Broadband Everywhere Global Perspective FTTx Industries
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1 Broadband Everywhere Global Perspective FTTx Industries Dr. Charilaos Christopoulos Director Systems Management Business Unit Multimedia Ericsson, Sweden Mr. Yosuke Yamazaki, Session Chairman: Let me introduce our first speaker in this session, Mr. Charilaos Christopoulos. He joined Ericsson in He has worked with multimedia technologies, standards and applications, including mobile TV, IPTV and IMS. He has had various positions, including head of MediaLab at Ericsson Research, business development manager at Multimedia Solutions and recently director of Systems Management at Business Unit Multimedia. He has a BSc in Physics from Greece, a MSc in Software Engineering from UK and a Ph.D. in image and video processing from Belgium. Dr. Christopoulos please take the floor. Dr. Charilaos Christopoulos: Thank you for coming to this session. You see the title is Broadband Everywhere. This is what we are using in Ericsson when talking about what is happening in the broadband world, what are the trends, what is the technology and what are the different marketing options. Of course, a lot will be heard about about the fiber-to-the-home (FTTH) trends. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 88
2 The digital natives The life of a typical 21-year-old entering the workforce today 10,000 hours of mobile phone use MySpace/ YouTube Different expectations about work and play 25,000 s, IM, and SMS Technologically literate 5,000 hours of video game playing Constantly connected 3,500 hours of online social networking Sharing/ Blogging Content creators and multi-taskers Source: The Digital Natives Project (2007), Pew Internet & American Life Project (2007), Financial Times (September 20, 2006) Before I start the presentation I think I need to start with a definition. When I look at myself or at most of you here, I would not really consider us as what I describe in this slide as digital natives. If you look at a person at age 21, which is joining the workforce, this person has been using about 10,000 hours of mobile phone, has sent and received at least 25,000 s, IM and SMS, has been spending about 5,000 hours on games on the computer and about 3,500 hours of social networking. Not to mention that this person is using YouTube everyday downloading videos, and he is not actually a consumer, he is also a producer. He is uploading his home videos. I don t think, you and me are doing this. We are digital immigrants. There is a big difference between these people and us. We know how the world was before everything became digital. We really don t know why these people are spending so much time doing that thing and they don t know why we are not spending more of our time in this digital world. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 89
3 Drivers for broadband growth Increased no. of subscribers Fiber, VDSL2 Mobile broadband with HSPA Gbyte HSPA >100 Mbit/s with LTE Multiple service support (Voice, broadband, TV...) Increased network capabilities TV, media, Online gaming Internet access (Mobile) mail, remote access E- education, e- health Information & communication Government info, declaration Machine-to-Machine services User generated content Maps and directions Plentitude of services benefiting individuals, enterprises, society PC/Laptops/notebooks Mobile Phones & Communicators HDTV & LCD screens Game consoles, MP3 players Media players Digital (video) cameras Health care tools Cars, fridges, surveillance,... More advanced devices If this broadband was driven by us, then we would not need the 50 Mbit/s. I think it is driven by these young people and these are applications that we are not really doing, but these applications are actually driving broadband. We have to understand, what the everyday activities of these people are. Now we are seeing that people are even approaching high-definition TV. I think, we have to look at the trends of the society and what applications these digital natives are going to use. The drivers for broadband growth are the number of services we see now. There are, of course, much more advanced devices. A lot of devices are networked at home. In addition, we have the increased network capabilities. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 90
4 Networked media market value A shared opportunity between the industries 2005 valued just under 20 billion 2011 overall market size will grow to 107 billion Total market revenues (EUR billions) Source: Analysys Research (2006) Networked Television Networked Gaming Networked Radio Networked Music Networked Video Networked Print Looking at the market we notice two big industries, the media and the telecom working together. We call it networked media. If you see these two industries combined you will see a huge potential. Looking at the telecom market you know you can deliver media efficiently. If you look at the trends we have television, gaming, print, music and video, which is quite a big market. In 2005 the market was just under 20 billion and there is a forecast for 2011 of about 107 billion. Most of this will be in gaming and TV, which has the highest growth. There is a huge demand now for delivering TV content and video-on-demand content over the telecom network, which will make the demand for broadband much higher. That is the market we are trying to capture here. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 91 91
