An ADTRAN White Paper. The Case for Gigabit

Transcription

1 An ADTRAN White Paper The Case for Gigabit

2 Introduction On March 10, 2010, the Federal Communications Commission (FCC) published the National Broadband Plan. Authors of this plan likened broadband to electricity, stating, Like electricity a century ago, broadband is a foundation for economic growth, job creation, global competitiveness and a better way of life. Among its many stated goals, the plan aimed to ensure that by 2020, at least 100 million U.S. homes would have affordable access to a broadband service of at least 100 megabits per second (Mbps) downstream, or delivered to the home and at least 50 Mbps upstream, or leaving the home. Fast forward to today and we have somewhat leapfrogged the 100 Mbps goal with accelerating momentum for Gigabit broadband services, where the discussion now centers on broadband capability that is 10x that goal. Indeed, we have entered a new era in broadband next-generation broadband where 1,000 Mbps in the downstream and 100 Mbps or more in the upstream are attainable broadband goals for communities all across America. Large service providers including Google, AT&T, CenturyLink and others have embraced this new broadband reality. But so too have smaller ones like Comporium Communications of Rock Hill, South Carolina and Blue Valley Tele-Communications of Home, Kansas, both of whom are bringing Gigabit broadband to the heartland. Even with their stated 100 Mbps National Broadband Plan goal, the FCC recognized the benefits Gigabit services brings to communities, and in 2013 then FCC Chairman Julius Genachowski issued his Gigabit City Challenge 1. The challenge called for at least one Gigabit community in each of the 50 states by We are well on our way to achieving that goal. With Gigabit broadband, we re entering the third phase of Internet access service. Gigabit Broadband Defined While there is no official definition for Gigabit broadband, its definition is generally accepted as the availability of broadband service that offers 1 gigabit per second (Gbps), or 1,000 Mbps in the downstream, with a comparable upstream service, to at least a subset of subscribers. Gigabit services are generally associated as a Fiber-To-The-Home (FTTH) service, but that classification will not fit forever, as DOCSIS 3.1 emerges and gives cable companies Gigabit capabilities across coaxial cable networks 2. While technically Gigabit broadband is 1 Gbps service, the term is being more broadly adopted to define ultra-fast broadband, or next-generation broadband. With Gigabit broadband, we re entering the third phase of Internet access service. Phase one was defined by dial-up access to the Internet at speeds that topped out at 56 kilobits per second (Kbps), delivered via the Public Switched Telephone Network (PSTN). Phase two of Internet access was first generation broadband, which provided about a 50x to 100x improvement in access speeds over dial up. First generation broadband, which is still the dominant form of wireline Internet access today, also introduced the always-on nature of broadband Internet access. We are now entering phase three of Internet access, where we will once again see a 50x to 100x improvement in access speeds. This next generation broadband, or Gigabit broadband, is enabling a new range of consumer and business applications that are redefining the broadband experience and energizing economic development in the communities where it is present. 1 FCC Chairman Genachowski Issues Gigabit City Challenge, 2 NEW GENERATION OF DOCSIS TECHNOLOGY, 2 The Case for Gigabit

3 Industry Landscape According to a February 2014 joint NTIA-FCC broadband data report, there were 99 Gigabit broadband networks operating in the U.S. 3 That same data reports 232 networks offering 100 Mbps or faster (in the downstream). Washington State has the most Gigabit networks at 17 and only two states, Montana and West Virginia, have no Gigabit networks, according to the data. Networks in this context do not apply to individual service providers, as a single service provider can operate multiple Gigabit networks. Service providers of all types, including telcos, cable Multi-system Operators (MSOs), utility/ municipalities, and even electric cooperatives are embracing the Gigabit movement. Non-traditional service providers are also a part of the Gigabit trend, most notably Google, with their Google Fiber initiative. Beyond their first three identified markets of Kansas City, Missouri; Austin, Texas; and Provo, Utah; Google is exploring expanding into an additional 34 localities across nine major markets 4. Gigabit-focused organizations including Gig.U and Gigabit Squared are facilitating the entrance of non-traditional service providers as well, including a number of colleges and In select Kansas City neighborhoods where Google Fiber is available, they are achieving upwards of 75 percent penetration 9. universities. The Institute for Self Reliance, publisher of a community- and municipally owned networkfocused website, muninetworks.org, reports that over 40 communities in 13 states now have a publicly owned network offering at least 1 Gigabit services 5. Among traditional service providers, Gigabit services span the typical tier sizing structures. Tier 1 carrier AT&T has answered the competitive challenge introduced by Google Fiber with their own announced Gigabit network in Austin. AT&T has also hinted at a major Gigabit expansion to as many as 100 markets 6, provided they can get preferred regulatory treatment. Tier 1 cable MSO Cox has also announced an ambitious Gigabit network roll out across its network 7. Tier 2 service providers TDS and Frontier have also announced Gigabit broadband deployments, and a range of smaller rural focused Tier 3 carriers are actively deploying as well. Consumers are increasingly adopting these next-generation broadband offers. In a May 2014 J.P. Morgan Global Technology, Media and Telecom Conference, Verizon CEO Lowell McAdam reported that over half of FiOS subscribers now opt for their Quantum FiOS service, which tops out at 500 Mbps 8. Google Fiber is seeing impressive penetration rates as well. In select Kansas City neighborhoods where Google Fiber is available, they are achieving upwards of 75 percent penetration 9. 3 National Broadband Map Broadband Statistics Report-Number of Providers by Speed Tier, Providers%20by%20Speed%20Tier.pdf 4 Google May be Planning Massive Google Fiber Expansion, 5 Community Network Map, 6 AT&T Eyes 100 U.S. Cities and Municipalities for its Ultra-Fast Fiber Network, 7 Cox Communications Kicks Off Plan to Offer Residential Gigabit Speeds, 8 Verizon CEO: Half of Base Chooses FiOS Bandwidth Upgrade, 9 Analyst: Google Fiber Adopted by As Much As 75% of Homes Passed in KC Neighborhoods, An ADTRAN White Paper 3

