Optimizing the fiber business case. G-PON interoperability and certification strategies for operators and vendors

Optimizing the fiber business case G-PON interoperability and certification strategies for operators and vendors

2 Contents Methodology...3 Executive summary...3 Overview...4 The importance of interoperability...4 Market status...4 A brief history of G-PON interoperability...4 The role of Broadband Forum and certification...5 Market dynamics...5 The business case for service providers...5 Case study: Orange eyes plug-and-play interoperability...5 Case study: Chunghwa seeks to reduce capex and avoid lock-in...6 Case study: BT seeks common ground for uncommon requirements...6 Case study: PCCW looks to overcome the interoperability impasse...7 The business case for vendors...7 Case study: Huawei eyes the longer-term prize...7 Case study: Alcatel-Lucent highlights deployability challenges...8 Case study: Calix seeks to challenge the big three...8 Case study: PT Inovacao makes multivendor G-PON real...9 Mutual benefits for operators and vendors...9 Market development...9 Understanding the impact of China...10 The Informa view...11 2014 will be an important year for G-PON interoperability...11 Extend interoperability, educate about deployability...11 The industry needs to rebalance the multivendor business case...11 Success will depend ultimately on marketing, not technology...11 This report was commissioned by the Broadband Forum About the Broadband Forum Broadband Forum, a non-profit industry organization, is focused on engineering smarter and faster broadband networks. Our work defines best practices for global networks, enables service and content delivery, establishes technology migration strategies, engineers critical device & service management tools, and is key to redefining broadband. Our free technical reports and white papers can be found at www.broadband-forum.org. Informa UK Limited 2013. All rights reserved. The contents of this publication are protected by international copyright laws, database rights and other intellectual property rights. The owner of these rights is Informa UK Limited, our affiliates or other third party licensors. All product and company names and logos contained within or appearing on this publication are the trade marks, service marks or trading names of their respective owners, including Informa UK Limited. This publication may not be:- (a) copied or reproduced; or (b) lent, resold, hired out or otherwise circulated in any way or form without the prior permission of Informa UK Limited. Whilst reasonable efforts have been made to ensure that the information and content of this publication was correct as at the date of first publication, neither Informa UK Limited nor any person engaged or employed by Informa UK Limited accepts any liability for any errors, omissions or other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume full responsibility and risk accordingly for their use of such information and content. Any views and/or opinions expressed in this publication by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Informa UK Limited.

3 Executive summary Fiber-to-the premises (FTTP) is already the world s fastest-growing fixed-broadband segment and gigabit passive optical network (G-PON) technology is set to become its dominant architecture. But problems with getting G-PON equipment from different vendors to interoperate has been holding back service providers ability to innovate, speed up deployments and lower costs. To gain a deeper understanding of the challenges, Informa Telecoms & Media surveyed 237 broadband industry stakeholders and interviewed senior executives at Orange, BT, Chunghwa Telecom, PCCW, Huawei, Alcatel-Lucent, Calix and PT Innovacao. Over half of G-PON operator respondents (53%) said that interoperability issues caused problems related to their internal testing burden, while 44% reported issues with network performance issues and 41% with greater management overhead. Certification is emerging as a key tool to drive the transition to multivendor G-PON networks regardless of the fiber-to-the-x architecture being deployed with many service providers and vendors confident of deriving benefits. Survey respondents said that, on average, certification could help, or has helped, shorten the time spent selecting and testing G-PON customer premises equipment, known as ONUs, by around 40%. 2014 will see increased activity around G-PON interoperability as several major operators move towards deploying multivendor networks and challenger vendors look to shake up the market. Ultimately, success will depend on the industry s ability to convince a critical mass of service providers and vendors that they have more to gain than lose from making the transition. Methodology Informa Telecoms & Media took a two-pronged approach to understanding the opportunities and challenges presented by G-PON interoperability and certification, employing an online survey and oneto-one interviews with 10 industry executives working for four service providers and four equipment vendors. The online survey was sent to a hand-picked selection of senior broadband industry stakeholders extracted from Informa s global database of research clients, contacts, speakers