GLG Institute
                               SM




   Professional Education On Anything. Anywhere.




GLGi: FTTx and IP...
Contents
●   short list of companies for FTTX deployment would include:
    Verizon, AT&T, Bell South, and all-other-carri...
GLG Institute
                             SM




      Professional Education On Anything. Anywhere.



Joseph Savage is ...
North America Ramping Up

                         ● USA - FTTP
                           Verizon, FTTN AT&T

           ...
Cable Operators Fierce Triple-
        Play Competition
● Cable MSOs - $85 Billion Network
  Investment from 1994 to 2004
...
Status of US Connection Access
                                                 FTTH
                                     ...
FTTH Homes Passed (Cumulative – North America)
      7,000,000
                                                           ...
FTTH Homes Connected                                    (Cumulative – North America)

 1,200,000
 1,100,000               ...
Overall Take-Rate for FTTH
                          (Cumulative – North America by Year)


50.0%

                       ...
Overall Take-Rate for FTTH Non-RBOC
                           (Cumulative – North America by Year)
 60.0%

              ...
Competition In Action
                                   6.0%
                                               +5.1%
       ...
Telco Industry Overview and
       G-PON deployments
 There are five segments of North American Telco’s

  ●   RBOCs – Ver...
FTTH Industry Overview -
                   RBOCs
● Verizon passing 3 million homes
  per year – Tellabs
  (BPON/GPON), Mo...
Verizon FTTP Deployment
                                       3Q’06 Deployment Status:
                                  ...
Verizon Access Network Status


                Distribution
                 Terminal



                                ...
Verizon Maintenance (OpEx) Savings
 Network Report Rate - Outside Plant



        1.01                           80%




...
Improved Home Networking
Today                                             2007 and Beyond




                   New wiri...
FiOS TV Deployment
                                  Serving
                                   Office

 Super            ...
Mid-Year FiOS Internet Results
           Verizon FiOS Internet
        Subscribers and Penetration
                      ...
Video Franchise Status
                                                               Number of Franchises
               ...
FiOS Data – Early Results
              Homes                            Subscribers/
            Marketed To             ...
Early FiOS TV Results
        Verizon FiOS TV
          Subscribers                   ● Monthly Churn less than
          ...
Penetration – FiOS Video
        Open for Sale                         Subscribers/
                                      ...
Strong Demand for Bundles
      FiOS TV Customer Base


                      Triple Play           ● 99% of FiOS TV base
...
Compare Verizon and AT&T:
                           AT&T                             Verizon
                - Node, for ...
AT&T and Bell South
● AT&T – FTTN passing 18 million
  homes by 2008 (behind schedule)
  – New technology issues (VDSL, MS...
AT&T and Bell South
● Bell South – Waiting to be Acquired
  – Historical Leader of Fiber-in-the-Loop
  – History of FTTC D...
Bell Canada & Qwest
● Bell Canada – only customer for
  Lucent Stinger products (Lucatel
  merger issues)
    – Committed ...
Bell Canada & Qwest
● Qwest Limited by debt
    – Recently issued RFI for GPON FTTH
      equipment
    – Pushed by Planne...
Market Forecast - KMI
                        18

                        16                                     FTTP Fore...
AE & PON FTTH Vendors
                  Motorola, 8%       North American Market Share
          Calix/OSI,               ...
The Rest of the Market
            IOC Industry Overview
● Three Groupings
  – 2nd Tier Multi-State holding Companies
    ...
Telco Sources of Revenues

            Small IOC                                     RBOC
                                ...
2nd Tier IOC Market
        Largest Multi-State IOCs                      Largest Multi-State IOCs

                      ...
2nd Tier IOC Market

                                        Embarq was formed in 2006 through
                           ...
2nd Tier IOC Market

                                        Windstream was formed in 2006
                               ...
2nd Tier IOC Market

                                Frontier is the nation's 7th largest
                                ...
CO Switch Market Segments
                                       • Base: 23,650 switches –
       >10K                    ...
Hosts/Remotes Dominate
             Small Telco's’
                  Hosts                  • 54% of All Switches Are
    ...
FTTH Deployment Plans

● 2nd Tier Independent Operating
  Companies
    – Embarq – planning G-PON in 2007
    – TDS – limi...
2nd Tier IOC Access Market
● Capital Expenditures for Tier 2
  was $5 to $6 Billion in 2005
● DSLAM/DLC/FTTx portion was 2...
IOC Industry FTTH Overview
● April 2006 Render Vanderslice
  Data
    – Non-RBOC Homes Passed – 570,000
      (of 4.1 mill...
2nd Tier IOC FTTx Vendors
   2nd Tier IOC Market Share
                               Alcatel, 18%
                       ...
2nd Tier IOC Favorable
● Central Purchasing/Decision Point
    – Technical Staff
    – Purchasing for multiple states
● No...
3rd Tier IOC Market




5/19/2010      TTTCo FTTX Status - 45
3rd Tier IOC Industry Overview
111 M Total U.S. Households
                                    70M RBOC
                  ...
3rd Tier IOC Market Status
● 83% responded Yes to an NTCA
  survey “Will you increase the
  amount of fiber in your access...
3rd Tier IOC Market
                 Favorable
● Funding for rural IOCs from
  Universal Service Fund and Rural
  Utility ...
3rd Tier IOC Market Statistics
● 3rd Tier IOCs
  – 1,300 – 1,400 small operators
  – 8 million subscriber lines – long loo...
Role of Rural
Utility Service