4 Enabling Gigabit Technologies Today, the Gigabit movement is powered by FTTH technology. Tremendous FTTH investment has occurred in the past decade, allowing service providers to easily introduce Gigabit services across their networks. According to market research firm RVA LLC, FTTH technology is now available to 27.7 million homes in North America, of which 10.7 million are actually connected 10. The FTTH Council reports 850 service providers in North America operate a FTTH network reaching at least a portion of their subscriber base 11. The vast majority of these service providers are Tier 3 telcos serving small town America. Among available FTTH options, Gigabit Passive Optical Network (GPON) technology is the workhorse for Gigabit networks to date. GPON is based on the ITU standard G.984 and was developed through input from the telecom industry initiative the Full Service Access Network (FSAN) 12 to improve on the earlier BPON FTTH standard. GPON offers 2.5 Gbps downstream/ 1.2 Gbps upstream capacity and supports Ethernet, ATM, and TDM protocols. As a result, GPON supports IP and legacy applications including both IPTV and RF for video, as well as VoIP and TDM for voice services. Its PON characteristic removes all electronics in the outside plant, and enables unpowered sharing of its capacity through the use of passive splitters. It is a point-to-multipoint technology, providing carriers with great efficiency and high reliability. In a GPON architecture, several (commonly 32 or 64) Optical Network Terminals (ONTs) at the customer premises are connected to an Optical Line Terminal (OLT) via fiber optics, creating a passive Optical Distribution Network (ODN). GPON can handle Gigabit deployments today, but its successors, XGPON and XGPON2, are already identified and have been introduced in test environments. XGPON is slated to provide 10 Gbps downstream and 2.5 Gbps upstream capacity, while XGPON2 looks to offer symmetrical 10 Gbps capacity. Active Ethernet connections via FTTH or Fiber-To- The-Node (FTTN) with vectored VDSL2 or other emerging copper based technologies can also support Gigabit services. This architecture typically brings an active Ethernet fiber connection to a neighborhood node, with either FTTH or copper connections in the last mile to the home. This application is often used in a migration path, leading to an end-to-end FTTH architecture. The Case for Gigabit Services The case for Gigabit services is rooted in the value and benefits that FTTH and ultra-fast broadband provide to service providers and the communities they serve. Introducing Gigabit services greatly improves upon the numerous identified benefits that FTTH brings. For service providers, FTTH improves efficiency and lowers cost, generates more Average Revenue Per User (ARPU), and better meets customer expectations. Customers are happier with FTTH and their communities have better economic development opportunities. RVC LLC performs annual research for the FTTH Council and their findings 13 support these assertions: FTTH provides on average, $151 in monthly ARPU. Other broadband services on average generate $109 per month On average, service providers report 20.4 percent lower operating costs with FTTH over other wireline broadband solutions FTTH customers report better satisfaction over DSL and cable with regard to speed, consistency of speed, and streaming video Homes connected with FTTH are valued higher than those that are not Among home based businesses with FTTH connectivity, 14 percent say they have generated incremental revenue of $10K or more over pre-ftth connectivity Community Economic Development Despite its relatively recent history, Gigabit broadband s impact on local economies is quite significant. Gigabit networks instantly create world-class broadband infrastructure and give businesses of all sizes confidence that they can participate and succeed in the global economy. From home based entrepreneurs who can leverage Gigabit services to compete with anyone across the world, to large Fortune 500 companies who see Gigabit infrastructure as fueling their participation in the knowledge economy, Gigabit networks are increasingly becoming an economic development necessity. Great examples already exist: Chattanooga, Tennessee credits the creation of 3,700 new jobs in the past few years in large part to the presence of a Gigabit network 14 built and operated by municipal provider EPB. The ultra-broadband network was instrumental in attracting new global players to Chattanooga, including Volkswagen and Amazon. 10 The State of North American FTTH, (registration required) 11 FTTH Primer, 12 Full Service Access Network Group (FSAN), 13 The State of North American FTTH, (registration required) 14 US Ignite - City Stories: Chattanooga Story, 4 The Case for Gigabit

