Next Generation Broadband

This research note is restricted to the personal use of Andre Fleming : fleminac@telkom.co.za.
Gartner for Business Leaders

G00210224
Emerging Technology Analysis: NextGeneration Broadband Access Caters for EndUser Bandwidth Appetite
Published: 28 January 2011
Analyst(s): Ian Keene
This emerging technologies report analyses the future expected

improvements in fixed access fiber and copper technologies and forecasts
the market uptake.
The questions why and when to invest in higher speed broadband fixed
access infrastructure is a key issue for the majority of communications
service providers (CSPs).
Key Findings
Synchronous 10 gigabit passive optical network (10GPON) field trials look promising while
development and standardization efforts continue to move wavelength division multiplexing
passive optical network (WDM PON) closer to reality. Very-high-bit-rate digital subscriber line 2
(VDSL2) technology and its enhancements will account for 50% of vendor DSL revenue by 2012
and revenue will continue to grow through to 2014 and beyond in an overall declining DSL
market.
Recommendations
CSPs should consider investing less in asynchronous DSL (ADSL) technologies and look toward
VDSL2 and its new enhancements or fiber to the home (FTTH) as competition from cable and
broadband cellular operators will continue to mount.
CSPs should conduct DSL bonding and vectoring trials particularly when silicon enhancements
make vectoring a reality for high count cable bundles (for example, 128 pairs) that are
commonly found in copper local loop infrastructures.
CSPs should consider synchronous 10GPON products that can overlay on GPON architectures
for enhanced enterprise services such as cloud computing.
Equipment vendors need to continually focus on component cost reduction as this is key to any
of the next generation of fixed access technologies moving to the Hype Cycles' Plateau of
Productivity.
Table of Contents
Analysis..................................................................................................................................................2
1.0 Technology Description..............................................................................................................2
1.1 VDSL Enhancements............................................................................................................2
1.2 FTTH Developments.............................................................................................................3
2.0 Technology Adoption..................................................................................................................4
2.1 Drivers for CSPs to Deploy Next-Generation Fixed Access Technologies..............................4
2.2 Inhibitors for CSPs to Deploy Next-Generation Fixed Access Technologies..........................4
3.0 Technology Impacts...................................................................................................................5
4.0 Reference...................................................................................................................................7
Recommended Reading.........................................................................................................................7
List of Figures
Figure 1. VDSL Central Office Revenue Forecast (Millions of Dollars).......................................................6
Figure 2. VDSL Revenue Forecast in Relation to Fiber Access and Other DSL........................................7
Analysis
1.0 Technology Description
1.1 VDSL Enhancements
Very-high-bit-rate DSL is a technology where its latest full standard, VDSL2 (G.993.2), was ratified
by the International Telecommunication Union (ITU), in May 2005. However it was only in 2008 and
2009 that VDSL2 started to gain significant commercial traction with deployments in networks
worldwide. To take advantage of VDSL2's higher bandwidth capability over ADSL2, CSPs first
needed to further extend their fiber network to decrease copper local loop lengths. Only now that
this build-out has happened in many networks are CSPs looking to providing higher bandwidth
services to subscribers, VDSL2 is being effectively deployed.
Current VDSL2 deployments typically supply subscriber download speeds of 20 Mbps to 50 Mbps
depending upon the length of the copper local loop and the quality of the cable. However, recent
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Gartner, Inc. | G00210224

laboratory demonstrations of enhancements to the basic VDSL2 technology have provided much
higher speeds. These enhancements have used one or more of the following technologies:
Copper twisted pair bonding (Standard G998.2).
"Vectoring" (Standard G993.5) cancellation of cross-talk between neighboring copper pairs in a

cable.
Phantom mode techniques that create a third virtual pair from two bonded copper pairs.
By way of example, in 2009 Ericsson demonstrated 500 Mbps over 500 meters using six bonded
pairs and vectoring. In April 2010, Alcatel-Lucent demonstrated 300 Mbps over 400 meters using
two bonded pairs, vectoring and phantom mode. These two vendors are interested in
demonstrating high user bandwidths for their VDSL2 solutions in order to help compete on
functionality rather than price as VDSL2 moves to a higher volume and more commoditized market
position. Since then, Huawei and Nokia Siemens Networks among other vendors have
demonstrated significantly improved speeds over basic VDSL2.
In terms of practical subscriber deployments, these laboratory demonstrations need to be
developed and proven in the field. User bandwidth will depend upon the length of the copper local
loop, quality of the installed cables containing many copper pairs, and the availability of redundant
copper pairs to enable bonding. Vectoring demands significant amounts of processing: increasing
as the square of the number of twisted pairs in a bundled copper cable. Current chipsets can scale
up to 32 lines but for large-scale deployment products that can process hundreds of lines (at least
128 twisted pairs) will be needed. CSPs are also likely to want system level vectoring as opposed to
the current line card vectoring. Initial products suitable for high volume deployment are expected in
the 2011 to 2012 time scale with expected typical subscriber bandwidths of 50 Mbps to 150 Mbps.
In the meantime, current solutions may prove attractive for (fiber to the building [FTTB])
architectures where the building serves multiple subscribers via VDSL2.
1.2 FTTH Developments