● RUS funding tied to purchase of
  products on RUS-approved list

● Some qualifications fo...
Role of Rural
Utility Service
●   USDA Rural Development continues to provide many programs for financing
    rural Americ...
Telco Associations Are a Key
     Channel to 3rd Tier IOCs
● Telecommunications Industry
  Association - TIA
● United Stat...
Telco Associations
● Telecommunications Industry
  Association - TIA
● United States Telephone
  Association – USTA
● Nati...
National
Telecommunications
    Cooperative
    Association
● The National Telecommunications Cooperative Association
  (N...
OPASTCO
●   OPASTCO is a national trade association representing more than 550
    small, independently owned local exchan...
Competitor Product Review
   ● RBOC GPON Suppliers               ● RBOC “Wanna Be’s”
       – Tellabs                     ...
Calix – OSI Product
                    Claims 60% of 3rd Tier PON Market in 2006


     FiberPath Residential ONT’s
• Con...
Calix – OSI Product
                      • Capacities
                           Max Capacity = 8 GPON Cards

FiberPath ...
Calix – OSI Product
    FiberPath 590 OLT+
    Rural & Mixed Plant
                                                       ...
Higher margin functionality migrating
              from home into the FTTH network




                                  ...
Calix C7 BLC
               Big Box Product – 26% of 2nd Tier IOC’s

  ●Slot utilization
   –   20 – universal slots
   – ...
Calix Product Review




5/19/2010      TTTCo FTTX Status - 62
C7 BLC Capabilities
– Voice switches                                 – Transport network
   •   GR-57
   •   GR-8
        ...
Entrisphere BLM 1500 Solution
                        EntriView EMS
               VoIP
               H.248              ...
BLM 1500 Functions and Services
                                                             ●   Aggregation & Grooming
● ...
Wave7 Product Review
Wave7 Last Mile Link
LML is proprietary, not
standards-based PON
                                    ...
Broadband Delivery at Every Edge
                                                  ZHONE Technologies
                    ...
Alloptic Product Review
                                The edge 2000 holds 8 Optical Line
                               ...
Small IOC FTTH Market Share
       3rd Tier IOC Market Share
                                                Pannaway,
   ...
Thank You For
                                  Your Attention

                           www.tttco.com


FTTx Deployment...
GLG Institute
                                          SM




       Professional Education On Anything. Anywhere.


Spec...
GLG Institute
                              SM




      Professional Education On Anything. Anywhere.


Gerson Lehrman Gr...
GLG Institute
                                                    SM




          Professional Education On Anything. Any...
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GLG Institute Professional Education On Anything. Anywhere.