and registered attendees of the company s conferences and exhibitions, including the Broadband World Forum series. Informa selected 237 completed responses for analysis, including 84 from respondents from broadband service providers and 86 from vendors and system integrators (see fig. 1). The results were then analyzed in conjunction with material gathered from the oneto-one interviews and against the backdrop of Informa s decades of research into telecom markets. Respondents spread across the globe and across the industry Fig. 1: What is your primary market and your organization s primary area of activity? Primary market Organization's primary area of activity Western Europe 26% Africa 11% Industry association: 2% Chipset/components vendor: 2% Other: 17% Service provider: 32% Asia Pacific 21% Educational body: 3% Software vendor: 3% North America 11% Middle East 9% Base: 237 Latin America 7% Central & Eastern Europe 14% Professional services: 3% Consumer electronics firm: 4% Systems integrator:12% Customer premises equipment (CPE) vendor: 2% ONU vendor: 3% Network equipment vendor: 17%

4 G-PON will account for three out of five FTTP subscriptions by end-2018 Fig. 2: Global, FTTP subscriptions by architecture, 2012-2018 Subscriptions (mil.) PtP 350 300 250 200 150 100 50 0 EPON 10G-EPON G-PON 10G-PON WDM-PON 2012 2013 2014 2015 2016 2017 2018 In theory, the ability of a service provider to use an OLT from vendor A and ONUs from vendors B, C and D should have been established when the International Telecommunications Union (ITU) standardized G-PON. At a basic level, interoperability has been achieved at the transport layer, in that data can be transferred between equipment from different vendors. Note: Figures refer to year-end Overview The importance of interoperability Interoperability matters. Over half of all respondents (54%) rated equipment interoperability as one of the top three challenges facing superfast broadband deployments. One in four service providers (25%) rated equipment interoperability as the number one challenge. Interoperability of gigabit passive optical network (G-PON) technologies will be particularly important. Fiber-to-the-premises (FTTP) services overtook xdsl to become the fastest-growing segment of the fixed-broadband market last year, and will continue to grow rapidly, accounting for 328 million subscriptions, 34% of the total, by the end of 2018. In 2016, G-PON will become the dominant architecture, passing 200 million subscriptions two years later to equal three out of five FTTP subscriptions worldwide (see fig. 2). network to provide connectivity to a type of customer premises equipment (CPE) called an optical network unit (ONU), via a passive device called an optical distribution network (ODN) (see fig. 3). For commercial or regulatory reasons, a small number of operators locate the ONU just outside the customer premises. Most also use a separate device called a residential gateway (RG) to support Wi-Fi, VoIP, TV and other value-added services, but some are moving towards building these features into their ONUs. How gigabit passive optical networks work Fig. 3: Typical G-PON network architectures Regional broadband network Local access network Central office (CO) or local telephone exchange Optical line terminal (OLT) Optical distribution network (ODN) aka passive splitter Critics, however, say the body allowed vendors to add too many variations at the layer for managing services, known as the ONU management and control interface (OMCI). Out of a total of 256 objects in the standard, only six were mandatory for vendors to adopt. This left the industry in the paradoxical situation of the industry having a huge set of standard options, but no standard way of managing G-PONs. The role of Broadband Forum and certification For more than 20 years, the Broadband Forum (BBF) has worked to establish interoperability ONU Customer premises Optical network unit (ONU) Customer premises RG Residential gateway (RG) Market status A brief history of G-PON interoperability A typical G-PON network employs an optical line terminal (OLT) in a service provider s local access Customer premises Combined ONU/RG

5 in the broadband marketplace. Initially focused on ADSL testing, the scope of the BBF has extended to cover VDSL2 Vectoring, G-PON and XG-PON1, and home networking-related testing. The BBF develops global service and test requirement documents, conformance and interoperability test plans, private and public multivendor test events and an official Broadband Forum Certification Program. In 2012, the BBF launched its BBF.247 G-PON/XG-PON1 Certification Program, which it recently expanded to include more types of ONU products for homes and businesses. The program is modular, separately addressing virtual local area network (VLAN) architectures, multicast and both G-PON and XG-PON1 architectures. To date, 10 products have been publicly certified through the program. This year, the organization released the TR-255 OLT-ONU Interoperability test plan. This Interoperability issues for G-PON service providers companion test to the BBF.247 certification verifies OLT interoperability with BBF.247 certified ONUs. The BBF has also expanded the testing program with TR-309 XG-PON1 Physical