5 The new TV world From analogue to Digital TV (HDTV) From broadcasting to interactive TV Program production linear TV Program adaptation interactive TV Terrestrial IPTV Mobile TV Web TV Satellite Cable TV FTTX/DSL Cable TV Fixed wireless broadband 3G MBMS 3G Unicast Broadcasting DVB-H Media-Flo, DMB Since TV is the big market, we also have to understand that there will be a big change in the TV environment. First we know that analogue TV will stop in a few years. In Sweden we have already digital TV. In Europe it will be digital around 2012 or so, in Japan around At the same time we will see, that pure broadcasting or linear TV (on the left side) will fade away and we will move to interactive TV (on the right side), which will be delivered via fixed or wireless broadband networks. What I mean here with interactive is that the users are not really passive anymore. When we see TV and video services, it is important to notice that the trend is going to IPTV. Even though it means Internet Protocol TV, you can also say that it means interactive personalized TV. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 92
6 Bandwidth Requirements per household today example Mb/s downstream Mb/s upstream Future proof/scalable Quality & Security Serving for example; 3 HDTV channels 10 s of kb/s 1-2 SDTV channels HQ Audio High speed Internet Video conferencing Initially requiring; Mb/s downstream Mb/s upstream MB/s Mb/Month GB/Month When you look at the bandwidth which will be required, you notice that most of the TV sets sold now are high-definition. If you encode the HDTV channel with MPEG4 technology, this is about 8 to 11 Mbit/s, if you use standard definition TV (SDTV) it is about 1.5 to 2.5 Mbit/s, if you use MPEG2 you have to double these figures, so it will be 5 Mbit/s for standard and about 20 Mbit/s for high-definition. Then you can argue do I have 3 TVs at home, that everybody is watching at the same time with high-definition and in addition 1 or 3 SDTV channels? Why shouldn t this be the case in the near future? Assuming such a situation 30 to 50 Mbit/s will be required for downstream. So, these are the requirements we see already today. Then given the fact that we are discussing uploading videos and sharing videos, the uplink becomes quite high, too, maybe 15 to 30 Mbit/s. This is what we see as bandwidth requirement for households today. Certainly, delivering 2 or 8 Mbit/s to a household is not going to work in the near future. At Ericsson we get the requirements of 50 Mbit/s and more from operators. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 93
7 Fixed traffic to grow tenfold by Subscriber traffic in fixed access networks Yearly Terabyte IPTV Internet Classic 0 Voice & VoIP Source: Internal Ericsson If you see the forecast on the fixed traffic by 2012 we expect a tenfold growth. In this graph you see on the left that Voice-over-IP is almost zero. Most of the traffic increase is in Internet and IPTV. You will see some 300mil TBytes requirement, which is the forecast for Data has overtaken voice in the year 2000, so this is not even shown in this graph. This forecast deals with the last meters to the subscriber. How you do it in the backbone will depend on what aggregation model the operator has used. This is quite consistent with what we get from the operators. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 94
8 Mobile traffic to grow tenfold by 2012 Data traffic tripled in Yearly Terabyte TV/Video Internet Voice In the fixed networks: data overtook voice year Sources: Internal Ericsson In the mobile networks: data will overtake voice around 2010 Voice continue growing, but information based services will grow more driving the need for more mobile broadband spectrum The growth with mobile broadband is similar to the fixed traffic. Data will overtake voice in In Japan this has already happened. Internet and TV will be dominating in We cannot really compare the TBytes of the fixed and the mobile traffic, that means 300mil to 4mil TBytes, respectively. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 95
9 Broadband comes in many flavors Fixed access Fixed/nomadic wireless Mobile access xdsl Fiber (PON & P2P) Fiber/VDSL2 Cable (DOCSIS2 3) Fixed Mobile HSPA/LTE WiMAX Satellite/Terrestrial Unlicensed (WiFi etc) Others G-HSPA 3G-LTE Others Subscriptions (Millions) Mobile Fixed If you look at the graph in the lower right side you see that in 2010 we expect more than 1 billion broadband subscribers, of which half of them will be fixed and half of them wireless. This number is only half of the truth, because the fixed subscription comes normally from home members. So if you look at the number of users we expect half a billion subscriptions but we expect about three times more users, i.e. 1.5 billion users in the fixed broadband, then about 600 million users in the mobile broadband in the year 2010, so 2 billion users basically in broadband in total. That is quite an impressive figure, in 2012 this number of users increases to 2.5 to 3 billion broadband users, not only subscriptions. Now, broadband comes in many flavors, as you can see on the slide. Looking at the capacity and speeds, I would say, that with fixed access we can assume that it is kind of unlimited. Of course, with mobile this is not the case. But anyway, all of these will be delivering more than 10 Mbit/s downlinks. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 96
10 Main drivers for FTTH/FTTC Provides current and future bandwidth needs Competition from Cable TV and associated triple play revenues Enabler for IPTV Services Potential of significantly reducing OPEX compared to copper access Regulatory relief for incumbents deploying fiber networks to speed up broadband penetration Now, what are the drivers for fiber-to-the-home (FTTH)? Basically fiber has unlimited capacity. If you do wavelength multiplexing you can talk about Gbit/s. If the biggest drivers are TV and video applications, we have to ask who are the main competitors? They are the cable TV companies. But in fact today they are mainly using the coaxial cables. From that point of view fiber is the much better technology if you want to provide broadband TV and IPTV services. There is a big potential for reducing the operating expenses (OPEX) compared to copper access. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 97