  1. 1. GLG Institute SM Professional Education On Anything. Anywhere. GLGi: FTTx and IPTV Rollout Joseph Savage, Managing Director, Telecom ThinkTank Inc GLG Institute Wednesday, November 29, 2006 Penn Club, New York
  2. 2. Contents ● short list of companies for FTTX deployment would include: Verizon, AT&T, Bell South, and all-other-carriers for service providers, and would include: Tellabs, Alcatel, Cisco, Motorola, Adtran, Corning, ADC Telecommunications and all-other-FTTx vendors. Topics would include: ● – Impact of service provider choice of FTTx architecture on their roll out status – on each service provider vendor list – and on the service provider’s ability to deliver IPTV. – Effect of current legislation and regulatory status on pace and scale of FTTx deployments – Early days, but information on take-rates and subscriber satisfaction for FTTH. – Field experience, costs, forecasts and projections – speculation by an independent industry observer. 5/19/2010 TTTCo FTTX Status - 2
  3. 3. GLG Institute SM Professional Education On Anything. Anywhere. Joseph Savage is the Managing Director at Telecom ThinkTank Inc, a telecommunications consultancy. He has more than 30 years of experience in telecommunications networking and services. He has been a consultant to equipment vendors, analyst firms, and service providers in the areas of strategic, business, technology and product line planning. Previously, he was the President and Chief Executive Officer at Broadnet Technologies Inc, Radiant Photonics Inc, Geyser Networks Inc and Vice President-Research, at RHK. He has served clients as: Alcatel, Lucent, ECI Telecom, Huawei, SBC, Verizon, Bell South, NTT, British Telecom, and FastWeb.
  4. 4. North America Ramping Up ● USA - FTTP Verizon, FTTN AT&T ● Canada - FTTN and DSL, FTTH SaskTel ● Mexico - Community Trials Underway, Monterrey 5/19/2010 TTTCo FTTX Status - 4
  5. 5. Cable Operators Fierce Triple- Play Competition ● Cable MSOs - $85 Billion Network Investment from 1994 to 2004 – Voice Service Deployments Accelerating – HDTV ubiquitous in 2006 – DVR, PVR part of service offerings – Interactive offerings increasing ● Pursuing Business Customers – Footprint expanding to offer leased line and IP Services ● Comcast, Time- Warner, Cox, Cablevision, Rogers, Sha w 5/19/2010 TTTCo FTTX Status - 5
  6. 6. Status of US Connection Access FTTH 1% No Internet 28% Broadband 43% Dial-up only 28% Source: RVA Render & Associates, LLC 2006 5/19/2010 TTTCo FTTX Status - 6
  7. 7. FTTH Homes Passed (Cumulative – North America) 7,000,000 6,099,000 6,000,000 5,000,000 4,000,000 4,089,000 3,000,000 2,696,846 2,000,000 1,619,500 1,000,000 970,000 19,400 35,700 72,100 180,300 189,000 0 110,000 2 3 4 5 6 01 02 03 04 05 06 -0 -0 -0 -0 -0 p- p- p- p- p- p- ar ar ar ar ar Se Se Se Se Se Se M M M M M Source: RVA Render & Associates, LLC 2006 5/19/2010 TTTCo FTTX Status - 7
  8. 8. FTTH Homes Connected (Cumulative – North America) 1,200,000 1,100,000 1,011,000 1,000,000 900,000 800,000 700,000 671,000 600,000 500,000 400,000 300,000 322,700 200,000 213,000 64,700 146,500 100,000 5,500 10,350 22,500 38,000 78,000 0 2 3 4 5 6 01 02 03 04 05 06 -0 -0 -0 -0 -0 p- p- p- p- p- p- ar ar ar ar ar Se Se Se Se Se Se M M M M M Source: RVA Render & Associates, LLC 2006 5/19/2010 TTTCo FTTX Status - 8
  9. 9. Overall Take-Rate for FTTH (Cumulative – North America by Year) 50.0% 41.3% 40.0% 35.9% 35.4% 34.5% 30.0% 31.2% 29.0% 26.0% 28.4% 20.0% 20.4% 18.0% 19.0% 10.0% 0.0% 1 2 2 3 3 4 4 5 5 6 6 -0 r-0 p-0 r-0 p-0 r-0 p-0 r-0 p-0 r-0 p-0 S ep a S e Ma S e Ma S e Ma S e Ma Se M Source: RVA Render & Associates, LLC 2006 5/19/2010 TTTCo FTTX Status - 9
  10. 10. Overall Take-Rate for FTTH Non-RBOC (Cumulative – North America by Year) 60.0% 52.4% 50.0% 51.0% 47.4% 48.2% 43.7% 40.0% 41.3% 35.9% 34.5% 30.0% 31.2% 29.0% 28.4% 20.0% 10.0% 0.0% 01 02 03 04 05 06 2 3 4 5 6 -0 -0 -0 -0 -0 p- p- p- p- p- p- ar ar ar ar ar Se Se Se Se Se Se M M M M M Source: RVA Render & Associates, LLC 2006 5/19/2010 TTTCo FTTX Status - 10
  11. 11. Competition In Action 6.0% +5.1% +4.4% Annual Access Line Growth (%) 4.0% +3.8% +2.1% 2.0% 0.0% 1997 1998 1999 2000 2001 2002 2003 -2.0% -4.0% •Loss of Dial-up/Fax lines -3.1% •Mobile as only line -3.7% -4.1% -6.0% Competition Attacking Core Business! 5/19/2010 TTTCo FTTX Status - 11
  12. 12. Telco Industry Overview and G-PON deployments There are five segments of North American Telco’s ● RBOCs – Verizon, AT&T, Bell South ● 2nd Tier IOCs – Embarq, Windstream ● 3rd Tier IOCs – Hope City Tel, Windom ● IOCs as CLECs – GVTC, Windstream ● Overbuilder CLECs – Grande, Knology 5/19/2010 TTTCo FTTX Status - 12