layer Interoperability Test Plan and is actively developing specifications that will support an expansion of its testing programs to new functions and types of ONU. Further developments will be focused both on next-generation PON (NGPON2) and fiber-to-the-distribution point (FTTdp)/G.fast technologies. Market dynamics The business case for service providers Interoperability issues between different vendors OLT and ONU equipment have also caused an array of problems for many service providers. Over half of G-PON operators (53%) complained of their internal testing burden, while 44% reported network performance issues and 41% found greater management overhead to be an issue (see fig. 4). Fig. 4: What problems have interoperability issues between different vendors OLT and ONU equipment caused your organization? (Please tick all that apply) Internal-testing burden Network performance issues Greater management overhead Single vendor lock-in Late service launches Longer procurement cycles Slow rollout times Limited vendor selection Limited functionality High ONU costs High OLT costs Other (please specify) 6.3 9.4 20.3 23.4 21.9 26.6 26.6 26.6 31.3 40.6 43.8 53.1 0 5 10 15 20 25 30 35 40 45 50 55 Respondents (%) Base: 64 service providers that have deployed, are deploying, or are planning to deploy G-PON Case study: Orange eyes plug-and-play interoperability Orange has compelling reasons for getting G-PON interoperability right. By 2020, it plans to have rolled out fiber-to-the-home (FTTH) to 60% of the population in its home market of France, where it competes with three other FTTH operators. Orange is also committed to or investigating deploying FTTH in several other markets, including Spain, Slovakia and Poland. Orange believes interoperability will play a key role in achieving these goals: Lowering capex: Although the current cost of ONUs is not a major problem for deployments in large wealthy markets, it does make the business case challenging in smaller countries where ARPU is lower. Orange believes interoperability will lead to greater vendor competition, which will lead to lower per-unit prices. Reducing opex: In France, Orange has deployed two G-PON systems and each relies on using the vendor s own OLT and ONUs. This creates cost and complexity around provisioning and managing services, such as the need to ensure that engineers connect the right ONU to the right network. Driving innovation: Interoperability promises to enable ONU vendors to innovate independently of OLT vendors, helping operators to introduce new features faster as well as products tailored for specific uses, such as residential, business, wholesale and mobile backhaul services. The promise of a single box : Orange has adopted a two box model, with an ONU providing connectivity and its Livebox residential gateway handling TV,

6 VoIP and other advanced features. Greater interoperability would open up the possibility of offering a single combined ONU/gateway, which might be cheaper to buy, deploy and manage. Certification will play a key role in Orange s strategy to ensure plugand-play G-PON interoperability. Orange hopes that adoption of BBF.247 and TR-255 processes will help establish trust between the various parties, which might otherwise doubt each other s technical capabilities. Looking further forward, the operator believes that vendors must make the next-generations of ITUstandardized PON technology interoperable from day one. Vital to the overall success of the plan, however, will be ensuring that a critical mass of operators adopt certification and in a consistent manner, says Orange. Otherwise, it will hard to convince vendors that the extra time and money spent on certifying their products can be spread across multiple deployments. Case study: Chunghwa seeks to reduce capex and avoid lock-in Chunghwa Telecom s (CHT) interest in G-PON interoperability is linked to a critical stage in its superfast broadband strategy. The Taiwanese incumbent is in the process of deploying a nationwide FTTH network with a target of 300,000 FTTH subscribers receiving 100Mbps services by the end of 2013. CHT is also about to launch a new tender for the second stage of its network construction; French vendor Alcatel- Lucent has been its sole G-PON vendor since February 2011. The operator wants to invite up to four vendors to take part in the tender. Any new vendors brought in to the deployment must demonstrate interoperability with the G-PON equipment of other vendors, says the operator. Those that fail to do so will be excluded from the tender. CHT believes that interoperability will help keep G-PON equipment prices down, as well as prevent it from being locked in to a single vendor. Certification will also help to speed up the deployment of its FTTH network by removing the lengthy testing procedures of rival vendors G-PON equipment, it says. Although it recognizes the role to be played by Broadband Forum certification, CHT says that it will take an active role in making sure that potential vendors adhere to interoperability standards. Case study: BT seeks common ground for uncommon requirements BT is rapidly deploying a fiber-based high-speed broadband infrastructure based on both fiber-to-the-cabinet (FTTC) using VDSL2 and FTTP using