The FTTH market grew by 18% in 2010 and double digit growth is forecast through 2013. GPON
technology is experiencing worldwide deployment, with Ethernet PON deployed in the Asia/Pacific
and Japan regions. Point-to-point active Ethernet FTTH deployments are favored by some
municipal service providers and the technology is attractive to Google. With the 10GPON standard
maturing, some CSPs are field testing synchronous 10GPON products with the initial intention of
deploying this technology as an overlay on GPON fiber networks for enterprise class 1 Gbps to the
building services. However, for 10GPON to reach the Plateau of Productivity on the Gartner Hype
Cycle and replace GPON as the preferred FTTH consumer solution, cost reduction will be key.
Equipment vendors face a challenge in reducing the optical component cost.
WDM PON solutions are further to the left on the Gartner Hype Cycle. They are characterized by the
use of dedicated wavelengths for each building termination. The use of multiple wavelengths
increases the capacity of WDM PON systems beyond those where multiple users share the same
wavelength, and the use of WDM splitters in the fiber tree means that any user only receives the
intended wavelength which WDM PON suppliers emphasize as a security benefit over traditional

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PON architectures with shared wavelengths. Vendors also claim that WDM PON architectures will
significantly reduce the number of central office locations and hence reduce operating expenditure
costs for the CSP. However, the use of dedicated wavelengths requires more advanced optical
components and, therefore, WDM PON suppliers face a cost challenge that must be overcome
before WDM PONs will find widespread use. Further product development and standardization is
needed before any large-scale deployments will occur. WDM PON is being standardized by the ITU,
supported by the Next-Generation Access (NGA) initiative from the Full Service Access Network
group.
2.0 Technology Adoption

2.1 Drivers for CSPs to Deploy Next-Generation Fixed Access Technologies
With many CSPs building out their fiber network closer to subscriber premises, VDSL2 will
increasingly become a technology option that will enable higher bandwidth services and new
applications. Many CSPs will view this as an incremental opportunity to improve service revenues.
Where cable operators are building out Data-Over-Cable Service Interface Specification 3.0
technology and bundling TV, voice and broadband Internet, both VDSL2 enhancements and GPON
will be technology choices for many CSPs who need to upgrade their ADSL or ADSL2 networks to
compete.
CSPs are looking at a range of cloud services to enhance their enterprise customer revenues;
synchronous 10GPON will help them realize this.
The high growth in broadband cellular subscriptions, High-Speed Packet Access (HSPA) and Long
Term Evolution (LTE) networks and the uptake of smartphones and cellular PC dongles could
severely lessen the attraction of consumer ADSL services that can only provide maximum download
speeds of 2 Mbps to 8 Mbps. CSPs will need to take measures to retain the attraction of their fixed
broadband services and prevent consumer migration to cellular only broadband. Providing much
higher bandwidth fixed line services is a key measure to retain subscriptions.
Many cellular operators are looking to FTTH technologies for cellular backhaul.
Possible uptake in use of GPON technologies in the enterprise space (see "Emerging Technology
Analysis: Ethernet Passive Optical Networks in the Enterprise LAN").
2.2 Inhibitors for CSPs to Deploy Next-Generation Fixed Access Technologies

Large-scale deployment of FTTH is a long term investment for CSPs with a very high price tag.
CSPs need to gain a good uptake of higher bandwidth and higher-priced FTTH services in order to
justify this investment. Constructing a business plan that shows a favorable return on this
investment is not always easy and many CSPs will delay or reject FTTH projects.
In some countries, unfavorable telecommunication regulations or uncertainty of the future stance of
the regulators will restrict investment in fixed access technologies and expected return on
investment in both VDSL2 and FTTH technology will not look favorable. However, with VDSL2 being
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a shorter term investment than FTTH, and requiring much less upfront capital expenditure, VDSL2
will be more resilient to regulatory uncertainty than FTTH.
3.0 Technology Impacts