  13. 13. FTTH Industry Overview - RBOCs ● Verizon passing 3 million homes per year – Tellabs (BPON/GPON), Motorola (BPON/GPON) and Alcatel (GPON) ● AT&T passing 0.5 million homes per year – Alcatel (FTTN, GPON) ● Qwest has no public FTTH plans ● BellSouth adding 150k new homes per year on FTTC – Tellabs (FTTC) ● Bell Canada –Lucent (FTTN) 5/19/2010 TTTCo FTTX Status - 13
  14. 14. Verizon FTTP Deployment 3Q’06 Deployment Status: ● 5.4M premises passed in 16 states ● 3.8M premises open for sale 2006 Deployment Objectives: ● Pass 6M premises ● 5M premises open for sale 2010 Deployment Objectives ● Pass 18M premises by 2010 FTTP Deployed ● Over 50% of households Pipeline Variations Affect Vendors QoverQ 5/19/2010 TTTCo FTTX Status - 14
  15. 15. Verizon Access Network Status Distribution Terminal Legend: GPON -- Gigabit Passive Optical Network OLT -- Optical Line terminal Cost Per Premises Passed $1,021 ● Lower material cost $873 $850 ● New & improved technology ● Innovations ● Training & productivity YE 05 YTD Aug 06 YE 06 Target 5/19/2010 TTTCo FTTX Status - 15
  16. 16. Verizon Maintenance (OpEx) Savings Network Report Rate - Outside Plant 1.01 80% 0.20 Voice & DSL FiOS Total field maintenance dispatches and OSP-related dispatches showing solid declines 5/19/2010 TTTCo FTTX Status - 16
  17. 17. Improved Home Networking Today 2007 and Beyond New wiring Existing wiring New wiring Existing wiring Cost Per Premises Connected ● Simplified in-home network $1,220 - no new wires ● Enhanced customer experience & customer interaction $933 $880 ● Simplified installation process ● Evolution toward remote service activation and maintenance 'Jan 06 'Aug 06 Dec 06 Target 5/19/2010 TTTCo FTTX Status - 17
  18. 18. FiOS TV Deployment Serving Office Super Hub Serving Fiber Headend Office Office Splitter Serving Office Super Headend Broadcast Video Voice, Data, IP TV Voice, Data, IP TV 2006 Video Transport Deployment Objectives: •Network delivers RF Video ● 2 national super headends Services ● 9 video hub offices •Migrate to IPTV after Technical Issues Resolved ● 292 video serving offices •Somewhat better TV Image ● 1.8M homes open for sale 5/19/2010 TTTCo FTTX Status - 18
  19. 19. Mid-Year FiOS Internet Results Verizon FiOS Internet Subscribers and Penetration 725K 2Q’06 Results: ● Average penetration in wire centers open for 375K sales 15% 12% – 6 months = 8% – 9 months = 12% – 12 months = 15% ● Monthly churn less than 1Q'05 2Q'05 3Q'05 4Q'05 1Q'06 2Q'06 2006 1.5% Target Subscribers Penetration 70% of subscribers are new to Verizon broadband 5/19/2010 TTTCo FTTX Status - 19
  20. 20. Video Franchise Status Number of Franchises 300 161 44 4Q’05 Current 2006 Projected Households with Franchises (M) 6.1 3.3 Statewide legislation passed or local franchises granted 0.9 4Q’05 Current 2006 Projected 5/19/2010 TTTCo FTTX Status - 20
  21. 21. FiOS Data – Early Results Homes Subscribers/ Marketed To Penetration % 35-40% 17M 6M – 7M 15% 5M 725K 2006 Target 2010 Target 2006 Target 2010 Target ● 55% market share by 2010 5/19/2010 TTTCo FTTX Status - 21
  22. 22. Early FiOS TV Results Verizon FiOS TV Subscribers ● Monthly Churn less than 175K 1.5% ● 99.4% subscribe to Premier Tier ● 60% have HD and/or DVR ● 37% subscribe to movie or sports package ● 12% of gross sales have included Home Media DVR 4Q'05 1Q'06 2Q'06 YE Target FiOS TV Subscribers About two-third of subscribers are cable defectors 5/19/2010 TTTCo FTTX Status - 22
  23. 23. Penetration – FiOS Video Open for Sale Subscribers/ Penetration % 20-25% 15M 3M – 4M 10% 1.8M 175K 2006 Target 2010 Target 2006 Target 2010 Target Target - 26% market share by 2010 5/19/2010 TTTCo FTTX Status - 23
  24. 24. Strong Demand for Bundles FiOS TV Customer Base Triple Play ● 99% of FiOS TV base 79% has 2nd product FiOS TV Only ● Bundled line churn is 50% lower than voice- only lines 9% FiOS TV + Data 11% ● 56% of FiOS TV sales include FiOS Internet FiOS TV+ Voice 5/19/2010 TTTCo FTTX Status - 24
  25. 25. Compare Verizon and AT&T: AT&T Verizon - Node, for upgrades (94% of homes) - Home/Premises – first goal 30 FTT-? - Home for new developments million of 56 million subscribers (6% of homes) FTTN+VDSL, fiber - 3,000 ft from ITU G.893 (BPON) => GPON Technology home 1550-nm AM overlay for bdcst IPTV with switched video video, AND planning for IPTV $4 B for 2005 – 2007 $800 M in 2004, $1-1.5 B in 2005 $250 per FTTN home passed FTTx Cap-Ex $600 - $1000 per FTTP home $1000 - 1300 per FTTP home passed passed 17 M Homes passed with FTTN in 12 M homes passed by 2008 Target 2008 35 M customers passed by 2020 1 M Homes with FTTH in 2008 Fiber 1-1.5 M Fiber-km per year 4-8 M Fiber-km per year Demand % Aerial 25% 45% Plant Acquisition of Cingular, AT&T Cites operational expenses Other factors Says vid. franchises unnecessary Filing for video franchises. 5/19/2010 TTTCo FTTX Status - 25