G-PON. At present, the majority of its UK deployment is based on FTTC, but the operator also offers a G-PONbased fiber-on-demand product that enables customers to request for their homes to be connected via FTTP. BT is committed to improve G-PON interoperability to enable increased flexibility and choice in the network equipment it uses. The operator has unusual requirements for its G-PON deployment, but believes that using certification to establish common ground within the industry will be vital to achieving its goals. Regulation means that the UK incumbent operates its fixed network as a separate business from its retail arm, offering wholesale access on equal terms to any third-party service provider. As a result, BT has quite a different wholesale service, provisioning, management and CPE systems compared with most other G-PON operators, whose networks are largely for their own use only. Like other operators, BT believes improved G-PON interoperability will lead to more choice and flexibility, lower equipment costs, reduced testing and management overheads, improved reliability, reduced trouble-to-resolve and an increased ease and speed of innovation. This is a journey, says BT. The first step is to achieve improved ONU interoperability and the end goal is full OLT and ONU interoperability, allowing the operator to use third-party ONUs confidently in its FTTP deployment. The operator adds that it will take some while to achieve this goal, which the Broadband Forum is now catalyzing through its certification program for G-PON. BT accepts that operators can no longer write their own individual specifications for interoperability from the ground up and expect increasingly cost-conscious vendors to comply, nor can operators afford to go through such expensive and time-consuming testing. BBF certification can enable both parties to meet in the middle, says BT. By agreeing on a base set of interoperability requirements, vendors and operators can concentrate on those features that truly need to be customized for a particular deployment. Even noncompliance can help operators

7 Interoperability is number two in the operators ONU selection criteria Fig. 5: Please rank the following items based on the importance within the process of selecting an ONU product gain a better understanding of the challenges of establishing interoperability, adds the operator. BT s future invitations to tender for G-PON will require that vendors can declare with confidence that their products have passed BBF certification. The company is looking to the BBF and the industry to build on the success of the ONU certification and make rapid progress to achieve OLT and ONU interoperability. Cost per unit 41% Equipment performance issues Greater internal-testing burden Customer dissatisfaction Exclusion from RFP bids Longer sales cycles Late product launches Customer churn High OLT costs High ONU costs Limited functionality Low service provider demand 9.1 Number of user ports 5% Hardware features 7% Software features 8% Vendors also suffer from G-PON interoperability problems 11.4 13.6 13.6 13.6 15.9 Case study: PCCW looks to overcome the interoperability impasse PCCW says that G-PON interoperability is an important issue and one that can only be solved by having the major G-PON vendors commit to a certification scheme. The Hong Kong incumbent is one the world s pioneering IPTV and FTTH operators. At end-june 2013, it had 362,000 subscribers on its FTTH network, which passes 1.7 million households. Maintenance costs 10% Interoperability with OLT equipment 30% Base: 61 service providers that have deployed, are deploying, or plan to deploy G-PON. Fig. 6: What problems have interoperability issues between different vendors OLT and ONU equipment caused your organization? (Please tick all that apply) 22.7 25.0 25.0 0 5 10 15 20 25 30 35 40 Respondents (%) Base: 44 organizations involved in the supply of G-PON products and/or related services. 29.5 38.6 The operator whose principal G-PON vendor is Huawei says that, although many vendors claim that their G-PON equipment is compatible with that of rival vendors, often that is simply not the case. PCCW says that genuine G-PON interoperability will need to work at both the level of chipsets and also the complete end-products from the major vendors. The operator cautions that this will be very tough to achieve. It argues that the major vendors domination of the OLT market means it is in their interests to try to lock operators into deploying their own proprietary ONU equipment as well. However, PCCW believes that the successful introduction of certification in this area could save around 80% of the interoperability testing that must currently be carried out by operators. The business case for vendors Attractive as locking in customers to both their OLTs and ONUs might appear, interoperability has benefits for vendors too, not least because it ranks second only to cost per unit in the service providers ONU selection criteria, with nearly 30% identifying it as the most important item (see fig. 5). Nor are G-PON vendors isolated from interoperability problems, with many reporting similar issues with equipment performance (39%) and testing (30%) as well as exclusion from RFP bids and customer dissatisfaction (see fig. 6). Case study: Huawei eyes the longer-term prize Skeptics say major OLT vendors should have little interest in

