network technology laboratory economics and methods to provide optimal access network in broadband...

Network Technology LaboratoryNetwork Technology Laboratory

Economics and Methods to Economics and Methods to Provide Optimal Access Provide Optimal Access

Network in Broadband Access Network in Broadband Access Network Network

-2-

1 Introduction

2 KT’s Broadband Access Network

3 Optimal Equipment Provision Criteria

4

5

Modeling and Economics

Conclusion

-3-

What is BroadbandWhat is Broadband ??

Narrowband• The highest speed modem used with a traditional telephone

line, known as a 56K modem, offers a maximum data transmission rate of about 45,000 bits per second (bps).

• For example, using a 56K modem connection to download a 10-minute video or a large software file can be a lengthy and frustrating exercise.

Broadband• Broadband or high-speed Internet access is provided by a series

of technologies that give users the ability to send and receive data at volumes and speeds far greater than current Internet access over traditional telephone lines. In addition to offering speed, broadband access provides a continuous, “always on” connection (no need to dial-up) and a “two-way” capability, that is, the ability to both receive (download) and transmit (upload) data at high speeds.

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Access NetworksAccess Networks

Access networks is part of a communications network which connects subscribers to their immediate service provider.

Access networks provide broadband services over the last mile to homes and small offices

We can classified access networks into two categories depending on the infrastructure• Wireline infrastructure

• CATV networks • xDSL technologies - Existing copper technologies (ADSL,VDSL,XDSL etc.) • Fiber To the Home (FTTH) or to the Building (FTTB), to the Pole(FTTP)

• Wireless infrastructure• Satellite• WiFi and WiMAX, Wibro• 3G WCDMA and HSDPA• ZigBee• Bluetooth

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Broadband Technologies CategoryBroadband Technologies Category

FTTH (Fiber to the Home)FTTH (Fiber to the Home)FTTC (Fiber to the Curb)FTTC (Fiber to the Curb)

xDSL(Twist-pair)

xDSL(Twist-pair)

HFC(Hybrid Fiber Coaxial)

HFC(Hybrid Fiber Coaxial)

LAN(UTP Cable)

LAN(UTP Cable)

Home Run(Point-to-Point)

Home Run(Point-to-Point)

AON(Active Optical Network)

AON(Active Optical Network)

PON(Passive Optical Network)

PON(Passive Optical Network)

ADSL8M

VDSL150M

DOCSIS 2.0 40M

DOCSIS 2.0b 200M

•CMTS : Cable Model Termination System•ETTH : Ethernet to the Home•OLT : Optical Line Termination•ONU : Optical Network Unit•ONT : Optical Network Termination•TDM : Time Division Multiplexing•CWDM : Coarse Wavelength Division Multiplexing•DOCSIS : Data Over Cable Service Interface Specifications

DOCSIS 3.0 200M

ETTH 200M

Fast Ethernet 100M

KT : NtopiaDirectly connect between

OLT and ONU(ONT) 100M Powered switch node

UTP connection

Fiber signal amplificationSpeed lowHigh Cost

TD

MW

DM

A/B-PON

E-PON

G-PON

DWDM-PON

CWDM-PON

VDSL2100M

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1 Introduction



4

5


Conclusion

-7-

KT Broadband KT Broadband NetworkNetwork

IP-VDSL

Ntopia

FTTH(WDM-PON)

FTTH(E-PON)

FTTP/FTTC

Metro-core S/W(RS38000)

GES FES

OLT

MODEM

ONT OLT

24 UTP

Fiber

Fiber

Fiber

RN(SPLITTER)

Fiber

1

32

ONT

RN(AWG)

32

1

OLT

VDSLaggregator S/W

FNU(S/W)

24 UTP1

32

Metro-core S/W(RS38000)

UTP

UTP

Fiber

Ntopia S/W

Ntopia S/W

Copper

Copper

RN(AWG)

1000BFXAPT 통신실 동단자함

100BFX

1000BFX

100Mbps/λ

100Mbps/λ

100Mbps

100Mbps

32λ/1core

32λ/1core

1.25Gbps/1Core

VDSLaggregator S/W

BBx

BackBone Network Access Network Home Network

-8-

The Number of Subscribers and Equipments at KTThe Number of Subscribers and Equipments at KT

구분DSLAM

(8M)IP-ADSL

IP-VDSL

(10M)

IP-VDSL

(20M)

IP-VDSL

(50M)NTOPIA FTTP FTTH 계

APT

No. equip.