  26. 26. AT&T and Bell South ● AT&T – FTTN passing 18 million homes by 2008 (behind schedule) – New technology issues (VDSL, MSoft) – Cost of Outside Plant higher than planned – U-verse and Home Zone initiating – 1 million FTTH (Alcatel 7342 B/G PON) – Video Transport in Place, VSO’s in construction 5/19/2010 TTTCo FTTX Status - 26
  27. 27. AT&T and Bell South ● Bell South – Waiting to be Acquired – Historical Leader of Fiber-in-the-Loop – History of FTTC Deployments (150,000 per year in greenfields) – Single customer for Tellabs/AFC/Marconi/Reltec FTTC products (new generation=committed levels?) – Assumed will adopt AT&T FTTN style 5/19/2010 TTTCo FTTX Status - 27
  28. 28. Bell Canada & Qwest ● Bell Canada – only customer for Lucent Stinger products (Lucatel merger issues) – Committed to FTTN architecture, “split node” migration to FTTH – FTTN issues with HDTV – Voip from CATV MSOs very successful 5/19/2010 TTTCo FTTX Status - 28
  29. 29. Bell Canada & Qwest ● Qwest Limited by debt – Recently issued RFI for GPON FTTH equipment – Pushed by Planned Community Builders – Uses Alcatel xDSL and FTTH gear – Numerous Municipal and Open networks in its area 5/19/2010 TTTCo FTTX Status - 29
  30. 30. Market Forecast - KMI 18 16 FTTP Forecast USA 2.5 FTTP -- AE FTTP - PON 16 million subscribers in 2011 14 Subscribers (million) 2.0 12 AE – Muni’s, Utopia, Overbuilders 10 PON – RBOC’s, IOCs, Utilities 1.5 8 2007 transition year BPON to GPON 13.4 6 1.1 10 4 Almost zero GEPON 0.6 7 0.4 2 0.2 4 0.1 2 3 0.0 1 0 0.0 0 0.0 0 0.0 0 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 5/19/2010 TTTCo FTTX Status - 30
  31. 31. AE & PON FTTH Vendors Motorola, 8% North American Market Share Calix/OSI, Tellabs (AFC), 11% 53% Other, 8% World Wide Packets, 1% Alloptic, 3% Wave7 Alcatel, 6% Allied Telesis, Optics, 5% All Tiers of 5% Operators 5/19/2010 TTTCo FTTX Status - 31
  32. 32. The Rest of the Market IOC Industry Overview ● Three Groupings – 2nd Tier Multi-State holding Companies • Embarq, Frontier, Century, TDS… – 3rd Tier Single State, Single Franchise IOCs • Paul Bunyan Tel Coop, Farmers Tel, …… – Overbuilders and Municipalities • Knology, Bristol VA Utilities, ShenTel, GVTC, Comporium, Grande Communications……. 5/19/2010 TTTCo FTTX Status - 32
  33. 33. Telco Sources of Revenues Small IOC RBOC Access (14%) Other USF (4%)) (35%) Access (45%) Other (2%) Local Local Service Service (18%) (82%) Drives different competitive dynamics for smaller Telco’s 5/19/2010 TTTCo FTTX Status - 33
  34. 34. 2nd Tier IOC Market Largest Multi-State IOCs Largest Multi-State IOCs 5th largest LEC 6th largest LEC 7.1 million access 3.4 million access lines in 18 states lines in 16 states 7th largest LEC 2.5 million access lines in 24 states 8th largest LEC 2.4 million access lines in 22 states Valor and AllTel Approximately 20 customers Smallest is Greenpoint – 200k lines 5/19/2010 TTTCo FTTX Status - 34
  35. 35. 2nd Tier IOC Market Embarq was formed in 2006 through the spin-off of Sprint’s landline business and Sprint North Supply. HQ in Overland Park Kansas 7.1 million access lines in 18 states – Indiana, Florida, Delaware, Kentuck y, Kansas, Missouri, Nebraska, Ne w York, Nevada, North Carolina, Ohio, Oregon, Pennsylva nia, South Carolina, Wisconsin and Texas. 5/19/2010 TTTCo FTTX Status - 35
  36. 36. 2nd Tier IOC Market Windstream was formed in 2006 through the spin-off of Alltel's landline business and merger with VALOR Telecom. HQ in Little Rock, Arkansas 3.4 million access lines in 16 states – Alabama, Arkansas, Florida, Geo rgia, Kentucky, Mississippi, Misso uri, Nebraska, New Mexico, New York, North Carolina, Ohio, Oklahoma, Penn sylvania, South Carolina and Texas. 5/19/2010 TTTCo FTTX Status - 36
  37. 37. 2nd Tier IOC Market Frontier is the nation's 7th largest telecommunications provider offering local, long distance, and Internet access services in 24 states over 2.5 million access lines HQ Citizens Tel in Chicago, Illinois Century Tel is the nation's 8th largest telecommunications provider offering local, long distance, and Internet access services in 22 states over 2.4 million access lines HQ in Monroe Louisiana 5/19/2010 TTTCo FTTX Status - 37