8 improving G-PON interoperability, as it could turn ONUs into a commodity, leading to, at best, lower per-unit prices and, at worst, lost sales. Huawei, however, says it is firmly committed to the process. The Chinese vendor suggests that improved G-PON interoperability could create a number of benefits for vendors. The cost of making ONUs could fall as their designs become more common and so create scale for component manufacturers. In addition, lower costs and greater flexibility for operators could speed up deployments, establishing G-PON as a more robust competitor to rival systems, such as the DOCSIS 3.0 technology favored by cable operators. In the longer-term, improved interoperability could open up the possibility of the ONU becoming a device that subscribers can purchase and own themselves, which would dramatically change how operators provide and manage services, says Huawei. This could also lead to further innovation and development although there will still likely be some technical issues to solve, such as customer self-installation of the fiber optic connection. The vendor says that the biggest danger in the interoperability process would be if the players view it as a zero-sum game, used only to extract concessions from the other side. This would result in strong pushback from other players, delaying the evolution of the technology. To this end, it is critical to persuade key vendors that standardization will actually help them speed up their time-to-market volume rather than act as a drag. Case study: Alcatel-Lucent highlights deployability challenges For Alcatel-Lucent, G-PON interoperability represents an opportunity and a challenge. The equipment vendor believes that interoperability has been achieved from a standards point of view, but deployability challenges remain. Alcatel-Lucent has actively pushed for more transparency about the concept, in the belief that it will give service providers greater confidence in deploying the technology, preferably using its equipment and services. In 2009, it published its own guide for implementing interoperability at the ONU management and control interface (OMCI) level, an area of the ITU G-PON standard that was notorious for holding up multivendor deployments because of its lack of strict guidelines. Most operators now include interoperability criteria in their request-for-proposal (RFP) documents, says the vendor. But standards and certification can only go so far, according to Alcatel-Lucent. Today, guidelines for technical interoperability between OLT and ONU interfaces are very clear; but having correct communication between devices does not guarantee faultless behavior: lasers can overheat, counters can be inaccurate. The vendor has seen a number of examples of operators changing their mind about multivendor deployments once the complexity has become clear. In other words, certification can guarantee interoperability, but not deployability. Alcatel-Lucent argues that the Broadband Forum needs to set the right balance between what certification can achieve and what costs service providers will have to support, and educate the market about the difference. Otherwise, the industry will have unrealistic expectations about the real costs and benefits of deploying multivendor G-PON networks. Case study: Calix seeks to challenge the big three Calix has a number of compelling reasons for valuing interoperability and certification. Although the US-based vendor is a significant force in the North American market for G-PON equipment, elsewhere three other players dominate: Huawei, ZTE and Alcatel-Lucent. Proving that its equipment can work with the equipment of these dominant vendors and others provides a means for Calix to sell to service providers that have already deployed, especially tier-1 and tier-2s. The consolidation of the G-PON market could also work in Calix s favor. Less choice for service providers could limit their ability to introduce new ONUs and guard against any problems their vendor might have in supplying equipment, such as silicon shortages. Using a third party like Calix could enable a service provider to innovate independently of its OLT vendor, as well as spread risk. The company says that service providers are past the stage of including Broadband Forum certification merely as a box vendors need to tick in order to win an RFP; a growing number are already trialing and deploying multivendor G-PON networks. Having its ONUs certified as BBF.0247-compliant has opened