11 Broader view at FTTx CAPEX "Typical" FTTx cost distribution 79% 13% 8% Active electronics Civil Works Passive equipment Source: Ericsson analysis If you look at what is the cost for installing fiber. Most of it is in the civil works. From what we have seen from the various operators, basically about 80% is civil works. Of course, this looks like a lot of money, but the important thing is, from the moment you have done it, there is almost zero maintenance cost for the coming 20 years compared to other technologies. So, there is of course a potential to reduce significantly the OPEX by using fiber compared to copper. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 98
12 Worldwide map of PON GPON GPON/ EPON GPON/ EPON EPON BPON GPON BPON GPON GPON GPON GPON/ EPON GPON GPON Most countries in the world have now understood the reasons for deploying fiber to speed up broadband penetration. A lot of governments are trying to support that. Gigabit Passive Optical Network (GPON) is the technology to which most of the operators are going. It seems to be the technology for the future. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 99
13 PON and p2p FTTH forcasts In the bottom graph, where you can see the FTTH subscribers, if you take the year 2010, we expect about 47 million subscribers, of which about 40 million will be in PON technology, while 6.6 million subscribers will have Ethernet FTTH. In the top graph, which shows the Ethernet FTTH subscribers by geographic region, you see in the top line, that this is basically Europe. So Europe with about 58% will be Ethernet FTTH. We think that PON is the way to go, which we see in the bottom graph. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 100
14 Full Service Broadband Network Harmonization of Applications, content and network Service layer Layer IMS / Standard Services Multi Access Edge Network Management Wireline Access Wireless Access Transport Multimedia services to a screen of your choice As for broadband access we have fixed access, we have wireless access and we talk about a lot of services, which can be delivered over both kinds of access networks. But we will not be able to compare the speed which is coming from the mobile broadband to the fixed broadband. That will be another scale, not even the data which will be transferred from the mobile broadband to the fixed broadband. But what we will see from an operator trying to compete, we will not see an operator either providing fixed or mobile access. Most of the operators want to provide triple play services. The users want to take the services with them. Besides providing the access technology, there is the challenge for the operators to provide backbone networks and efficient IP transport networks and how to create services which can be delivered to any access. In this context, you will hear many times the magic word of convergence, which has been defined in numerous ways. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 101
15 New Service Revenues The Full Service Broadband opportunity Broadband everywhere through efficient HSPA Increased capacity, efficiency & bandwidth through Fiber/VDSL Group & multimedia com Networked devices HDTV IPTV Gaming Media streaming & VoD Revenue from new high bandwidth services with strict demand on QoS Revenue from mobility & increased broadband coverage Web communities Downloads and filesharing Revenue from broadband over ADSL & cable Browsing, , messaging Broadband connectivity is your business foundation How can an operator make money with these broadband services? If we look at the current situation, where we make revenues with ADSL and Cable, it is more or less saturated. You can assume that everybody has a fixed line or cable. If you got stuck in that one, then there will be a saturation in the income you get. There are 2 ways an operator can improve his situation, if we talk about broadband everywhere. Wireless is the service where you transport the services over the mobile network, i.e. address many more users than with just the fixed network. Mobile broadband is basically now comparable to ADSL or even better now. If you want to deliver high quality services, like HDTV, then it means investment in your technology like fiber and VDSL technology. Broadband Everywhere, Global Perspective Charilaos Christopoulos page 102
16 Operator challenges & solutions Sustainable business models to meet new players and consumer demands Cost effective & quick rollout, enabled by fiber network technologies Broadband market Increased speeds to cater for new services, solved by GPON, VDSL2, HSPA, LTE Move towards all-ip and deep fiber architectures to handle increased usage Seamless, everywhere connectivity enabling multiple services, using Full Service Broadband There are a lot of challenges for the operator. What is the business model you are going to have? How do we prepare a cost effective rollout? How do I deliver the contents on GPON, VDSL? Shall I move to all-ip and deep fiber architecture? How do I deliver the services? This summarizes basically my presentation: Broadband comes in many flavors Broadband momentum is shifting to Deep Fiber and Mobile Access enabled applications, enabling increased capacity, efficiency & bandwidth through FTTx Harmonization of applications, content and networks is happening Need for Full Service Vendor Thank you very much! Broadband Everywhere, Global Perspective Charilaos Christopoulos page 103
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