  38. 38. CO Switch Market Segments • Base: 23,650 switches – >10K average CO line size - 10.5 K (21%) • 70% of CO switches are “small” • 56% of “small” COs in IOCs <30.9 K> 5-10K (9%) <6.2 K> • 18% of small COs in VZ-GTE <1.1 K> • 26% in other RBOC’s • Nortel, Lucent and Siemens are dominant vendors 0-5K (70%) • Several secondary suppliers (Ericsson, NEC, AE…..) This information will relate back to Access product requirements later in the presentation. 5/19/2010 TTTCo FTTX Status - 38
  39. 39. Hosts/Remotes Dominate Small Telco's’ Hosts • 54% of All Switches Are Tandems (16%) Remotes (4%) • Average >3 Remotes Per Host Std-Alone • 70% of Switches Are In (26%) Host/Remote Associations Complex migration from current to next-generation Remotes IP-centric network (54%) architecture – drives big- box product selection 5/19/2010 TTTCo FTTX Status - 39
  40. 40. FTTH Deployment Plans ● 2nd Tier Independent Operating Companies – Embarq – planning G-PON in 2007 – TDS – limited trials in 2006 • Tennessee, Georgia, Oregon and Washington – Citizens - limited trials in 2006 – Windstream - limited trials in 2006 5/19/2010 TTTCo FTTX Status - 40
  41. 41. 2nd Tier IOC Access Market ● Capital Expenditures for Tier 2 was $5 to $6 Billion in 2005 ● DSLAM/DLC/FTTx portion was 25% to 30% ($1.4 Billion to $2.4 Billion ● Baird Survey indicated CapEx growth of 10% per year in FTTx spending segment 5/19/2010 TTTCo FTTX Status - 41
  42. 42. IOC Industry FTTH Overview ● April 2006 Render Vanderslice Data – Non-RBOC Homes Passed – 570,000 (of 4.1 million 14%) Non-RBOC Homes Connected – 241,000 (of 671,000 36%) 5/19/2010 TTTCo FTTX Status - 42
  43. 43. 2nd Tier IOC FTTx Vendors 2nd Tier IOC Market Share Alcatel, 18% Other, 8% Tellabs (AFC), 26% Calix, 25% Entrisphere, 23% 5/19/2010 TTTCo FTTX Status - 43
  44. 44. 2nd Tier IOC Favorable ● Central Purchasing/Decision Point – Technical Staff – Purchasing for multiple states ● Not Tied to RDUP Funding ● Easier to get video franchise, often cellular provider ● Less complex EMS/OSS requirements 5/19/2010 TTTCo FTTX Status - 44
  45. 45. 3rd Tier IOC Market 5/19/2010 TTTCo FTTX Status - 45
  46. 46. 3rd Tier IOC Industry Overview 111 M Total U.S. Households 70M RBOC Core IOC Segment ● 1,300-1400 Independent 28M Telco's (IOC) Households in IOC Segment ● IOC’s overbuilding adjacent territory ● 1,150 Municipalities ● Developers/Overbuilders ● Segment has approx. 28M homes – 9 million 3rd Tier 20M clustered rural ● FTTH passes 1-2% of homes today ● 10-15% homes passed by 4M Rural 4M Muni Owned Urban 2010 Sources: U.S. Census Bureau; FCC, 2005 5/19/2010 TTTCo FTTX Status - 46
  47. 47. 3rd Tier IOC Market Status ● 83% responded Yes to an NTCA survey “Will you increase the amount of fiber in your access network in the next five years?” ● Baird report: “Tier 3 carriers are in the early stages of an upgrade cycle with the greatest spending on next-gen equipment likely in the next two years.” 5/19/2010 TTTCo FTTX Status - 47
  48. 48. 3rd Tier IOC Market Favorable ● Funding for rural IOCs from Universal Service Fund and Rural Utility Service Loans ● Usually have CATV Franchise and Cellular Operations as well ● HITS and NCTC partnerships ● Enthusiastic Local Support 5/19/2010 TTTCo FTTX Status - 48
  49. 49. 3rd Tier IOC Market Statistics ● 3rd Tier IOCs – 1,300 – 1,400 small operators – 8 million subscriber lines – long loops – Average access lines – 6,250 35 Emp’s – Max: 35,000 lines Min: 700 lines – Total Capital Expended by Tier 3 in 2005 - $3 Billion (average $2.3 Million per operator) – DLC/FTTX/DSLAM – 42% of CapEx ($1.26 Billion) – Segment CapEx growth – 15% per Yr 5/19/2010 TTTCo FTTX Status - 49
  50. 50. Role of Rural Utility Service ● RUS funding tied to purchase of products on RUS-approved list ● Some qualifications for “USA content” in the listed products ● Some loan programs not tied to listed products 5/19/2010 TTTCo FTTX Status - 50
  51. 51. Role of Rural Utility Service ● USDA Rural Development continues to provide many programs for financing rural America's telecommunications infrastructure. The traditional "telephone" loan program, consisting of hardship, cost of money, and guaranteed loans, finances voice telephone service, and since 1995, every telephone line this program has constructed has been capable of providing broadband service ● http://www.usda.gov/rus/telecom/materials/index_listomat.htm – Materials Index – Wire and Cable Section 1 – Housings, Splice Cases, etc. Section 2 – Miscellaneous Splicing Materials Section 3 – Electrical Protective Devices Section 4 – Access, Central Office, & Transmission Equipment, Wireless Networks, Electronic Network Elements Section 5 – General Hardware Section 6 Questions concerning the Listing of Materials please contact Norberto Esteves at email:norberto.esteves@usda.gov. 5/19/2010 TTTCo FTTX Status - 51
