Passive Optical Networks in Optical Telecom Value Chain: Developments and Specifics

Table of Contents

1.0 Introduction 9

• 1.1 Dilemma 9
• 1.2 PON Comes to the Picture 9
• 1.3 Triple Play 10
• 1.4 A Little Bit of History 10
• 1.5 Value Chain 11
• 1.6 PON Introduction 12
• 1.7 Scope 13
• 1.8 Research Methodology 13
• 1.9 Target Audience 14

2.0 Technologies 15

• 2.1 The PON Proposition 15
• 2.2 PON Concept and Technologies 15
• 2.3 Standards 17
• 2.4 PON Classification 19
• 2.5 A-PON 20
  • 2.5.1 General 20
  • 2.5.2 Layers 21
  • 2.5.3 Frame Structure 22
  • 2.5.4 Ranging 23
• 2.6 B-PON 24
  • 2.6.1 Wavelength Allocation 24
  • 2.6.2 Services 25
  • 2.6.3 Split Ratio 25
• 2.7 G-PON 25
  • 2.7.1 General 26
  • 2.7.2 Elements 27
    • 2.7.2.1 Optical Line Termination (OLT) 27
    • 2.7.2.2 Optical Network Unit (ONU) 28
    • 2.7.2.3 Optical Distribution Network (ODN) 29
• 2.8 Protection 29
• 2.9 Interoperability between G-PON and A/B-PON 30
• 2.10 Ethernet PON (E-PON) 30
  • 2.10.1 EFM-General 30
  • 2.10.2 Rates 32
  • 2.10.3 Multi-Point Control Protocol (MPCP) 32
  • 2.10.3.1 Topology Emulation Sub-layer 33
  • 2.10.4 Physical Layer 34
  • 2.10.5 OAM 35
  • 2.10.6 IP Transport Differences 36
  • 2.10.7 Flows 37
  • 2.10.8 Framing 38
• 2.11 Dynamic Bandwidth Assignment 39
  • 2.11.1 Traffic Container (T-Cont) 41
• 2.12 Comparison: FSAN vs. E-PON 42
  • 2.12.1 E-PON Challenges 42
  • 2.12.2 Parameters 43
  • 2.12.3 Formats 44
  • 2.12.4 Comparison 44
• 2.13 Passive vs. Active Networks 46
• 2.14 Competition 48
  • 2.14.1 xDSL and PON: Different Strategies - Different Providers 48
  • 2.14.2 Cable Modem 50
    • 2.14.2.1 Base 50
    • 2.14.2.2 Scope 51
    • 2.14.2.3 Pros and Cons 52
  • 2.14.3 Wireless 52
• 2.15 PON Benefits 53
• 2.16 PON Services 54
  • 2.16.1 Voice 54
  • 2.16.2 Data 54
  • 2.16.3 Video 54
  • 2.16.4 Set 55
  • 2.16.5 Strategy 56
• 2.17 Summary 56

3.0 Telecom Value Chain 59

• 3.1 General 59
• 3.2 Model: Optical Telecom Industry Value Chain 59
  • 3.2.1 Features 60
  • 3.2.2 Forces 61
  • 3.2.3 Example 61
• 3.3 Optical Telecom Value Chain and Major Development Trends 62
  • 3.3.1 What to Expect 63
  • 3.3.2 Slow Recovery 64

4.0 PON Value Chain: Components 67

• 4.1 General 67
• 4.2 Macro Developments 67
  • 4.2.1 Private Market for Optical Components 68
  • 4.2.2 Winners and Losers 69
  • 4.2.3 Vendors 69
    • APA Optics 69
    • austriamicrosystems AG 70
    • BroadLight 70
    • Emcore 71
    • JDS Uniphase 72
    • Gould Fiber Optics 73
    • Marubeni 74
    • NeoPhotonics 74
    • OFS 75
    • Oplink 75
    • Passave 76
    • Vitesse 76
  • 4.2.4 Component Layer and PON 77