9 up opportunities to take part in deployments amounting to millions of lines, says Calix. One of the largest that it is taking part in involves trials that will see a Russian operator testing the interoperability of three different vendors equipment. Calix also sees longer-term benefits. As multivendor networks become more prevalent, the ability to manage compatibility between equipment could develop into a lucrative managed service vendors could offer to operators. Proving interoperability now could be a step towards such a model, adds Calix. Case study: PT Inovacao makes multivendor G-PON real Interoperability helped PT Inovacao to enter the G-PON equipment market in the first place. Around 2008, many operators had deployed end-to-end G-PON systems, mainly from Alcatel-Lucent and Huawei. Proving interoperability enabled PT Inovacao to starting supplying ONUs to these service providers. The company is part of the Portugal Telecom group, but sells technology to its parent s service provider business and others just like any other vendor. It says that its ONUs are now used in multivendor deployments in a number of markets in Europe and Latin America. The pitch for PT Inovacao s customers is lower ONU prices and the ability to introduce new features that their OLT vendors might not be able to support. For Portugal Telecom, for example, the vendor has developed as a single box CPE that combines ONU and residential gateway features, which costs the operator less to buy, deploy and maintain than two separate devices. PT Inovacao says it has derived a number of benefits from Broadband Forum certification. At a basic level, it provides independent proof to service providers that its ONUs can interoperate with other vendors equipment. This in turn has enabled the vendor to shave off time testing its products with operators. Testing and participating in the Forum s plugfests also helps PT Inovacao to strengthen its software stack and so improve its overall offering. While complying with certification adds to PT Inovacao s costs, it is confident that it ultimately generates a higher return for the business. Mutual benefits for operators and vendors The survey also produced evidence that certification can help service providers address one of the key challenges facing the G-PON industry: speeding up time-tomarket. Just laying new fiber is a hugely time-consuming process. Lack of clarity over equipment interoperability threatens to add to the burden by forcing service providers to spend more time evaluating and then testing new products and software loads. About half (48%) of G-PON service providers said it takes them between three to six months to choose an ONU vendor, from issuing a requestfor-information (RFI) document to selecting a product. Nearly four out of 10 (38%) said that it takes from seven months to over a year. Certification could help, or has helped, reduce ONU selection processes by about 40%, on average, said service providers and vendors. The practice also appears to be having a material impact on testing. On average, service provider respondents said they spend about three months testing new certified ONUs, compared with five for non-certified devices. Testing new software loads also takes about three months for certified ONUs as opposed to four months for noncertified devices. As with selection processes, service providers and vendors said that, on average, certification could help, or has helped, shorten their ONU testing cycles by around 40%. Market development Building a critical mass of industry support for interoperability will be a key challenge for the industry. Momentum behind certification appears to be growing, with several interviewees and about half of survey respondents indicating their support (see fig. 7). However, the other half have yet to commit, and only a fraction have made conformance with the schemes mandatory for vendors. Their reticence can perhaps be explained by uncertainty over how the overall business case for deploying multivendor G-PON networks stacks up. Although a majority are confident that using different OLT and ONU vendors could have a positive effect on their capex, respondents were split on the effect on opex (see fig. 8). Respondents to the survey highlighted costs and limited awareness and resources as key barriers to adopting certification (see fig. 9). Another problem for G-PON interoperability is that growth in

10 About 50% of G-PON operator respondents back certification Fig. 7: Does your organization include any of these Broadband Forum certification requirements within its request-for-proposal (RFP) documents? Don't know 25% BBF.247 ONU certification No 26% Yes (mandatory) 10% Planning to 5% Yes (optional) 34% TR-255 ONU-OLT Interoperability Test Plan Don't know 27% No 25% Base: 64 service providers that have deployed, are deploying, or plan to deploy G-PON. Yes (mandatory) 13% Planning to 7% Yes (optional) 28% Industry divided over the impact of multivendor networks Fig. 8: What effect do you think using more than one vendor for both your OLT and ONU equipment has had/could have for your business? Very negative Negative Neutral Positive Very positive n/a Time-to-market Service differentiation Opex Capex 0 20 40 60 80 100 Respondents (%) Base: 64 service providers that have deployed, are deploying, or plan to deploy G-PON. Cost implications and awareness are the key issues to resolve Fig. 9: What are/were the main obstacles to your organization adopting Broadband Forum certification programs? (Please tick all that apply.) CPE/CE vendors*** Network equipment vendors** Service providers* Uncertainty over benefits Time-to-market implications Low internal awareness Limited internal resources Lack of successful case studies Insufficient test case coverage Insufficient industry buy-in Cost implications Notes: *84 respondents; **38 respondents; ***19 respondents 0 10 20 