  52. 52. Telco Associations Are a Key Channel to 3rd Tier IOCs ● Telecommunications Industry Association - TIA ● United States Telephone Association – USTA ● National Telecommunications Cooperative Association – NTCA ● OPASTCO ● Regional – i.e. TANE 5/19/2010 TTTCo FTTX Status - 52
  53. 53. Telco Associations ● Telecommunications Industry Association - TIA ● United States Telephone Association – USTA ● National Telecommunications Cooperative Association – NTCA ● OPASTCO ● Regional – i.e. TANE, Texas Telephone Assn. 5/19/2010 TTTCo FTTX Status - 53
  54. 54. National Telecommunications Cooperative Association ● The National Telecommunications Cooperative Association (NTCA), "the voice of rural telecommunications," represents more than 560 small and rural telephone cooperatives and commercial companies. – 2006 TelcoTV Conference & Expo November 6-8 Dallas, TX – 2007 Broadband Summit January 10-12 Dallas, TX – 2007 VoIPossibilities Conference April 10-13 Minneapolis, MN 5/19/2010 TTTCo FTTX Status - 54
  55. 55. OPASTCO ● OPASTCO is a national trade association representing more than 550 small, independently owned local exchange carriers (LECs) and their affiliate telecommunications companies. ● Primarily serving rural areas of the United States and Canada, these commercial telephone companies and cooperatives range in size from fewer than 100 to as many as 100,000 access lines and collectively serve more than 2.5 million customers. – OPASTCO 44th Annual Winter Convention January 13-17, 2007, Disney's Grand Floridian Resort & Spa, Orlando, FL – OPASTCO 44th Annual Summer Convention and Tradeshow July 14-18, 2007, Anchorage, AK – OPASTCO 45th Annual Winter Convention January 12-16, 2008, Phoenix, AZ, JW Marriott Desert Ridge Resort & Spa 5/19/2010 TTTCo FTTX Status - 55
  56. 56. Competitor Product Review ● RBOC GPON Suppliers ● RBOC “Wanna Be’s” – Tellabs – Adtran, Lucent, Nortel, – Alcatel – Siemens, Fujitsu, Ericsso – Motorola n – Cisco, Hitachi, NEC ● Multi-State 2nd Tier IOCs – Entrisphere – Calix, Entrisphere, Tellabs – Adtran, Alcatel ● Non-IOC Innovators – Alloptic, Wave7, Flexlight ● 3rd Tier Small IOCs – Packetfront, Allied – Calix, Entrisphere, Telesis Tellabs – Cisco, World Wide – Telstrat, Zhone, Packets Pannaway – Amedia, Telco Systems – Occam, Wave7 5/19/2010 TTTCo FTTX Status - 56
  57. 57. Calix – OSI Product Claims 60% of 3rd Tier PON Market in 2006 FiberPath Residential ONT’s • Configurations  FiberPoint 502/504  Two or Four Line POTS  10/100BaseT Auto sensing Ethernet  Supports 8 DHCP, 8 Static IP, 5 PPPoE Clients and 8 Subnets  Supports 8 IPTV Set Top Boxes  IGMP Compliant  Optional HPNA V3 – Cat 3 or Coax FiberPoint 522/524 – All Features from Above Plus  RF Modulated Video – 54 to 860 MHz  Supports Telco, IP and RF/IP Return 5/19/2010 TTTCo FTTX Status - 57
  58. 58. Calix – OSI Product • Capacities  Max Capacity = 8 GPON Cards FiberPath 590  2 or 4 Port GPON Gig-E input  32 PONs = Up to 1,024 ONT’s  Gig-E Interface – 1 per GPON Card OLT+ Gig-E Aggregation for Remote Transport Services OC-12/48 for Remote Transport Services • Data Provisioning Bridged or Routed – supports PPPoE and or DHCP QoS – Voice, VoIP, Streaming Video, TSL, Data IPTV – IGMP v2 Aware • Integrated Voice Gateway GR-303 Groups (up to 4) 4 DS1’s per Quad T1 Card VoIP and SIP capable • Full Line of Copper Service Cards • Active and Protect CPU’s • -48 Volt Redundant Power • Network Management Interface and Dry Contacts 5/19/2010 TTTCo FTTX Status - 58
  59. 59. Calix – OSI Product FiberPath 590 OLT+ Rural & Mixed Plant ADSL 2+ Remote FiberPath 590 OLT+ Voice, Video & Central FiberPath 590 OLT+ Data TWP OC - 12/48 FiberPath ONT GPON Going to Gig-E Uplinks Voice, Video & Data 5/19/2010 TTTCo FTTX Status - 59
  60. 60. Higher margin functionality migrating from home into the FTTH network Moving in to the FTTH Access Network VoIP Interface Home Networking Element Management Service Management IPTV/VoIP Applications QOS in Home MoCA interface ….. 5/19/2010 TTTCo FTTX Status - 60