383,353 - 869,681 876,230 729,5191,583,74

9- -

4,442,532

user 236,497 - 564,662 590,678 524,630 903,618 - -2,820,08

5

user% 8.4% - 20% 20.9% 18.6% 32% - - 100%

Single

housing

No. equip.

3,450,179

877,494 - 154,629 729,519 - 68,861 25,0765,305,75

8

user2,128,47

6710,181 - 104,237 524,630 - 26,899 10,324

3,504,747

User% 60.7% 20.3% - 3% 15% - 0.8% 0.3% 100%

SUM

No. equip.

3,833,532

877,494 869,6811,030,85

91,459,03

81,583,74

968,681 25,076

9,748,290

user2,364,97

4710,181 564,662 694,915

1,049,259

903,618 26,899 10,3246,324,83

2

user% 37.4% 11.2% 8.9% 11% 16.6% 14.3% 0.4% 0.2% 100%

)2007 year

85% of all subscribers at KT use Copper, especially 95% at single housing

68.5% of all subscribers at KT use 20M below equipments

In case of single housing , 20M below equipments occupied about 84%

In case of APT complexes, 50M above equipments provided about 50%

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The Status of Equipment Provision at KTThe Status of Equipment Provision at KT

Current Provision Basis• High Density Housing Area (Apartment)

UTP possible : Ntopia UTP not possible : 100M VDSL

• Low Density Housing Area (Single Housing) Densely populated area : BBx-50M-VDSL / FTTH Sparsely populated area : BBx-50M-VDSL / FTTH-P

구 분 Suppy Equip. Quality upgrade requirement

APT

New housing

Special class FTTH FTTH

UTP Ntopia-E Ntopia-E

TP 50M-VDSL 100M-VDSL

Old housing

Re-modeling Ntopia-E Ntopia-E

No Re-modeling 50M-VDSL 100M-VDSL

Single

housing

Inside CO(1Km) 50M-VDSL 50M-VDSL

Outside CO

(1Km)

Densely Area BBx-50M-VDSLBBx-50M-VDSL

FTTH

Sparsely Area ADSL(Single) BBx-50M-VDSL(Single)

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1 Introduction


3

4

Quality and Optimal Provision Criteria

5


Conclusion

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Transmission Rate depending on distance

VDSL has distance problem• 50M VDSL : 500M longer, transmission rate attenuation • 100M VDSL : 300M longer, transmission rate attenuation

FTTH provides constant transmission rate regardless of distance

* VDSL 50/100M downstream basis

0

20

40

60

80

100

120

100 500 900 1300 1700 2100 2500 2900

loop length(m)

transm

issio

n r

ate

(Mbps) 50M VDSL

100M VDSL/VDSL2

FTTH

Transmission rate according to distance

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Bandwidth according to Subscriber capacity rate

FTTH provides the constant bandwidth• WDM-PON provides the constant bandwidth regardless of subscriber capacity rate(for using wav

elength)• E-PON, Ntopia fluctuate according to subscriber capacity rate

VDSL E-PON, Ntopia fluctuate according to subscriber capacity rate

The bandwidth per subscriber

0

20

40

60

80

100

120

1 6 11 16 21 26 31

number of subscriber

bandw

idth(M

bps)

50M VDSL(100M)

100M VDSL/VDSL2(100M)

100M VDSL/VDSL2(1G)

E-PON FTTH(1G)

WDM-PON FTTH(3.2G)

Ntopia-E (100M)

유사 FTTH (100M)

* VDSL 50/100M downstream basis

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Fault rate(inquiry exclusion)

215.6233.9

126.0141.3

123.9

0.0

50.0

100.0

150.0

200.0

250.0

IP-VDSL50M

IP-VDSL100M

Ntopia-E FTTH유사 FTTH

IP- VDSL50MIP- VDSL100MNtopia- E

FTTH유사

FTTH

Fault-rate and CauseFault-rate and Cause

[number of fault/1000 users]

Ntopia solution lowest fault rate• No equipment in the customer’s premises

VDSL(50M/100M) solution highest fault rate• Many connection node from backbone to access including modem or ONT• Copper line has copper deterioration