5 Lake Nona, outside of Orlando, Florida has seen explosive growth, thanks in part to a planned Gigabit connected community, operated by service provider Dais Technologies. Significant broadband investment in both wireline and wireless infrastructure has transformed a medical campus that provided 400 jobs in 2012 to a medical city that will include five medical campuses employing close to 4,000 people 15. Local communities and economic development entities are quickly recognizing the power Gigabit services bring to their local economy. Google received 1,100 applications for its first Google Fiber deployment, from which Kansas City was selected. As the Gigabit movement accelerates, communities all across the country will come to expect Gigabit infrastructure from their broadband service providers to remain competitive. Application Incubation Perhaps one of the best implications of the Gigabit movement is the acceleration of the application development it promotes. Gigabit networks and their capabilities excite and motivate app developers to push the envelope and develop new apps that can take full advantage of that massive bandwidth. There is plethora of new application development occurring as a result, ranging from kids in a garage somewhere in the corner of Kansas City or other Gigabit communities, to sponsored formal developer communities that have sprouted up all across Gigabit America. Some interesting examples have emerged: Hometown2Hometown Born in Gigabit community Lafayette, Indiana, this app allows users to connect with distant communities and experience cultural venues, neighborhoods, businesses, natural features, and cityscapes through H2H Camplaces, utilizing Google 3D imaging technology. It is a virtual tour guide of sorts. NewCourtland Health Monitoring Program This trial application allows seniors who would normally need to enter a nursing home or receive expensive in-home health aids, utilize remote monitoring technology, Local communities and economic development entities are quickly recognizing the power Gigabit services bring to their local economy. the Healthsense eneighbor system, within their home instead. The platform uses sensors placed around the home, biometric devices, medication dispensing and a check-in button in each home, replacing an average $225 daily cost per patient for nursing home care, with a $125 per day in-home FTTP technology driven system. Software Lending Library Gigabit networks provide the speed and low latency required to offer desktop sharing of software applications. Rather than buying and downloading software, users can now borrow or rent high performing software applications, accessing the software on their desktop from a remote server. The Kansas City Library is trialing such an approach thanks to Google Fiber. These efforts will only multiply. Initiatives like the Gigabit Challenge 16 and the Mozilla Ignite Challenge 17 will lead to apps that we cannot even imagine today, building expectation and demand for Gigabit services. Prepare For the Future Today The telecom industry has much to be proud of. Here in the U.S., we have built a network that is the envy of the world. But one area where this industry has not excelled is anticipating and forecasting disruptive change, especially with regard to Internet access. All too often, reaction is the prescribed course. In phase one of the Internet, did we properly anticipate the explosion in dial-up access lines, in which demand for second lines far outweighed supply of available copper pairs in the network? In phase two, did the industry properly forecast the demand for online video consumption and the impact services like Netflix would have on the network? We are now entering phase three of Internet access, and indications suggest the disruptive wave will be even more intense than the first two phases. With Gigabit services, we have a chance to get it right and proactively address this disruptive change. 15 Thinking big in Medical City, An ADTRAN White Paper 5

