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Wireline Resurrection:  The New Optical Networking Agenda Presented by Stéphane Téral Directing Analyst, Next Gen Voice & ...
Agenda for this afternoon <ul><li>With an emphasis on European telcos </li></ul><ul><ul><li>The wireline resurrection </li...
Financial Health Has Returned <ul><li>Balance sheets are clean… </li></ul><ul><ul><li>Capex-to-sales trending toward 15%, ...
<ul><li>In CY05: </li></ul><ul><ul><li>571.7 million mobile subscribers </li></ul></ul><ul><ul><ul><li>Still growing at do...
Welcome To The New Telecom World! <ul><li>Wireline broadband has reached critical mass </li></ul><ul><ul><li>High-speed In...
The Grand Vision Leads to A Grand Plan
All The Pieces Needed to Implement  The Grand Plan Very Hot! Hot! Cold! Connecting and grooming multiple optical flows fro...
<ul><li>NG-SDH </li></ul><ul><ul><li>The old continent is a huge multi-€billion SDH platform, as Ethernet backhaul aggrega...
Our Market Observations <ul><li>Action is indeed in the metro space with a rapid Ethernet adoption </li></ul><ul><ul><li>M...
Conclusions <ul><li>Although financial health has returned, thriving in the new world that has emerged requires a major ne...
Thank You Stéphane Téral Directing Analyst, Next Gen Voice & Mobile Core [email_address] Tel.: 1 408.583.3371 Infonetics R...
References <ul><li>This presentation draws from the following Infonetics services: </li></ul><ul><li>DSL Aggregation Hardw...
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Wireline Resurrection: The New Optical Networking Agenda

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Wireline Resurrection: The New Optical Networking Agenda