FTTH has fault rate lower than VDSL, but higher than Ntopia • Because ONT fault in customer premises

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Network Requirement to provide TPSNetwork Requirement to provide TPS

When TPS activated, Over 40+œ Mbps is required• When TPS started, 20+œ Mbps is required for servicing HDTV 1

channel, SDTV 1channel• When TPS activated, 40+ œ Mbps is required to provide 3 channels

HDTV simultaneously

Applications and ServicesBandwidth when TPS

startedBandwidth when TPS

activated

IPTV

(HDTV 1channel X 9Mbps, MPEG 4)

(SD TV 1channel X 4Mbps)

13 Mbps

(HDTV 1 channel 9Mbps,

SDTV 1 channel 4Mbps)

27 Mbps

(HDTV 1 channel 9Mbps)

Online Game 2 Mbps 2 Mbps

VoIP 0.3 Mbps 0.3 Mbps

Data

(HTML & Multimedia Data)5 Mbps 10 Mbps

Video Conferencing 3 Mbps 3 Mbps

Total 23.3 Mbps 42.3 Mbps

-15-

Operation Quality Operation Quality Comparison

Good

100M VDSL Ntopia FTTH FTTP/C Hybrid FTTH

Speed

TPS possible

QoS

Fault

competitiveness

Cabling difficulty (suburban)

Cabling difficulty (apartment)

Bad

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Optimal Access Network Topology (housing type)

ONT

FES

VDSL2

UTP

Copper

RS-38K

[Densely populated housing]

[Area inside CO]

(Remodeling Apt.)

(Remodeling impossible)

(Special Apt.)

Ntopia(FES)

L3

[Current Ntopia]

Real-FTTH

PON + Ntopia

Modem

PON + VDSL2

VDSL2

Copper


L3 + VDSL2

[Hybrid FTTH]OLT

UTP

Model

Copper

ONT

FES

UTP


(Suburban housing)Real-FTTH

PON + Ntopia

RN

(Inside 900M )[Non densely populated housing]

Modem

Central office (backbone)

Modem

Copper

VDSL2

VDSL2

OLT

KORNET

IP-Premimum

In case of reusable

BBx[BBx of outside CO]

Ntopia-SW

RN

[Hybrid FTTH]

Equipment

APT

New housing

Special class FTTH

UTP FTTH PON + FES

TP FTTH PON + VDSL2

Old housing

Re-modeling FTTH PON + FES

No Re-modeling FTTH PON + VDSL2

Single

housing

Inside CO(1Km) VDSL2

Outside CO (1Km )

BBx supplied VDSL2

BBx not supplied

FTTH

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How to invest and Provide access network How to invest and Provide access network equipmentequipment

Selection of investment priority Area

Selection of investment priority Area

• Which area is firstly provided• Choosing Priority item • Choosing weight

• Which area is firstly provided• Choosing Priority item • Choosing weight

Selection of network solution

Selection of network solution

• Selection of access solution as housing type

• Re-selection as economics and competitors

• Selection of access solution as housing type

• Re-selection as economics and competitors

Selection of wiring Size

Selection of wiring Size

• Choosing the number of line as subscriber’s size and density

• Choosing the number of line as subscriber’s size and density

Analysis of investment Analysis of investment

• Economical analysis as investment and maintenance costs

• Economical analysis as investment and maintenance costs

1

2

3

4

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Priority Selection for providing access technologyPriority Selection for providing access technology

Priority Diagnosis Table

Each items is calculated with weight - The item of comparing bandwidth with competitor and KT is the

highest In case the total sum is many , priority is highest

- The area of densely populated, apartment complex, equipment is inferior to competitor

KT market share

(15%)

Number of people

(25%)

Provision technology

with competitor and

KT (45%)

Housing type

(5%)

Price rate

(5%)

VOC(fault)/number of subscriber

(5%)

basis Value basis Value basis Value basis Value

basis Value

basis Value

35% below

10 1000 above

10

Next page

APT 10 competitor/KT<1

10 0.26104 above

(top 5%)

10

35%~50%

8 501~1000 8

51%~70%

5 301~500 6 Rural

Area

5 competitor/KT=>1

1 0.04273~

0.26104

5

71%~90%

4 101~300 4

91% above

1 100

below

1 0.04273 below

(low 5%)

