expanding the value of copper

“The major telecom companies are in a state of transition like I’ve never seen before,” says Kermit Ross, founder of research firm Millenium Marketing. “They are moving rapidly to transform their networks. Of course, the driver is competition. If they don’t build it, customers will go away. But the copper infrastructure is taking on a new level of importance, since ILECs have plenty of it to leverage. The growth in new access lines stopped, but they kept adding to their networks at the same rate. So now they have twice as much copper as they’re using.”

Meanwhile, according to a new report by Technology Futures Inc. (TFI), half of the households in the United States will subscribe to broadband access next year, and a shift to data rates in the range of 24mbps to 100mbps will have begun. By 2010, U.S. broadband penetration of 75 percent is likely, and 10 to 20 percent of U.S. households will subscribe to very high-speed broadband.

Lawrence Vanston, president at TFI, says, “Our forecasts for higher bandwidths reflect the general tendency for bandwidth demand to increase along with computing power and memory. They also reflect the demand for specific services such as IP video that require more bandwidth.” TFI forecasts 40 percent of U.S. households will use IP video in 2010, and 20 percent will demand high-definition IP video.

To meet this need, the line into the home should be able to offer 16 to 30mbps downstream, which translates into supporting two high-definition televisions concurrently, plus a range of standard-definition channels, highspeed Internet and VoIP. The existing access network is incapable of such speeds. Accordingly, RBOCs have announced plans to take the access infrastructure to the next level.

Most prominently, Verizon Communications Inc. intends to roll out FTTH. But SBC Communications Inc. and BellSouth Corp. are taking FTTN approaches, pulling fiber into neighborhoods, then using DSL for the last few feet to reach homes.

“The question is, ‘How far can you push fiber economically into the access network?’” says Ken Davison, vice president of sales and marketing, Critical Telecom, maker of nextgeneration DSL equipment. “Verizon is doing fiber to the premises, and it will take about 25 years to complete. Verizon serves 56 million homes. By 2006, they will only have passed about 3 million. They may find themselves behind the curve with being able to deliver new services.”

Then there are economic considerations. To ultra-broadband-enable a home with FTTP costs around $1,100 to $1,800 per home passed, Davison says. “But if they can deliver FTTN and copper for $250 per home and another $80 to light, then drive the ARPU (average revenue per user) up to $150 per user or more with the triple play, then the model works.”

Better DSL technology is critical to the fiber extension model. Telcos using FTTN could extend fiber to the 700,000 neighborhood crossconnect cabinets used to deliver copper pairs in the United States — 95 percent of all homes are within 5,000 feet of one. Placing DSLAMs in the cabinets then will put 95 percent of homes within range of very high-speed DSL (VDSL). Moving the DSLAM to the outside plant creates a distributed plan.

“The shift in spending is swinging to remote deployment, which drives a need for new boxes and enclosures, which requires different network management and new challenges for reliability,” says Ross. “There are 20,000 times the number of packets that traverse a video network. So neat ideas are emerging in small-size DSL technology and the way the products are scaled. Small, maybe 100-line products, are the future average. The established vendors have to reposition rapidly. This is one of those times where a new vendor can really break into the market.”

Most agree the fiber extension requirements go beyond what is available today. That opens up an opportunity to use new DSL standards to deliver phenomenal amounts of bandwidth.

FTTH provides bi-directional 100mbps performance today, but the reality is that many telcos aren't in a position to run fiber to every home in their coverage area,” says Kevin Brown, vice president of marketing at Pannaway Technologies Inc. Pannaway’s Broadband Access Switch delivers 28mbps over copper.

“VDSL is the future,” says Sam Lucero, senior analyst at In-Stat. “For fiber extension, ADSL2+ won’t provide the kind of bandwidth — 25 to 30mbps — they need. It’s really 24 under ideal conditions, significantly less in actual field deployments. VDSL2 is where the fiber extension comes in, because it takes the best of the ADSL2+ with line monitoring and power. When it comes down to marketing and selling services, it really is the speed that sells, and that allows applications like VoIP to be deployed more rapidly.”

ADSL2+ is said to support speeds of 25mbps for 5,000-foot spans, while VDSL supports 50mbps at up to 1,000 feet. VDSL2 will deliver 50 to 55mbps in a FTTC scenario, but the spec won’t solidify until mid-2005.

Meanwhile, silicon vendors like Ikanos Communications and Metalink Broadband Ltd. have demonstrated 100mbps downstream bandwidth within 1,000 feet or less. “IC vendors are developing this and leapfrogging ahead of VDSL2 and pushing for 100 symmetrical — but it’s still up in the air for specs,” says Lucero.

Bonding two copper pairs is another approach. ADSL2+ has the capability to bond two pairs to double up on bandwidth — offering up to 32mbps if 5,000 feet from the home.

“The DSL guys have continuously cranked up what they can deliver via copper loops,” says Jim Tindall, vice president of marketing at Ceterus Networks Inc., which addresses bonding from an equipment perspective. “But I think bonding is going to be integral to making this happen effectively.”

Qwest Communications International Inc. and BellSouth have begun ADSL2+ equipment deployments, while Verizon has said it is testing ADSL2+. SBC is testing VDSL and ADSL2+, and is considering using bonded ADSL2+ connections to achieve 5mbps. The activity is a sign that copper will hold its value for a while.

“With all that capex for fiber to look forward to, carriers need to leverage what they have,” says Ross. “The copper that has been put in place in the last 25 years is virtually indestructible, barring a gopher or backhoe cutting through it. It has many years of useful service left.”

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