBH support for small cells & WiFi. Bright House is member of CableWiFi Alliance. Bright House delivered a paper* at OFC/NFOEC 2012: EPON allowed Bright House to cost effectively support 8Mbps service per MNO (mobile network operator) cell site with the flexibility to scale up to 200Mbps as required. Four years after deploying the first MBH service, scaling EPON is truly where the access medium excels. Easy to horizontally scale the deployment with no changes to optical plant in the field. 10G EPON co-existence with EPON on same ODN would support towers that grow in bandwidth needs. Source: Mobile Backhaul for PON: A Case Study, Bright House Networks, Edwin Mallette, OFC/NFOEC Technical Digest,

24 Bright House Networks continued Support for multiple types of subscribers: Source: Bright House Networks 24

25 CenturyLink GPON CenturyLink is 3 rd largest communications company in US. Provides communications services to residential, business, governmental and wholesale customers. In 2009, CenturyLink announced its use of Calix s GPON equipment for MBH. GPON-based MBH services to wireless carriers with cell towers in CenturyLink footprint. CenturyLink leveraged its existing deployments of Calix s C7 broadband service nodes along with Calix ONTs to extend fiber optic links to cell towers. Most towers had only basic T1 backhaul. MBH capacity had to be increased to handle growth from 3G and 4G. CenturyLink is using a variety of solutions for MBH, including point-to-point and GPON. 25

26 CenturyLink using Calix equipment Calix has continued to develop its Ethernet Service Access Platform: Source: Calix 26

27 Selected PON market dynamics 27

28 Selected deployment - Google Fiber Google fiber was announced in early 2010, launched in July 2012 symmetrical 1Gbps FTTH service in Kansas City, Missouri and Kansas City, Kansas. Why drive revenues and test bandwidth usage. Google s approach keep it simple: Utility partnership provided Google with access to poles, existing fiber network. Demand aggregation pre-registration scheme to pick neighborhoods. Google s equipment approach one solution for home-gateway and set-top box. No voice service and one TV bundle (very different than other service providers). $84 million to service 149,000 customers around $564/customer Three service plans: Regular service free. Super 1Gbps speed and 1TB of Google drive space for $70/month. TV add TV service plus 2TB DVR box for $120/month. Many incumbent telcos would not be permitted to use Google s approach. 28

29 PON equipment revenues and shipments Comparison of YoY (2Q13 compared to 2Q12): EPON OLT port shipments down 55%, ONTs/ONUs down 36%. GPON OLT port shipments up 93% and ONTs/ONUs up 66%. GPON OLT shipments represented 71% of total in 2Q13, compared to 36% YoY. GPON ONT/ONU shipments represented 63% of total in 2Q13 compared to 39% YoY. 29 Source: Ovum

30 China s major role in PON and beyond Equipment level: Combined, Huawei, ZTE and Fiberhome represented: Around 80% of OLT port shipments in 2Q13. Around 75% of ONT/ONU shipments in 2Q13. Device level: Transition from GPON transceivers to GPON BoB (BOSAs on board) led by Chinese device vendors. Optical component level: Chinese vendors for advanced optical components more than doubled their global market share from 7% in 2008 to 15% in Numerous Chinese ONT transceiver/bosa vendors. Expansion into fast-growing datacom market. 30 Source: Ovum China Is Hotbed for OC Industry Change, TE , March 2013.

31 But access market is brutal Pressure on component and equipment prices has been intense and will remain harsh: FTTx network (the ODN) deployment costs are high. CSPs (communications service providers) pressure suppliers for lower cost components and equipment. Similar to DSL, ASPs will continue to fall, even as volumes decline. There are many suppliers of ONT transceivers/bosas. Some suppliers are willing to operate at thin profit margins. Other suppliers have adopted vertical integration strategies to eliminate margin stacking. Upward integration strategy from transceiver to ONT/ONU CPE devices. Downward integration strategy from equipment to components (PON MAC chipsets). 31

32 Summary 32

33 Summary PON has a good geographic fit with many macrocells and small cell/wifi (indoor and outdoor) deployments and deployment plans. PON fits the technical requirements for mobile backhaul. PON for MBH has been deployed successfully by several CSPs for a number of years. Adoption/deployment - major challenge is around education and testing. PON for MBH enables faster FTTx PON network monetization, supports fixedmobile convergence. China s component and equipment vendors have a major role to play in the PON for MBH market. 33

34 Thank you 34

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