  1. 1. Wireline Resurrection: The New Optical Networking Agenda Presented by Stéphane Téral Directing Analyst, Next Gen Voice & Mobile Core Infonetics Research, Inc. www.infonetics.com
  2. 2. Agenda for this afternoon <ul><li>With an emphasis on European telcos </li></ul><ul><ul><li>The wireline resurrection </li></ul></ul><ul><ul><ul><li>What are we talking about? </li></ul></ul></ul><ul><ul><li>The grand vision </li></ul></ul><ul><ul><ul><li>Where are we going? </li></ul></ul></ul><ul><ul><li>Implications </li></ul></ul><ul><ul><ul><li>What does it mean for optical networking? </li></ul></ul></ul><ul><ul><li>Conclusions </li></ul></ul>
  3. 3. Financial Health Has Returned <ul><li>Balance sheets are clean… </li></ul><ul><ul><li>Capex-to-sales trending toward 15%, a sustainable level </li></ul></ul><ul><ul><li>Lower debt/higher free cash flow </li></ul></ul><ul><ul><li>Good margins </li></ul></ul><ul><ul><li>BUT opex left aside for now </li></ul></ul><ul><li>… And a new world has emerged </li></ul><ul><ul><li>Continuous fixed access line decline resulting from fixed-to-mobile substitution </li></ul></ul><ul><ul><li>Decline of traditional voice calling triggered by the emergence of VoIP </li></ul></ul><ul><ul><li>High broadband penetration fueled by fierce competition now puts pressure on broadband ARPU </li></ul></ul>Note: includes all EMEA wireline and wireless data
  4. 4. <ul><li>In CY05: </li></ul><ul><ul><li>571.7 million mobile subscribers </li></ul></ul><ul><ul><ul><li>Still growing at double digits through CY08 </li></ul></ul></ul><ul><ul><li>44.8 million DSL subscribers </li></ul></ul><ul><ul><ul><li>Growing at double digits each year but single digit in CY09 </li></ul></ul></ul><ul><ul><li>5.4 million VoIP subscribers </li></ul></ul><ul><ul><ul><li>Growing at double digits each year </li></ul></ul></ul>Don’t Forget, The Old Continent Is Mobile!
  5. 5. Welcome To The New Telecom World! <ul><li>Wireline broadband has reached critical mass </li></ul><ul><ul><li>High-speed Internet access, video, and voice are all coming together </li></ul></ul><ul><ul><li>IPTV and VoD need 20M per household </li></ul></ul><ul><li>Mobile broadband is coming into play </li></ul><ul><li>IP is the name of the game </li></ul><ul><ul><li>Time has come to move away from rigid TDM infrastructures </li></ul></ul><ul><li>Opex is becoming THE major focus </li></ul><ul><li>Incumbents are fighting back </li></ul><ul><ul><li>Except BT, everyone owns a mobile network; most alternative carriers don’t </li></ul></ul><ul><ul><li>Incumbents’ customers will enjoy full interoperability between their fixed broadband access and their mobile access </li></ul></ul><ul><li>This implies a major transformation: </li></ul><ul><ul><li>PSTN migration </li></ul></ul><ul><ul><li>Fixed-mobile convergence </li></ul></ul>The Grand Vision
  6. 6. The Grand Vision Leads to A Grand Plan
  7. 7. All The Pieces Needed to Implement The Grand Plan Very Hot! Hot! Cold! Connecting and grooming multiple optical flows from multiple locations Bandwidth management Optical Switching Ethernet-based FTTx CWDM Gigabit Ethernet D/CWDM & ROADM NG-SDH with Ethernet ASON/GMPLS DWDM/ROADM Activity Ethernet Aggregation Transport Aggregation Metro transport Aggregation Bandwidth management Agile core transport Function Multiplexing and grooming many smaller traffic flows into larger flows Multiplexing and grooming various types of metro traffic flows into larger flows Multiplexing and grooming IP traffic into Gigabit Ethernet flows over fiber Transporting and managing optical access traffic (e.g., DSLAM backhaul, video distribution); ranging from unmanaged CWDM and scalable DWDM options Transporting and managing metro traffic; DWDM becomes an alternative to NG-SDH in the core of large metro networks Introducing an optical control plane that has automatic switching capabilities at the optical layer Transporting and managing traffic over multiple wavelengths, creating an agile network Description ACCESS METRO BACKBONE Domain
  8. 8. <ul><li>NG-SDH </li></ul><ul><ul><li>The old continent is a huge multi-€billion SDH platform, as Ethernet backhaul aggregation is deployed, the platform is being upgraded </li></ul></ul><ul><ul><ul><li>The existing infrastructure will not disappear anytime soon </li></ul></ul></ul><ul><li>ROADM </li></ul><ul><ul><li>The significant presence of WDM in metro networks prompts carriers to add flexibility in managing wavelengths </li></ul></ul><ul><ul><ul><li>Marconi’s ROADMs have been carrying live traffic in the BT network for a while </li></ul></ul></ul><ul><li>CWDM </li></ul><ul><ul><li>Broadband services are fueling the need for more cheap bandwidth </li></ul></ul><ul><ul><ul><li>CWDM deployments started 10 years ago in enterprise networks </li></ul></ul></ul>Why Metro and Access Are Hot
  9. 9. Our Market Observations <ul><li>Action is indeed in the metro space with a rapid Ethernet adoption </li></ul><ul><ul><li>Metro is 75% of total optical spending in CY05, expected to reach $2.6B in CY09 </li></ul></ul><ul><ul><li>Broadband and wireless backhauls are the main drivers </li></ul></ul><ul><ul><ul><li>Metro networks are being upgraded to support IPTV rollouts </li></ul></ul></ul><ul><li>Next gen SDH accounts for 79% of total metro spending in CY05 and is expected to reach $1.8B in CY09 </li></ul><ul><ul><li>Ethernet capability is “The Big Plus” as it cuts: </li></ul></ul><ul><ul><ul><li>The number of network elements </li></ul></ul></ul><ul><ul><ul><li>The complexity </li></ul></ul></ul><ul><ul><ul><li>Opex </li></ul></ul></ul><ul><li>The metro ROADM market is taking off </li></ul><ul><ul><li>2% of total metro spending and 8% of metro WDM spending in CY05, reaching $233M by CY09 </li></ul></ul>
  10. 10. Conclusions <ul><li>Although financial health has returned, thriving in the new world that has emerged requires a major network transformation </li></ul><ul><li>In this transformation, the optical networking market is driven by the need for: </li></ul><ul><ul><li>More bandwidth for broadband services </li></ul></ul><ul><ul><li>Converged/collapsed IP networks with a long term vision of having a single agile network for all services </li></ul></ul><ul><ul><li>Revenue generating projects </li></ul></ul><ul><ul><li>Opex reduction </li></ul></ul><ul><li>Metro is where the action is, and will continue to dominate through CY09 </li></ul><ul><li>Backbone will come back to life as soon as a significant number of these metro networks get filled in </li></ul><ul><ul><li>Watch the uptake of bandwidth hungry services (e.g., VoD) </li></ul></ul>
  11. 11. Thank You Stéphane Téral Directing Analyst, Next Gen Voice & Mobile Core [email_address] Tel.: 1 408.583.3371 Infonetics Research, Inc. www.infonetics.com
  12. 12. References <ul><li>This presentation draws from the following Infonetics services: </li></ul><ul><li>DSL Aggregation Hardware Quarterly Worldwide Market Share and Forecasts: 4Q05 </li></ul><ul><li>Optical Network Hardware Quarterly Worldwide Market Share and Forecasts: 4Q05 </li></ul><ul><li>Radio Access Network Equipment Quarterly Worldwide Market Share and Forecasts: 3Q05 </li></ul><ul><li>Service Provider Capex Analysis, Europe: 1H05 </li></ul><ul><li>Service Provider Next Gen Voice and IMS Equipment Quarterly Worldwide Market Share and Forecasts: 4Q05 </li></ul><ul><li>Service Provider Plans for Next Gen Voice: North America, Europe, and Asia Pacific 2005 </li></ul>

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