neXt-Gen MOnetisatiOn - JULIE KUNSTLER
How to monetise next-gen PONs
Investing in next-gen GPON will enable faster payback or monetization compared with existing GPON systems, according to detailed analysis by Ovum, which has modelled four distinct working scenarios.
• ONT costs by different types of PON and next-gen PON according to different types of subscribes, such as residential, SMB or enterprise. Since next-gen GPON shipments have been very small to-date, the scenarios were based on initial high-cost equipment prices. Equipment prices will decline as volumes increase and we have been told that CSPs are answering large RFPs with significantly lower prices than those used in the scenarios. It is possible to develop a large number of scenarios based on different types of subscribers and differing competitive environments that CSPs are facing. Four different scenarios are described, based on Ovum’s conversations with vendors and CSPs because these situations reflect the commonly-mentioned opportunities for next-gen PON. ScenARio #1 – gPon veRSUS xg-Pon1 We start with a comparison of GPON versus XG-PON1. The most likely usage of XG-PON1 is for residential and SMB
is strategic for operators, enabling higher revenues over the same ODN (optical distribution network) as residential customers. • Next-gen GPON supports the bandwidth craze for 1G, 2G and 10G offerings to residential subscribers and supports network future proofing. • The monetisation of next- gen GPON networks will continue to increase as next-gen PON optics prices and therefore equipment, continue to decline due to volume manufacturing and development efforts. monetiSAtion ScenARioS foR next-gen Pon Through conversations with vendors and CSPs along with internal analysis, Ovum has developed a series of scenarios that analyse the monetisation potential of GPON and next-gen PON, taking into account potential revenues and expenses. Considering revenues, these scenarios examine potential ARPU per PON OLT port for GPON and for different types of next-gen GPON. The revenue scenarios take into account:
• ARPUs for the different types of customers and applications. North American ARPUs are used for simplicity across the scenarios. • Number and types of customers that are being supported on a PON OLT port today and that are likely to be supported on next-gen subscriber scenarios rather than theoretical maximums. • The expenses are based on: • Large upfront cost for building an ODN including the feeder fiber, distribution fiber and preparing the central office for a single OLT PON port. A cost of $300,000 was used for all scenarios. • Cost of pulling fibre to each subscriber supported on a specific type of PON OLT port, whether homes, apartment units, businesses, enterprises and/or wireless cells for MBH. A cost of $2,000 per subscriber was used for all scenarios. • OLT port costs by different types of PON and next-gen PON. PON OLTs in the future. For example, operational practices are applied to
T here are compelling financial reasons to deploy next-gen PON FTTx networks to support residential subscribers, non-residential subscribers including SMBs (small- medium-sized businesses), enterprises and MBH (mobile backhaul). In addition, next-gen PON provides future proofing as bandwidth demand by subscribers continues to grow. During 2015, several CSPs publicly announced trials of next-gen GPON equipment and 10G EPON equipment is now being deployed in both North America and China. Next-generation PON deployments are expected to ramp in 2016 providing strong ROI opportunities for CSPs. This article presents and analyses next-gen PON monetisation scenarios based on different types of subscribers, their respective ARPUs (average revenues per user) and next-gen PON component and equipment costs. The focus here is on next-gen GPON for simplicity as the same monetisation results apply to next-gen EPON. In Ovum’s view, the business and performance highlights in the area of next-gen passive optical networks are as follow: • The financial advantages of next-gen GPON are strong when compared to existing GPON; next-gen GPON supports faster monetisation of the FTTx network. • Next-gen GPON’s support of business customers JULIE KUNSTLEr Principal consultant, optical components, at ovum
Residential
sMBs
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$5,000
18.0 16.0 14.0 12.0 10.0
$4,000
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$0
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figure 1: gPon versus xgPon1 – monthly ARPU and years until payback
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ISSUE 6 | Q1 2016
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