The overall impact that next-generation fixed access technologies will have, if deployed, is to
significantly increase user bandwidths, enable new services and push HSPA and LTE back to a
slower speed access alternative.
Investment in FTTH network architectures is forecast to continually grow over Gartner's 2010 to
2014 forecast period. Some carriers are expected to take a longer term view and focus on FTTH
roll-out and minimize their investment in VDSL2. However, even in these cases, VDSL2 is expected
to play a role for distribution inside multi-tenant buildings. In addition FTTH roll-out typically takes
five to 10 years minimum and some CSPs will want to supplement their FTTH deployments with
VDSL2 in order to reach a critical mass of high bandwidth subscribers in a shorter time period to
introduce new applications and services.
The overall DSL central office equipment market peaked in 2007 and is forecast to decrease to $2.6
billion by 2014; 67% of the peak 2007 revenue. While ADSL and ADSL2 investment is forecast to
continue to decline, carrier investment in VDSL2 central office equipment is forecast to grow with a
2010 to 2014 compound annual growth rate of 15% (see Figure 1).
VDSL2 enhancements are expected to feature in carriers' access infrastructure deployments from
2012 onwards. Initial deployments are expected to be for in-building distribution of multi-tenant
FTTB deployments in developed markets where the copper local-loop CSPs are looking to
significantly enhance subscriber bandwidths in the face of difficult competition.
Development of VDSL2 products with enhancements based upon bundling and vectoring will be
driven by equipment vendors looking to protect their margins in the face of growing price pressure
in an expanding market. Equipment vendors will use VDSL2 products to offer a mediumindependent upgrade path, allowing CSPs to postpone or gradually make their transition from
copper to fiber.
VDSL2 equipment vendors should focus on the development of system-level high line count
vectoring hardware, network trials and component cost reduction.
CSPs should now monitor vendor capability with new VDSL2 enhancements and during 2011 and
2012 undertake field trials of the new technology and continue to re-evaluate its role in the
deployment of higher bandwidth fixed access. In particular they need to understand the capital
expenditure vs. operating expenditure tradeoffs involved in VDSL2 vs. fiber decisions, including the
impact from changes in the investment horizon, competitive landscape and/or regulatory
framework.
Throughout the forecast period fiber access equipment revenues are expected to exceed those
from VDSL2 and the revenue gap between these two technologies is expected to grow (see Figure
2).

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CSPs should consider vendor capability to overlay synchronous 10GPON technology on their
GPON solutions when selecting a FTTH supplier. 10GPON CSP services to enterprises are
expected to start on a growth curve from 2012 onwards but are unlikely to exceed 5% of FTTH
deployments before 2015.
WDM PON has a number of interesting features for CSPs but most likely remains at least five years
away from large-scale deployment. Product development with a particular emphasis on cost
reduction will take time and standards are not yet agreed upon with several differing standard
proposals from vendors.
Possible extremes:
Vendor field trials of enhanced VDSL2 products will show poor results or equipment cost and/or
operational expenditures proves restrictively high; either resulting in little or no uptake by CSPs
and lower than forecast sales of VDSL2 equipment.
The VDSL2 enhancements prove extremely efficient and cost-effective with sales above those
forecast and negatively impacting vendor FTTH equipment revenues.
Product development breakthroughs with 10GPON technology within the next three years or
WDM PON within the next five years make either the preferred broadband access technology
within the next three years.
Figure 1. VDSL Central Office Revenue Forecast (Millions of Dollars)

Millions of Dollars
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2009
2010
Total DSL Broadband Access
2011
VDSL2 Access
2012
2013
2014
Other DSL (ADSL, ADSL2, SDSL) Access
DSL = digital subscriber line; ADSL = asynchronous DSL; VDSL = very-high-bit-rate DSL
Source: Gartner (January 2011)
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Figure 2. VDSL Revenue Forecast in Relation to Fiber Access and Other DSL
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2009
2010
Fiber Broadband Access
2011
VDSL2 Access
2012
2013
2014
Other DSL (ADSL, ADSL2, SDSL) Access
DSL = digital subscriber line; ADSL = asynchronous DSL; VDSL = very-high-bit-rate DSL
Source: Gartner (January 2011)
4.0 Reference
"Hype Cycle for Communications Service Provider Infrastructure, 2010"
Recommended Reading
"Forecast Analysis: Carrier Network Infrastructure, Worldwide, 2007-2014, 4Q10 Update"
"Emerging Technology Analysis: Ethernet Passive Optical Networks in the Enterprise LAN"

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This research note is restricted to the personal use of Andre Fleming : fleminac@telkom.co.za.

Gartner for Business Leaders

Analyst(s): Ian Keene

This emerging technologies report analyses the future expected

Gartner, Inc. | G00210224

Copper twisted pair bonding (Standard G998.2).

"Vectoring" (Standard G993.5) cancellation of cross-talk between neighboring copper pairs in a

1.2 FTTH Developments

Gartner, Inc. | G00210224

2.0 Technology Adoption

2.2 Inhibitors for CSPs to Deploy Next-Generation Fixed Access Technologies

Gartner, Inc. | G00210224

3.0 Technology Impacts

Gartner, Inc. | G00210224

Figure 1. VDSL Central Office Revenue Forecast (Millions of Dollars)

Total DSL Broadband Access

Other DSL (ADSL, ADSL2, SDSL) Access

Source: Gartner (January 2011)

Gartner, Inc. | G00210224

Fiber Broadband Access

Other DSL (ADSL, ADSL2, SDSL) Access

Source: Gartner (January 2011)

Gartner, Inc. | G00210224

Latin America Headquarters

Gartner, Inc. | G00210224

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