5.0 PON Value Chain: Subsystems 79

• 5.1 General 79
• 5.2 Types 79
• 5.3 Margins 80
• 5.4 Suppliers 80
  • AFC (Tellabs) 80
  • ADC 81
  • AFL 82
  • Alcatel 83
  • Allied Telesyn 85
  • Alloptic 85
  • Calix 86
  • CEOS 87
  • Ciena 88
  • Conklin-Inracom 89
  • ECI 90
  • Entrispere 92
  • Ericsson 92
  • Flexlight 94
  • Foxcom 95
  • FreeScale (Motorola) 95
  • Fujkura 96
  • Hitachi 98
  • Iamba 99
  • Lucent 100
  • Nayna 101
  • Occam 103
  • Optical Solutions, Inc. 104
  • Optical Zonu 107
  • PBN 107
  • Quantum Bridge, Inc. (Motorola) 108
  • Salira 109
  • Sumitomo Electric 110
  • Syntek 112
  • Terawave 112
  • TransComm Technology Systems (TTS) 113
  • UTStarcom 114
  • Wave7 Optics 114
  • Zhone 115

6.0 PON Market 117

• 6.1 Base 117
• 6.2 PON Commercialized 117
  • 6.2.1 Cost Components 120
    • 6.2.1.1 OSP 120
    • 6.2.1.2 Cost Reduction 121
    • 6.2.1.3 Design and Cost Efficiency 122
    • 6.2.1.4 Market Drivers 123
• 6.3 Forecast 123
  • 6.3.1 General 124
  • 6.3.2 Market Forecast 124
    • 6.3.2.1 Model Assumptions 124
    • 6.3.2.2 Market Estimate 124
      • 6.3.2.2.1 Structure 124
      • 6.3.2.2.2 Equipment 124
        • 6.3.2.2.2.1 Estimate 125
      • 6.3.2.2.3 Providers Revenue 127
    • 6.3.2.3 Regional Differences 132
      • 6.3.2.3.1 Japan 132
      • 6.3.2.3.2 U.S. 135
      • 6.3.2.3.3 Differences 135
      • 6.3.2.3.4 Europe Samples 137

7.0 PON Deployments 138

8.0 Conclusions 140

Acronyms 142

• Figure 1: Networks Layers 10
• Figure 2: PON Reference Model 16
• Figure 3: PON Details 16
• Figure 4: PON Standardization Process 18
• Figure 5: PON Inside 20
• Figure 6; A-PON Illustration 21
• Figure 7: B-PON Enhancement (Downstream) 25
• Figure 8: G-PON Illustration 27
• Figure 9: OLT Functional Block Diagram 28
• Figure 10: ONU Functional Block Diagram 29
• Figure 11: E-PON OAM Standardization 35
• Figure 12: Downstream Flow 37
• Figure 13: Upstream Flow 38
• Figure 14: Downstream Frame 38
• Figure 15: Upstream Frame 39
• Figure 16: Active vs. PON 47
• Figure 17: Layers 57
• Figure 18: Optical Telecom Industry: Value Chain Model 60
• Figure 19: Example: Optical Value Chain 62
• Figure 20: Product Lifecycle 63
• Figure 21: Amex Telecom Index (2005-Projected) 64
• Figure 22: PON Technologies Distribution 118
• Figure 23: PON Technologies - 2010 View 119
• Figure 24: Penetration Dependence (Source: Practel, Inc., 2004) 119
• Figure 25: PON Global Market Estimate (Equipment Sales $M) 125
• Figure 26: Sales -PON Equipment Elements Proportion (2005) 126
• Figure 27: PON Market -Technology and Geography (2005) 127
• Figure 28: Equipment: Geography of Sale 127
• Figure 29: Providers Market Potentials (U.S., Estimate -Premises Passed) 128
• Figure 30: Wired Premises Projection (U.S., $000) 129
• Figure 31: U.S. PON Providers Revenue Projection (residential segment, $M) 130
• Figure 32: PON Providers Revenue (U.S., Business, $M) 130
• Figure 33: PON Asian Providers: Revenue Projection ($M) 131
• Figure 34: PON Providers Revenue Estimate: Europe ($M) 132
• Table 1: A-PON Layered Structure Illustration 22
• Table 2: G-PON Signal Rates 26
• Table 3: EFM Objectives 31
• Table 4: EFM Physical Layer 35
• Table 5: T-CONT Types 41
• Table 6: PON Characteristics 57
• Table 7: Changes in Industry Funding 65
• Table 8: Competition 66
• Table 9: Components Business Average Margins (in %); Second row - Gross Margin, Third row - Operating Margin 79
• Table 10: Subsystem Layer Margins (%); Second Row - Operating Margin, Third Row - Gross Margin 81
• Table 11: Major PON Providers 119
• Table 12: PON Service Scenarios 121
• Table 13: Broadband Access in Japan 134