1

-19-

Priority Selection for providing access technologyPriority Selection for providing access technology

sharemarketKTssubscribertotal

valuevaluesubscriberofnumbriCompetitor i __1

_

)r_subscribe(number_of)__(KT

Competitor KT

basis value basis value

100M 10 10M below 10

10M 8

20M 5 20M 6

10M 1 50M 4

100M 1

Item of provision technology with competitor and KT

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Priority Selection for providing access technology Priority Selection for providing access technology (summary)(summary)

KT 점유률 50% 이하KT 점유률 50% 이하KT Market share

KT Market share

Number of people

Number of people Low densityLow density

competitor/KT

competitor/KT 열세 열세

priceprice

APTAPT

Rural Rural

1 Ranking

• The area of densely populated and equipment is inferior

to competitor

2 Ranking

• The area of sparsely populated and equipment is i

nferior to competitor • The area of densely populated and KT’s market share is high

3 Ranking

• The area of sparsely populated and equipment is superior to competitor

• The area of KT’s market share is high and equipment is superior to competitor

ranking

ranking

• 8p~10p : 1 ranking

• 5p~8p : 2 ranking

• 5p below: 3 ranking

2

KT 50% BelowKT 50% Below KT 50% aboveKT 50% above

High densityHigh density High densityHigh densityLow densityLow density

Inferior

Inferior

Superior

Superior

Inferior

Inferior

Superior

Superior

Inferior

Inferior

Superior

Superior

Inferior

Inferior

Superior

Superior

VOC rateVOC rate 多少多少多少多少多少多少多少多少多少多少多少多少多少多少多少多少

1

2

2

2

2

2

3

3

3

3 1

1

1

1

1

1

3

3

3

3

3

2 1

2

2

2

2

2

3

3

3

3 1

1 1

2

3

3

3

3

3

3

3

3

3

3

3

3

2

2

2

2 1

2

2

2

2

2

2

2

2 2

2

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1 Introduction



4

5


Conclusion

-22-

Analysis of Capital Efficiency (wiring cost)Analysis of Capital Efficiency (wiring cost)Densely populated housing

• Hybrid solution is 11% more than Ntopia• Hybrid solutions have provided good quality and bandwidth than Ntopia

Sparsely populated housing • FTTH solution is 8% more than BBx-VDSL• In the future, considering trenching costs, it is desirable to capitalize to competitive FTT

H in one step, without undergoing other solutions

Wiring cost per sub.

FTTH (special level)Hybrid FTTHBBx-VDSL

Densely populated housing

32%

8%

11%

VDSL( No using BBx)

Ntopia

Wiring cost per sub.

45%

sparsely populated housing

-23-

Modeling to analyze economics Modeling to analyze economics

We define generic sets and objective functions • Optimal functions to maximize “income cost of revenues –

capital expense “

Revenue costs

i

zt

ttY

21 ** {Yt=1 + }

i

Y =the number of subscribers,

= rate of increasing subscribers

Service usage cost of i technology per subscriber

, where t= year , z= target year,

-24-

Modeling to analyze economicsModeling to analyze economics

Capital costs • A set of parameters

j)}M(i, j)O(i, j)L(i, j){E(i, * p t

, where i=Access technology, j= Housing type

Equipment cost

Wiring cost

Service opening cost

Modem cost

Parameter Meaning Parameter Meaning

i Access technology r(i,j) Average ground rental cost per BBx

j Housing type Bx(i,j) BBx count(p/q )

p Subscriber line count Po(i,j) Electricity cost (monthly) per BBx

q Maximum line count per BBx As(i,j) AS(After Service) cost for subscriber

E(i,j) Equipment cost per subscriber Er(i,j) Fault rate

L(i,j) Wiring cost per subscriber H Labor cost per subscriber

O(i,j) Service opening cost per subscriber Rt Capital expense occurring at t year