  61. 61. Calix C7 BLC Big Box Product – 26% of 2nd Tier IOC’s ●Slot utilization – 20 – universal slots – 2 – common control slots – 1 – management interface slot ●Universal switching matrix – DS0 cross-connect • 11,700 DS0s – STS cross-connect • 1,056 STS-1s – Asymmetrical packet fabric • 50Gbps egress (multicast) • 2.4Gbps ingress ●Backplane architecture – Up to 10 Gbps to / from every slot – 24 fiber terminations per slot – 24 metallic terminations per slot 5/19/2010 TTTCo FTTX Status - 61
  62. 62. Calix Product Review 5/19/2010 TTTCo FTTX Status - 62
  63. 63. C7 BLC Capabilities – Voice switches – Transport network • GR-57 • GR-8 • OC-3 SONET • GR-303 • OC-12 SONET – DMS-100/ DMS-10 / 5ESS / EWSD / GTD-5 • OC-48 SONET • Softswitch interfaces • OC-192 SONET* – GR-303 / H.248* – ATM Switches • DS1 UNI • DS1 (IMA) UNI • DS3 UNI/NNI • OC-3c / 12c / 48c UNI/NNI – Routers • 10/100 Ethernet* • GE Ethernet* • OC-3c / 12c / 48c UNI/NNI Class 5 Soft ATM IP Core Switch Switch Switch Router Network 5/19/2010 TTTCo FTTX Status - 63
  64. 64. Entrisphere BLM 1500 Solution EntriView EMS VoIP H.248 POTS, ADSL, ADSL Phone 2+, DS1 Services: BLM 1500 Softswitch • POTS BLM 1500 • PON GR-303 BLM 1500 PC TR-08 • Video • HiCap Class 5 Switch SONET PBX FTTP/FTTC • ADSL2+ • ADSL BLM 1500 integrates: FTTN • Ethernet ATM • NGDLC/DSLAM • Specials Switch • PON ADSL2+ GigE • Packet Voice Gateway VDSL VDSL2 • SONET / GigE transport IP Switch • IPTV with embedded IGMP 5/19/2010 TTTCo FTTX Status - 64
  65. 65. BLM 1500 Functions and Services ● Aggregation & Grooming ● Architecture – Non-blocking DS1 and DS0 – 60 Gbps non-blocking redundant switching switching fabric – 3/1/0 grooming – 2 Switch Fabric packs are the only – ADSL, ADSL2+ ATM, and required commons Ethernet – 16 universal application slots for – OC-48, ATM DS-3c & OC-3c network or subscriber interfaces – ATM to Ethernet bridging – 3 Gbps full duplex connection from the fabric to each application slot ● Services – NEBS III and GR-487 Cabinets – POTS & Specials – 3 shelves in a 7’ bay – PON ● Topologies – ADSL / ADSL2+ – DS1 and DS3 – Integrated ADM functionality – Fast Ethernet – SONET, GigE, ATM, and TDM – Gigabit Ethernet – Copper and fiber feeds – Integrated POTS & DSL Loop – OC-48 ring, star, point-to-point Test – Supports up to 16 RTs per COT ● Video ● Integrated voice gateway – Switched digital and RF overlay – GR-303 & TR-08 support – H.248 Softswitch Interface – Native packet multicast with – Lucent 5ESS, Nortel DMS100, AGCS embedded IGMP GTD5, Siemens EWSD certified – High speed OC-48 and GigE ● Management transport – ADSL2+ and PON broadband – TIRKS, LFACS, NMA, TEMS, SWITCH/D interfaces LE – Server-based scalable EMS ● Ethernet – TL1, CORBA – Ethernet 100Mbps & Gigabit – Virtual Network Elements* * Virtual Network Elements are patent – Transparent LAN pending Service, VLANs 5/19/2010 TTTCo FTTX Status - 65
  66. 66. Wave7 Product Review Wave7 Last Mile Link LML is proprietary, not standards-based PON Distributed PON Up to 86 km Focused in 3rd Tier between CO and OLTs Group LMCs Central Office or Hub RF: 1550 nm, 50- 860 MHz LMC-RM IP/Ethernet: 1310 nm, 625 Mbps RF Video LMG 50 - 870 MHz L2/L3 Switch IP Gigabit Ethernet CPEs per LMC: Up to 20 km between OLT CPE: Hardened or Indoor LMC-RM is 192 and ONTs Subscriber Interfaces: 10/100BASE Ethernet -T RF 50 - 850 MHz POTS Centralized PON LMC-RM Up to 20 km between OLT LMG and ONTs 5/19/2010 TTTCo FTTX Status - 66
  67. 67. Broadband Delivery at Every Edge ZHONE Technologies Remote OSP DSLAM Pushing broadband deeper Raptor 100 OSP Into the loop with fiber Remote Terminal MDU Terminal MALC 319 Raptor 100 MDU Central Office MALC or Raptor 719 CO 5/19/2010 TTTCo FTTX Status - 67
  68. 68. Alloptic Product Review The edge 2000 holds 8 Optical Line Termination cards (OLTs) (16 Gigabit EPON networks) There are four NIC Cards connecting to multiple Data and TDM telephony service providers. The edge2000 chassis supports 500 ONUs, 4,000 data VLANS, and 2,500 TDM POTS services. Edgegear 2000 The edge 200 is a head-end controller. It is a 16 gigabit Ethernet switch, a 2 PON OLT, and a TDM cross connect in a 2RU environmentally hardened package. Edgegear 200 5/19/2010 TTTCo FTTX Status - 68
  69. 69. Small IOC FTTH Market Share 3rd Tier IOC Market Share Pannaway, Paradyne, Telstrat, 7% 11% 9% Motorola (Next Occam Level), 5% Networks, 11% Other, 5% Adtran, 11% Tellabs (AFC), 14% Calix, 27% 5/19/2010 TTTCo FTTX Status - 69
  70. 70. Thank You For Your Attention www.tttco.com FTTx Deployment Analysis - North America November, 2006 5/19/2010 TTTCo FTTX Status - 70
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