fiber not just for breakfast

Fiber: Not Just for Breakfast Anymore

Heather Burnett Gold, President FTTH Council Americas

Google gets over 1000 applicants

C Spire announces build out of Mississippi

CenturyLink announces Omaha, Las Vegas

VTel, Smithville Digital announce upgrades to gigabit speeds

Minnesota already has over 50 operators

The world is going all-fiber

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0

5

10

15

20

25

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Homes Passed Homes Marketed Homes Connected

2013 Homes Passed: 27.7M2013 Homes Marketed: 25.5M2013 Homes Connected: 10.7M

North American FTTH Growth

Source: RVA annual Provider & Consumer Studies

Number Of U.S. FTTH Communities

Based on the 2012 Consumer Study,approximately 8.5% of U.S. municipalities had FTTH – or about 1,759

Source: RVA 2012 Consumer Study

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0%5%

10%15%20%25%30%35%40%45%50%

FTTH Take RatesU.S. Take-Rates Versus Homes Marketed Reach

45.8%

Verizon Build Starts

Source: RVA annual Provider & Consumer Studies

Real Estate Dev (Greenfield)

Competitive Prov/ CLEC Rural

Muni Retail Rural

Competitive Prov/ CLEC Urban/Suburban

Muni Wholesale

81%

62%

52%

51%

48%

38%

31%

30%

25%

FTTH Take-Rates Are Even Higher In Many Cases

Take-Rates Vary From 25% To 81%

Tier 3s

Verizon

Munis

U.S. FTTH State PenetrationState Households Connected Ranges From 1% to 33%

Primary driver in

area:

Source: RVA 2013 Provider & Consumer Studies

FTTH is already strong in rural areasWith over 500 FTTH providers in Tier 2 / Tier 3

markets

There are over 500 FTTH providers in Tier 2 / Tier 3 markets

In 2009, major funding opportunities were made available through the stimulus.

Broadband Initiatives Program provided $3.5 billion to expand and improve connectivity in rural areas and small towns/cities

Broadband Technology Opportunities Program gave $3.7 billion focusing on middle mile infrastructure, “community anchor institutions,” broadband adoption and mapping

FTTH in rural areas benefited from the ARRA stimulus

According to RVA, LLC, 73.7 million homes in suburban and rural areas are not yet passed by FTTH

Take rates in Tier 2 and 3 markets exceed 50 percent

And FTTH results in higher ARPU over other types of broadband builds in the same areas0o

And the market is still ripe

In the past 15 years, we’ve seen… The Internet iPods HDTVs DVRs Smartphones (Blackberry, iPhone, etc.) Tablet computers

All of these revolutionary technologies require higher speed networks

We must expect and plan for more and faster changes in the future!

Why Is the World is Changing?

Video on all Screens - HDTVAn image is built on a screen, pixel by pixel.

One HDTV program = 8 - 12 Mbps

Pixel

1920 pixels

1 house = 48 Mbps just for video, today…How about tomorrow?

TV + DVR 24 Mbps

TV 12 Mbps

1080pixels

App Uses Already Available Are Increasing

Shop online

Upload large files

Use VOIP for audio

Download/ stream video to television set

Upload video content to Internet

Use two-way video conferencing

0% 20% 40% 60% 80% 100%

68%

25%

10%

5%

13%

7%

81%

36%

24%

23%

20%

19%

2013

2010

Internet Activities Completed At Least Once/Month By FTTH Users

Why Fiber?Greater Bandwidth, Longer Distance, Lowest Cost /

Bit

Bandwidth Distance Cost per Bit

Copper

Bandwidth Distance Cost per Bit

Fiber

2,400 Pair Copper Cable

100 Gbps to 1KM

1 Fiber Cable> 50 Tbps

> 5,000 KM

Fewer truck rolls with fiber Lower power consumption versus

DSL/HFC Not affected by lightning, rain,

humidity issues No maintenance needed for

amplifiers

Why fiber? Metal cables and wireless have significant

limitations

Feature Benefit

High bandwidthHigh information carrying capacity

Low attenuationLong distances without repeater, which is less expensive

Light weight Small size

Easier installationsUnobtrusive

No metallic conductors

No grounding problemsNo “crosstalk”

PassiveNo power requirementsNo circuit protection needed

Difficult to tap Very secure

InexpensiveWidely deployable & cost effective

With An All Fiber NetworkYou Build It Once – Its Build to

Last

PON (Passive Optical Network) Incorporates a signal divider,

such as an optical power splitter

One fiber at the central office feeds many fibers in the field

G-PON (Gigabit PON) and GE-PON (Gigabit Ethernet-PON) are the most common architectures

Point-to-Point (“Active Ethernet”) One fiber in the head end =

one fiber in the field

Typical FTTH Architectures

OLT

Optical Power Splitter or wavelength filterPON

Point-to-point

OLT

Central office or remote cabinet


GPON GE-PONPoint to

Point (Active

Ethernet) Current Gen

Next Gen

Current Gen

Next Gen

Downstream Bandwidth

2.4 Gbps total

10 Gbps total

1.2 Gbps total

10 Gbps total

100 -1000 Mbps per

sub

Upstream Bandwidth

1.2 Gbps total

10 Gbps total

1.2 Gbps total

10 Gbps total

100 -1000 Mbps per

sub

Typical distance

20 km 20 km 20 km 20 km 20 km

Wavelengths (nm),

DownstreamUpstream

14901310

15771270

15501310

1577 1270

15501310

Today’s Common FTTH Architectures

OLT

Optical Power Splitter or wavelength filterPON

Point-to-point

OLT



* NG-PON 2 = 40 Gbps downstream/10 Gbps upstream

In US – Passive Optical Networks is the predominant network architecture (94%)

PONs have some distinct advantages. They're efficient, each fiber optic strand can serve up to

32 users. Have a lower building and maintenance costs

Passive optical networks also have some disadvantages. They have less range than an active optical network, Make it difficult to isolate a failure when they occur. Because bandwidth in a PON is not dedicated to individual

subscribers, data transmission speed may slow down during peak usage times in an effect known as latency.