30 40 50 60 70 Respondents (%) network deployments will be driven partly by numerous relatively small rollouts. According to Informa Telecoms & Media s forecasts, the majority of G-PON networks will serve fewer than half a million subscribers, even by the end of 2018 (see fig. 10). Many of these operators might be the hardest to convince or even be made aware of the interoperability agenda. Most are small or operate in low-arpu markets, and so may struggle to see whether the benefits of operating a multivendor G-PON network will outweigh the extra costs, such as testing, managing multiple vendors and participating in global certification initiatives. The survey indicated that familiarity with Broadband Forum programs was lower among smaller service providers, with more respondents citing cost implications, limited internal resources and low internal awareness as barriers to adoption compared with their larger peers. Understanding the impact of China There is at least one major operator whose plans for G-PON will have a significant bearing on interoperability. China Telecom s aggressive rollout has already delivered the bulk of new subscribers which made China the world s largest FTTH/B market earlier this year. By the end of 2018, Informa Telecoms & Media forecasts that the operator will be responsible for more than half of the 131 million G-PON subscribers in China, equal to two out of three of the global total (see fig. 11). China Telecom is understood to be some way down the road to a multivendor deployment. But its exact plans are somewhat opaque, as it acted more or less unilaterally to demand that vendors adopt its

11 preferred specifications rather than in concert with other service providers. Several interviewees said that the industry needed to work harder to bring the operator to the table in order to align its plans with their goals of establishing interoperability on a global scale. Or, as one service provider executive put it, maybe we need to bring the table to China Telecom given the scale of the operator s plans and its growing influence over vendors. The Informa view 2014 will be an important year for G-PON interoperability Informa s survey suggests service providers and vendors are confident that they can derive mutual gains from G-PON interoperability and certification, especially in terms of reducing time-to-market. A number of major service providers are in the process of moving towards multivendor networks, while challenger vendors see interoperability as a way to get a foot in the door of existing deployments. Skeptics may say they ve heard it all before, but more pieces seem to be in place to make it happen this time around. Extend interoperability, educate about deployability There will always be a trade-off between the how much time and money certification can save service providers and how much it costs vendors to conform. The BBF is right to extend G-PON certification to cover wholesale, multicast and mobile backhaul and other emerging service models, but it also needs to help ONU vendors to spread the cost of certifying the growing number of products in their portfolios, say by allowing variants to be granted Most G-PON deployments will be small-scale for the foreseeable future Fig.10: Global, number of service providers by G-PON subscriptions, 2013 and 2018 Number of service providers 0-100,000 1-5 million 60 50 40 30 20 10 0 certification if a vendor s flagship product passes. The industry should also focus on promoting guidelines about deployability based on realworld case studies. 100,000-250,000 10 million+ 2013 The industry needs to rebalance the multivendor business case Some vendors might question how reasonable service providers calls for greater G-PON interoperability are, but they are likely to grow rather than abate. Informa believes the industry should innovate in order to capitalise on, rather than resist, the transition to multivendor networks. Service providers need to collaborate more to create scale for their requirements, while OLT vendors should restructure their offerings to 250,000-500,000 500,000-1 million 2018 offset potential lost ONU sales with revenues from implementing and managing interoperability and bettersegmented ONU portfolios. Success will depend ultimately on marketing, not technology The majority of executives Informa interviewed were satisfied with the Broadband Forum s certification schemes and test plans. The 5-10 million Note: Includes only the 72 operators Informa Telecoms & Media forecasts G-PON subscriptions for. The number of operators with less than 250,000 subscriptions are likely to be higher Understanding the impact of China Fig. 11: Global, G-PON subscriptions by selected markets, 2012-2018 Subscriptions (mil.) Rest of the world 210 180 150 120 90 60 30 0 2012 Note: Figures refer to year-end Taiwan 2013 France 2014 Russia 2015 US 2016 China 2017 greatest challenge the organization faces is getting its message across to the skeptics, the undecided and the plain unaware. Key to this effort will be understanding and explaining how multivendor deployments can drive innovation and reduce the total cost of ownership of G-PON, and not just the per-unit cost of ONUs. 2018

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