6 Growing Bandwidth Demand While the explosive demand for bandwidth is well documented, it is worth putting it into context here. Some of the market data is staggering. Apple recently reported statistics that highlight their impact on the overall market. There are now over 500 million iphones and over 200 million ipads in circulation. Those ios devices fueled many of the 75 billion apps that have been downloaded from the App store since it launched, with 300 million people visiting the App Store daily. Keep in mind that much of that download activity occurs over Wi-Fi networks, which are largely wireline broadband served. If you think Apple is impressive, Google counts over 900 million Android devices (as of 2013), and will soon cross the 1 billion device milestone. By 2017, market research firm Gartner predicts 268 billion app downloads annually, and that does not even count music and video downloading. The Cisco Visual Networking Index (VNI) predicts it would take an individual over 5 million years to watch the amount of video that will cross global IP networks each month in That equates to nearly a million minutes of video content crossing the network every second 18. Video is no stranger to bandwidth consumption, and HD video in particular. We are seeing a growing number of households that now possess multiple HDTVs. According to Leichtman Research Group, 75 percent of U.S. households now have at least one HDTV, and among them, 59 percent have more than one 19. The introduction of 4K HD with its higher bandwidth demands should only hasten video demand implications. TVs are no longer the sole culprits of video bandwidth demand. Wi-Fi connected tablets and smartphones within the home add even more video consumption, in both SD and HD formats. It would take an individual over 5 million years to watch the amount of video that will cross global IP networks each month. Gigabit networks are well prepared to manage this familiar explosion in bandwidth demand. By adopting a Gigabit broadband strategy, service providers can proactively and profitably meet growing customer expectations for bandwidth, wherever they fall. Gigabit: A Cultural Shift Opportunity The introduction of the Internet fundamentally changed the telecom service provider business. That rate of change continues to be dynamic and will only multiply, challenging service providers to make cultural shifts within their companies. That legacy culture was honed over decades of a regulated business model built on selling access to a build it and they will come network. Today s marketplace is radically different. Now agility, market awareness and focus, rapid product introduction and competition from near and far characterize the marketplace. Service providers must shift their focus away from a utility mindset to that of a competitive carrier who understands customer demands and leverages their network assets for rapid product innovation. Cultural change is one of the biggest challenges facing service providers, because failure to accomplish it could be perilous. One tactic proven to facilitate cultural change is the introduction of a game changing service that impacts every facet of a company s value proposition. Gigabit broadband is such a service. Its introduction can engender an atmosphere of enthusiasm and creativity that helps fuel cultural change. A Gigabit service provider is not just a utility company anymore, and the skills necessary to successfully build, market, and sell a Gigabit experience can help transform not only a service provider, but an entire community. 18 Cisco VNI Forecasts, 19 LRG Research Notes 1Q2014, 6 The Case for Gigabit

7 If Not You, Who? If history is any measure, today s Gigabit broadband momentum ensures its wide-scale adoption. It is no longer a question of if, but when. Existing service providers should begin planning their Gigabit migration today? Gigabit services allow carriers to get ahead of the forthcoming disruptive wave and more importantly, profit from it. Gigabit services, which have historically been offered mostly by telcos and municipals will see broader interest from cable companies. Forthcoming DOCSIS 3.1 will empower them to more easily and cost effectively make the Gigabit leap. The appeal of Gigabit services and the economic development it fuels will lead to more demands for it from local communities and government leaders. Someone will have to provide it. Communities are increasingly taking matters into their own hands through publicly owned networks, should their appeals be ignored. Conclusion Next-generation broadband is upon us and it provides an exciting opportunity for the broadband carrier community. A wave of early Gigabit network adopters has paved the way for the industry to follow. The FCC s goal of 100 Mbps to 100 million homes can and should be surpassed. As bandwidth demand continues its torrid pace and applications developed specifically for ultra-fast broadband multiply, customers will look to and demand Gigabit broadband services. Service providers should be proactive in their network planning and their cultural shift. They should not wait until customers are asking for it. Rather they should prepare for it now and ensure no one else can seize the opportunity. Regardless of time horizon, every future dollar invested in the network should be allocated toward enabling Gigabit broadband, whether it comes to market next month, next year or in the next decade. The time to prepare is now and the risks of inaction are too high. An ADTRAN White Paper 7

8 ADTRAN, Inc. Attn: Carrier Networks 901 Explorer Boulevard Huntsville, AL P.O. Box Huntsville, AL fax General Information 800 9ADTRAN Pre-Sales Technical Support Post-Sales Technical Support Where to Buy Global Inquiries fax ADTRAN is an ISO 9001, ISO 14001, and a TL 9000 certified supplier. CN323A June Copyright 2014 ADTRAN, Inc. All rights reserved. ADTRAN believes the information in this publication to be accurate as of publication date, and is not responsible for error. Specifications subject to change without notice. ADTRAN is a registered trademark of ADTRAN, Inc. and its affiliates in various countries. All other trademarks mentioned in this document are the property of their respective owners. ADTRAN warranty duration and entitlements vary by product and geography. For specific warranty information, visit ADTRAN products may be subject to U.S. export controls and other trade restrictions. Any export, re-export, or transfer of the products contrary to law is prohibited. For more information regarding ADTRAN s export license, please visit