FTTH Overview and Update

Fiber To The Home (FTTH) is one of several methods for delivering Broadband to residential subscribers. With FTTH, the architectural distinctions between types of carriers (like Telco, Muni, Cableco, Utility) disappear. All these carriers deploy virtually identical architectures once they are delivering services with FTTH, and the only remaining differences are largely due to legacy system support. Other forms of Broadband bring fiber to an aggregation point and use either wireless (e.g., WiMAX and LTE) or some form of wireline (twisted pair, coax, or powerline) to serve a subscriber.

Other versions of FTTx that are commonly used are as follows:

• FTTB – Fiber to the Building, usually a multi-tenant building, with Digital Subscriber Line (DSL) or Ethernet delivered to each subscriber,
• FTTC – Fiber to the Curb, typically with some form of DSL connecting to the subscribers,
• FTTN – Fiber to the Node, typically with ADSL2+ or VDSL2 from an OutSide Plant (OSP) cross-connect to the subscribers,
• FTTP – Fiber to the Premises, where the premises could be a business or a residence. (Note that “Premises” is ALWAYS spelled plural (but used as singular) and means building(s) and land taken together as one piece of property. Premises derives from the descriptions of property at the beginning of a deed, and these descriptions are known as premises because they are taken as a given.)

BroadbandSoho.com offers an excellent set of images of FiOS BPON deployment, which is Verizon’s original Fiber to the Home technology. Note that Verizon is a fan of aerial fiber, and fiber shown in this series of images is all aerial fiber. Aerial fiber is cheaper to install than buried fiber in an overbuild, and most installations of Verizon FiOS are overbuilds.

The Optical Network Terminal (ONT, but ITU-T standards refer to it as an ONU), installed at the subscriber’s home, converts optical signals to electrical signals for transmission to phones, routers, computers, and Set Top Boxes (STBs) within the home. The ONT can be installed outside the home (an outside ONT is shown in the FiOS pictures above), or it can be installed inside. Inside ONTs are rare in the US because, on existing homes, generally all telephone and cable connections terminate outside, and installing the ONT outside allows technicians easy access for repairs and upgrades (no appointment necessary with the owner). The picture below shows where power, cable, and telephone connections are installed on the outside of my house. I do not have FTTH as a service option, and the gray box is an HFC coax NID providing TV, telephone, and DOCSIS cable modem service. An FTTH ONT would replace this HFC NID.

Indoor FTTH ONTs are less expensive than outdoor ones, but most homes have no interior fiber, and installing it is expensive. One reason indoor ONTs are less expensive is that they do not have to operate in the wide temperature range (-40C to +65C) that the outdoor ones have to deal with, and this allows the indoor units to be built with cheaper components (especially the optical transceiver, typically rated 0 to +50C for indoor units). Additionally, the enclosure is a large part of the ONT cost, and indoor units can be built with a much less expensive enclosure. An indoor ONT is shown below.

Even though Fiber to the Home is typically a substantial investment for a carrier, the recession does not seem to have substantially dampened the expansion of FTTH. With other carrier(s) offering FTTH services in a market, a carrier may not have a choice when it comes to installing FTTH. Competition will force a carrier to upgrade to remain competitive. The following graphic, from Yankee Group, shows the FTTH payback period for various combinations of ARPU (Average Revenue Per User) and percent takeup. Because it does not discount future cash flows, this analysis provides an optimistic set of payback periods. Regardless, high ARPUs and high take rates are necessary to make the payback period reasonable.

Today, Fiber to the Home penetration is approximately 40 million homes worldwide. In the US, Verizon’s FiOS is the largest installation of FTTH. According to Fiberforall.org

In total, Verizon FiOS is available to 11 million premises within those states as of July 2009. This equates to about 34 percent of the households in Verizon’s wireline network footprint. Verizon has plans to keep FiOS deployment on a fast track with deployment reaching over 17 million homes by the end of 2010.

Note that there is a big difference between subscribers passed and subscribers served. With FiOS, approximately 30% of homes with available FiOS service actually subscribe to the service.

FTTH penetration varies greatly by country and tends to be more common in wealthy countries with high subscriber densities like Japan and Korea. The US is not a leading country in FTTH penetration as is shown in the graphic below (data for end of 2008). For each country listed, the orange part of the bar shows Fiber to the Building FTTB penetration and the blue shows actual FTTH. In FTTB, a fiber is terminated in the building, but subscribers are served with DSL or Ethernet.

© 2009, The Product Group LLC. All rights reserved.

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