FTTP Networks: Topology and Competition

Transcription

1 FTTP Networks: Topology and Competition Marvin A. Sirbu Department of Engineering and Public Policy Carnegie University Marvin A. Sirbu 1

2 Conclusions Up Front FTTP networks have significant economies of scale facilities-based competition is unlikely to be sustainable Service-level competition can exist over shared network infrastructure Sharing possible at different levels Sharing of dark fiber requires attention to fiber layout There is great variety in the models of sharing which can be found today 2008 Marvin A. Sirbu 2

3 Outline Models of Competition in FTTP Alternative FTTP architectures: impact on competition Economics of FTTP 2008 Marvin A. Sirbu 3

4 Outline Models of Competition in FTTP Alternative FTTP architectures: impact on competition Economics of FTTP 2008 Marvin A. Sirbu 4

5 Facilities based competition each competitor builds FTTP network Home 1 Network 1 Central Offices Service Provider A Home 2 Separate Networks Network 2 Service Provider B Data Link Layer Equipment ATM, Gigabit Ethernet, SONET 2008 Marvin A. Sirbu 5

6 UNE based Competition in FTTP Dark fiber based network owner wholesales dark fiber Wavelength based network owner wholesales wavelengths Central Office Home 1 Service Provider A Network Data Link Layer Equipment Service Provider B Home Marvin A. Sirbu 6

7 Open Access based competition network owner wholesales transport capacity Central Office Home A Network Service Provider A Home B Common Data Link Layer Equipment Service Provider B 2008 Marvin A. Sirbu 7

8 Sharing Network Infrastructure: Summary Layer: Shared Infrastructure 0 Conduit and collocation facilities. 1 (Physical Layer Unbundling) Dark fiber leasing, or perhaps, Optical Layer unbundling (CWDM or DWDM in PONs) 2 (Data Link Layer Unbundling) 3 (Network Layer Unbundling) Dark fiber and link-layer electronics at each end. For example, Ethernet-based VLAN, or ATM-based PVCs. Basic network service provided. For example, IP Layer 3 service over cable using policy-based routing to multiple ISPs 2008 Marvin A. Sirbu 8

9 Outline Models of Competition in FTTP Alternative FTTP architectures: impact on competition Economics of FTTP 2008 Marvin A. Sirbu 9

10 Home Run Architecture ONU Dedicated fiber to each Home Central Office Infrastructure Implications for Competition Central Office Equipment Physical layer unbundling possible wholesaler can sell individual fiber OLT Port ONU Optical Network Unit OLT Optical Line Termination Also supports open access Distribution Loop Feeder Loop 2008 Marvin A. Sirbu 10

11 Active Star Architecture ONU 1 Shared Feeder fiber Central Office Infrastructure Implications for Competition N Remote Node with Active Electronics Equipment OLT Central Office Equipment Physical layer unbundling is difficult requires competitors to collocate electronics at remote node Must provide feeder fibers for each competitor Distribution Loop Feeder Loop Logical layer unbundling possible - supports open access 2008 Marvin A. Sirbu 11

12 Curb side Passive Star Architecture (PON) λ λ λ λ ONU 1 32 Shared Feeder fiber λ Curbside Passive Splitter Combiner OLT Central Office Infrastructure Central Office Equipment Implications for Competition Physical layer unbundling not possible Logical layer unbundling possible - supports open access λ Separate λ s may be used for Data and video Distribution Loop Feeder Loop 2008 Marvin A. Sirbu 12

13 WDM PON ONU Central Office Infrastructure Implications for Competition λ 3 λ 2 λ 4 λ Shared Feeder fiber λ 1, λ 2, λ 3, λ 4, λ 5... λ 32 Passive Splitter Combiner OLT Central Office Equipment Physical layer unbundling not possible Optical layer unbundling possible wholesaler can sell wavelengths Also supports open access λ 5 Distribution Loop Feeder Loop 2008 Marvin A. Sirbu 13

14 Design Considerations in a PON: A Curb-side PON Neighborhood 1 Central Office Infra structure Splitter 1 PON1 Central Office OLT Equipment PON2 Central Office OLT Equipment Splitter 2 Both OLTs needed if only one home in each splitter group subscribes Neighborhood Marvin A. Sirbu 14

15 Design Considerations in a PON: A Fiber Aggregation Point (FAP) PON Neighborhood 1 Central Office Infrastructure Splitter 1 Central Office OLT Equipment Splitter 2 Neighborhood 2 Aggregation Fiber Aggregation Point PON supports all models of competition 2008 Marvin A. Sirbu 15

16 How many homes should be aggregated at an Optimal FAP? OFAP allows deferring investment in OLTs until penetration requires it 2008 Marvin A. Sirbu 16