M(i,j) Modem cost per subscriber Mt Maintenance cost occurring at t year

Line count at t year

-25-


Maintenance Costs • Rental costs

• Electricity costs

• AS(After Service) costs

zt

tt Hp

1

}{* , where H = Labor cost per subscriber p= Subscriber line count at t year

),(*),( jiBjir x Average ground rental cost per BBx * BBx count

),(*),(*12 jiBjip xo Electricity cost (monthly) per BBx * BBx count

),(*),( jiAsjiEr Fault rate* AS(After Service) cost for subscriber

zt

tt Hp

1

}{*

-26-


Optimal formula to minimize the capital costs and maximize the revenues

i

zt

ttY

21 ** {Yt=1 + } -

j)}M(i, j)O(i, j)L(i, j){E(i, * p t

zt

tt Hp

1

}{* +

zt

t 1} { [ ]

Maximize

-

-27-

Wiring Cost per one Subscriber (densely poluplated area)Wiring Cost per one Subscriber (densely poluplated area)

Ntopia Hybrid Ntopia FTTH

Capital cost

Wiring cost W 162,190 W 181,912 W 396,702

Equipment cost W 29,190 W 106,791 W 23,388

Cabling cost W 102,000 W 142,705 W 214,250

Service Opening Cost

Modem NA NA W 98,784

Opening cost W 31,000 W 49,121 W 60,280

BBx maintenance cost

Ground rental cost NA NA NA

Electricity cost NA NA NA

AS cost

Fault rate 2.0% 2.0% 2.3%

AS cost per subscriber W 17,895 W 17,895 W 17,895

Labor cost per subscriber W 25,780 W 25,780 W 25,780

Total Cost in densely Area W 368,055 W 524,204 W 837,079

($1 = W 1,000)

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Wiring Cost per one Subscriber (sparsely poluplated area)Wiring Cost per one Subscriber (sparsely poluplated area)

Inside CO VDSL Hybrid VDSL BBx VDSL

Capital cost

Wiring cost W 196,238 W 310,788 W 366,022

Equipment cost W 121,200 W 143,045 W 121,200

Cabling cost NA W 92,705 W 169,784

Service Opening Cost

Modem W 44,048 W 44,048 W 44,048

Opening cost W 31,000 W 31,000 W 31,000

BBx maintenance cost

Ground rental cost NA NA W 3,500,000

Electricity cost NA NA W 62,220

AS cost

Fault rate 3% 2.5% 3.3%

AS cost per subscriber W 17,895 W 17,895 W 17,895

Labor cost per subscriber W 25,780 W 25,780 W 25,780

Total Cost in sparsely Area W 412,961 W 665,918 W 4,337,949

($1 = W 1,000)

-29-

Modeling ResultsModeling Results

NPV(Net Present Value) > 0 : revenue occurs < 0 : revenue does not occur

Assumption

10 thousand lines are supplied at the first year. All equipments is newly deployed Comparing for 5 years Discount ratio = 9.81 %

-30-

Modeling Results(Densely populated housing)Modeling Results(Densely populated housing)

Capital expense and revenue result

during Y+5 Year in densely populated

housing• Ntopia solution is the most economical (at approximately Y+3)• FTTH solution is less economical than

Notpia, Hybrid solutions

Densely populated housing

Y Y+1 Y+2

Y+3 Y+4 Y+5

Ntopia Hybrid Ntopia

FTTHNP

V

Year

-31-

Modeling Results(sparsely populated housing)Modeling Results(sparsely populated housing)

Y Y+1 Y+2

Y+3 Y+4 Y+5

Inside CO VDSL

Hybrid VDSL

BBX-VDSL

NPV

Year

sparsely populated housing

Capital expense and revenue result during Y+5 Year in sparsely populated housing

VDSL solution inside the central office (CO) without BBx is the most economical (at approximately Y+3)

VDSL solution using BBx is less economical than inside CO VDSL , Hybrid solutions

-32-

ConclusionsConclusions

Reviews economics and efficiencies comparing three different access technologies such as VDSL2, passive FTTH, fiber LAN of Ntopia

FTTH appear to be the best candidate for the next-generation access network

- Subscribers want to be provided high bandwidth

- Broadband market shifts from ADSL to FTTH

In the eyes of KT (network provider), it is impossible to convert all access networks at one time to an optical for the cost problem.

We propose middle stage, Hybrid access network such as FTTH PON+Ntopia and FTTH PON+VDSL providing economical solution

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Thank You !

[email protected]

network technology laboratory economics and methods to provide optimal access network in broadband...

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