TECHNICAL
XGS-PON multi-use strategies to boost revenue
The vast majority of operators, more than 90% according to a recent Omdia survey, stated that they want to use their PON infrastructure to support more than just residential customers, such as enterprise services and transport. This multi-use strategy for the PON infrastructure enables operators to make more versatile use of their network, thereby increasing revenue. The adoption of next-generation PON technologies, such as XGS-PON, is fundamental to this multi-use strategy: 10Gbps symmetrical bandwidth supports many enterprise requirements. In addition, XGS-PON can support transport applications, such as public Wi-Fi traffic aggregation, and in some cases, wireless backhaul. The additional revenue opportunity could be sizable given the high ARPUs associated with segments such as enterprise connectivity. XGS-PON delivers network efficiency benefits
Figure 5: AT&T, retail tariff pricing for FTTP, June 2023
fastest speeds. In addition, pricing gigabit and multigigabit access at a premium places operators in a strong position to capitalise on the halo effect whereby even if the subscriber does not take the highest speed offer, they are more likely to choose a faster speed than they would have done if gigabit or multigigabit access was not available. AT&T is a good example of an operator that focuses on charging a premium for gigabit and multigigabit access (see Figure 5). An indication of the success of this strategy is that in its 1Q23 earnings call, the operator noted that the ARPU of new FTTP customers was about $70. By way of comparison the retail price of the operator’s 300Mbps plan is $55 per month, and its 500Mbps plan costs $65 per month. XGS-PON also provides operators with more room for upselling over time because it offers a long runway for further speed increases without the need to change anything in the OLT or optical network terminal (ONT). Gradually increasing the maximum speeds with XGS-PON provides operators with greater opportunities to continue to sell such speeds for a premium price or use them to retain customers, with practically no additional investment. Moreover, some subscribers that take FTTP speeds of, say, 100Mbps today may be considered unlikely to instantly upgrade to multigigabit access in one jump. However, over time end users are likely to move to multigigabit access in several incremental steps, and moving to XGS-PON can help support this process. It can therefore be seen that investing in XGS-PON today can keep delivering revenue benefits in the long run.
broadband traffic levels continue to grow this means the remaining bandwidth on a GPON FTTP network will be quickly saturated, which drives the need for an XGS-PON upgrade. XGS-PON allows operators to offer a wide range of tariffs to boost revenue The launch of XGS-PON and gigabit and multigigabit access provides operators with more flexibility in their tariff-tiering strategies. There are two strategies depending on business priorities, competitive landscape, and so on: n Operators could choose to make gigabit and multigigabit access a mass-market offering or even an entry-level tier. In this way they can maximise the attraction of the fastest speeds to a wide base of customers and thereby increase the subscription acquisition benefits. Example of this approach include Salt in Switzerland and some UK altnets. Many of these same arguments also apply to wholesale-focused operators. For wholesale players having a high- capacity network is key in order to attract more retail service providers to their networks. More retail service providers increases the likelihood of greater overall subscription take- up on the network, which improves the rollout business case for the wholesale-focused operator. n Alternatively, operators—whether retail or wholesale focused—could choose to price gigabit and multigigabit access at a premium. In this way they can increase ARPU by capitalising on the demand among the subset of customers willing to pay more for the
Long-term value with low incremental investment
The fact that XGS-PON provides a long runway for continued speed increases is also significant from a cost perspective. Operators that invest in XGS-PON ONTs today will be able to continue using them as subscribers migrate over time to higher speeds. This approach was successfully used by operators on GPON networks, but such networks are now reaching their maximum capacity, which necessitates the investment in XGS-PON. XGS-PON is also an efficient investment from a network perspective because it does not require any modification to the outside plant. Moreover, the technology can coexist on the same optical distribution network with GPON, which means existing GPON subscriptions can easily be upgraded to XGS-PON. XGS- PON also provides investment efficiency because operators have the potential option to upgrade their networks to support 25G PON in the future without altering their OLT hardware. A further indication of the network efficiency benefits that XGS-PON can provide is that, as discussed, it can support a multi-use strategy with the same optical distribution network being used for residential, enterprise, and
May 2024 Volume 46 No.2
85
Made with FlippingBook - professional solution for displaying marketing and sales documents online