Passive Networks +/-

Active optical networks advantages Reliance on Ethernet technology makes

interoperability among vendors easy. Subscribers control throughput

Active optical networks disadvantages. Require at least one switch aggregator for

every 48 subscribers. Requires power, so inherently less reliable

than a passive optical network.

Active Networks +/-

Can erase educational inequities Reduce health care challenges like

declining physician numbers, access problems

Can turn rural America into a "middle shore" for high-tech job opportunities

FTTH matters for rural residents

So – How Do You Get There?

FIND A CHAMPION Create a steering team Recruit local organizations Use their language, not yours Establish your network as the game-

changing asset Get people thinking and talking about your

network

Engage the community

What resources are in your region? Check the FCC’s Broadband Deployment Map as a start

Estimate Cost to Deploy Various state groups (i.e. Blandin) have model

spreadsheets Find experts – ask others who have deployed

Estimate what you can bring to the table Demand Assets

Build the Business Plan

Basic math blocks deployments

Benefits Accruing To: Investor in the network Content and applications Equipment and devices Local community The region The country

Totalbenefits

of high speed networks

But the only benefits that matter for the investment case are the benefits that matter to the investor…

and as to those…

C + O > (1-r)R + SB + (-CL)

For the Investor, the equation usually looks like this:

Initial Equation May Not Appeal to Investors.

CostsBenefits

C: Capital ExpendituresO: Operating Expendituresr: RiskR: RevenuesSB: System Benefits (Benefits that drive increased revenues outside the

communities where the new or incremental investments are made)CL: Losses due to competition

In short, the costs outweigh the benefits to the investor.

Communities can change the math.

Use existing assets, partnerships and opportunities to move the arrows.

C + O < (1-r)R + SB + (-CL)

But how do we do that?

Communities have Resources

Basic Math for an Upgrade

•Build to Demand Model•Access to ROWs, Facilities•Reduce Regulatory Time

Reduce Cap Ex

•Access Payments•Reduce Ongoing Regulatory Costs•Utilize Existing Billing Platforms

Reduce Op Ex

•Build to Demand•Standardize Functions Across Areas, VendorsReduce Risk

•Demand Acceleration/Aggregation•Marketing Platform•New Services

Increase Revenues

•Distributed Innovation•Seeding Long-Term Growth

Increase Ecosystem Benefits

Lowering costs: Reducing CapEx and OpEx

Decreasing Costs

Granting a provider access to existing physical assets ahead of time can decrease the costs of building or upgrading a network. These include dark fiber, conduit systems, potential future fiber and light poles.

Getting institutional partners involved. University communities have access to regional optical networks / open peering & routing to R&E networks

Expediting local permitting reduces the amount of time employees are waiting, lowers the capital expenditure costs while being little or no cost to the community.

Lowering or providing no cost permits for aspects of construction excavation, traffic control, railroad crossing eases capital expenditure burdens.

Assist with obtaining local rights of way or agree to obtain and assign rights of way to a potential provider partner to lower construction costs.

Institute a Dig Once policy to ensure conduit is installed prior to street closings, lowering costs for laying fiber.

Create incentives to encourage Multi-Dwelling Unit owners to create a common telecom entrance facility requirement, lowering barriers to entry for potential providers.

Streamline inspections for next generation network projects.

Pre-authorize use of construction methods like micro-trenching.

Ensure competitively neutral process for waivers for construction decisions regarding cabling and trenching.

Reduce Risk, Increase Revenue

Increasing Potential Revenue

Marketing services to the community

Effort to increase uptake of existing business services

Assist with local political support

Finding and securing local grants

Exclusive marketing rights

Named branding opportunities

Anchor institution, enterprise and residential revenue commitment through demand aggregation

Interested community and MDU owners willing to bundle the cost of services into rent for tenants

Over the top services

Exhaust all Federal, State and Local options Federal

CAF – new experimental dollars for all types of entities

Schools and Libraries Economic Development Agency loans RUS – loans and grants

State Blandin Foundation

Funding

Issue an RFP to determine what kind of ownership/network will work

Find a technical expert to assist in RFP review and implementation oversight

Communicate with your constituents every step of the way Where do you deploy first? What applications do they want?

Implement/Build

Many paths you can follow

A public entity completely owns the network infrastructure

A public entity owns or funds part of the infrastructure

PPP Open: Network owned by PPP, has an open wholesale network and may provide retail services

PPP Not Open: Network owned by PPP, not necessarily an open wholesale network but must provide retail services

A private entity completely owns the network and there is no public ownership

Third Party: A service provider owns the network and provides retail and wholesale services

Public

Public-Private Partnership

Private

Blandin Foundation Toolkit --http://broadband.blandinfoundation.org/toolkit/

FTTH Council Community Toolkit --http://www.ftthcouncil.org/communitytoolkit

Webinar on New FCC Rural Funding Experiments --http://www.ftthcouncil.org/p/ca/vi/sid=82

Lots of Resources to Assist…But You Can’t Afford to Wait