17 OFAP as a Real Option to Phase-in New Technologies Neighborhood 1 Central Office Infrastructure Splitter 1 GPON GPON CO OLT Equipment Neighborhood 2 Splitter 1 BPON Aggregation BPON CO OLT Equipment OFAP also supports flexibility in future split ratios - 10 Gbps GPON, GEPON - WDM PONs 2008 Marvin A. Sirbu 17

18 OFAP Benefits with an Active Star Architecture Neighborhood 1 Central Office Infrastructure Feeder 1 Central Office OLT Equipment RT & OLT to be deployed as needed Feeder 2 Central Office OLT Equipment Neighborhood 2 Larger serving area Aggregation point Higher utilization of RT and OLT ports Neighboring homes can be served by different technology generations 2008 Marvin A. Sirbu 18

19 Sharing in the Second Mile As video becomes dominated by unicast Video on Demand (VOD) metro aggregation network costs soar In smaller communities, access to regional transport to a Tier 1 ISP is a major barrier to entry Retail service providers sharing an FTTH access network may also need to share at the metro/regional level in order to be economically viable. There is a tradeoff with distributed video servers Sharing a content delivery network (e.g. Akamai) may be an alternative. This requires distributed colo space and interconnection See Han, S. et al IPTV Transport Architecture Alternatives and Economic Considerations, IEEE Comm Mag, Feb 2008 Lamb L., forthcoming. NSP, A Business Case Comparison of Carrier Ethernet Designs for Triple Play Networks, 2008 Marvin A. Sirbu 19

20 Regulatory Implications If regulators want to be able to require dark fiber unbundling, they need to require compatible fiber layout OFAP PON vs curb-side PON Even larger OFAP for competitive active star Need for additional feeder fibers All architectures support logical layer ( bitstream ) unbundling IPTV unbundling possible at bitstream layer If video distributed over a separate wavelength, issues of access to RF multiplex Marvin A. Sirbu 20

21 Outline Models of Competition in FTTP Alternative FTTP architectures: impact on competition Economics of FTTP 2008 Marvin A. Sirbu 21

22 Simple FTTH Economics: FTTH Includes Fixed Plus Variable Costs $ Cost = Fixed + R * Variable e.g. for Verizon YE06 Fixed=$850 Variable=$880 Source: pdf Fixed costs 0% Adapted from Friogo, et.al % Take Rate (R = customers / homes passed) 2008 Marvin A. Sirbu 22

23 Cost Per Subscriber vs Take Rate Variable Cost Total Cost/Sub % 20% 40% 60% 80% 100% Take Rate $ Marvin A. Sirbu 23

24 How Much Revenue to Support FTTH? One operator estimates $90/month per subscriber $40 for ongoing services cost $50/month to cover capital costs Assume an average of 10 year lifetime, 5% cost of capital Fiber lasts 40 years Electronics lasts five years $50/month can amortize $4700 What if Average Revenue Per User (ARPU) is less? $30/month can amortize $ Marvin A. Sirbu 24

25 Cost Per Subscriber vs Take Rate Variable Cost Total Cost/Sub Capital at $50/mo Capital at $30/mo Percent take rate needed to break even Cost/Subscriber Capital that can be amortized with $50/mo/sub Capital at $30/mo/sub 1000 Adapted from Frigo et. al Take Rate 2008 Marvin A. Sirbu 25

26 Cost Per Subscriber vs Take Rate Consumers Take Rate Cost/Subscriber Capital that can be amortized with $50/mo/sub Competition 0 Adapted from Frigo et. al Take Rate 2008 Marvin A. Sirbu 26

27 Economic Implications: If revenue available to amortize plant is only $30/month, must reach penetration of > 45% room for at most 2 facilities-based providers This analysis understates the problem No customer acquisition (marketing/sales) cost included Customer acquisition drives up Fixed costs pushing breakeven penetration higher Unlikely to see >90% total penetration 2008 Marvin A. Sirbu 27

28 Regulatory Implications Facilities-based competition among fiber network providers is unlikely Economies of scale Regulators should be cautious of waiving open access requirements in return for investment in fiber Could lead to remonopolization At best duopoly competition If service competition limited to ISPs which own facilities greatly reduced service level competition Operators will have Significant Market Power (SMP) Reduced service-level competition raises Network Neutrality issue 2008 Marvin A. Sirbu 28

29 Net Neutrality Can third parties compete with vertically Integrated ISPs? Central Offices Home 1 Home 2 Network 1 Separate Networks Network 2 Service Provider A Service Provider B Apps + Content Apps + Content Apps + Content Data Link Layer Equipment 2008 Marvin A. Sirbu 29

30 Conclusion What are the different models of competition in FTTP? Facilities based Service level (over shared network infrastructure) Fiber layout affects options for competition OFAP supports fiber unbundling even for PONs More feeder fibers required for competition FTTP networks have significant economies of scale Unlikely to support multiple facilities-based providers Second Mile sharing also important 2008 Marvin A. Sirbu 30

31 For Further Information pdf RC_2006.pdf Marvin A. Sirbu 31