While the cost of deploying fiber has long been a sticking point for operators who prioritize rapid deployment and affordability, Nokia’s Ana Pesovic told us how the long-term value proposition of passive optical networks (PON) is already clear – in both rural and rural areas also in urban areas.
We spoke to her to learn more about the evolution of the technology as XGS-PON begins to replace GPON as the most viable option in emerging markets.
One of the most important considerations when it comes to fiber optics is cost – but what benefits does it offer to make this investment worthwhile?
Fiber optic is a fantastic technology that presents a great opportunity in today’s market to connect consumers, businesses, IND 4.0, smart cities, etc. They also need fiber for 5G – it complements deployments and helps with efficient transport. Compared to copper, LTE, DOCSIS and 5G, fiber is by far the fastest and can reach 25 Gbps today and 100 Gbps in labs. It’s also the most environmentally friendly – 6 to 8 times better than any other access technology in terms of energy efficiency, allowing operators to reduce their carbon footprint while saving energy. It’s also durable – 75+ years – resistant to the elements and unlike copper infrastructure has no resale value meaning it won’t be stolen.
Is fiber optic prohibitively expensive in rural areas?
Fiber is widely available in urban areas, but there are questions about rural deployments and emerging markets where demand is not as high – there are many countries in Africa where equipment affordability means penetration is low. However, bringing fiber to rural areas makes a lot of sense – no one can deny the value of broadband and it can be argued that it is more important to these regions than to urban areas as rural areas are very reliant on connectivity, be it for Remote work or entertainment, or liaison with customers/suppliers. The relationship between the cost of fiber optic rollout and the revenue is often very favorable in emerging markets. For example, operators in the Philippines, South Africa and Indonesia report a cost ARPU ratio of between 2 and 8, compared to ~15 typical of Western European operators. There are many positive examples of fiber deployment in rural and emerging markets. For example, Safaricom, a fiber operator in Kenya, has a usage rate of around 60% for its fiber [source: Omdia, 2022], which many major operators in the US and Europe still can’t claim. Of course, the investment is expensive, and that’s why it’s only worth investing in a technology that lasts. Copper could be used with DSL for 5-10Mbps, but increasing that rate required upgrades and the installation of new nodes every five to ten years. In comparison, fiberglass is a one-time investment that lasts much longer.
There are many government initiatives to support the deployment of fiber optic networks in rural areas as the business case for operators is often not there – they want to focus on urban areas as they can get a quicker return on their investment. This has resulted in governments, local providers and utilities investing in rural fiber optic installations. Pros include a lack of competition — if you’re first to adopt the technology and win customers, you’ll likely discourage competitors from risking investments. The question now is whether GPON should be used by XGS-PON. The latter is technically only slightly more expensive; The bulk of the cost is in providing the fiber optics, which is required in any case. This typically accounts for around 70% of the total cost, and in rural areas this proportion is even higher. Once that’s done, the difference between XGS-PON and GPON is very small, meaning there’s little reason not to opt for the more advanced technology. GPON is about 15 years old now, while XGS-PON offers 10Gbps connectivity and is a bit more extensive. So, deploying fiber now is a big step up for not much more investment.
How easy is it to upgrade GPON to XGS-PON? What does the newer technology offer?
XGS-PON offers 10 Gbps connectivity – X is the Roman numeral for 10, while the “S” stands for “symmetric”. While GPON is still used in many homes, the technology is now showing its age, especially if you want to offer gigabit services – this is currently possible, but it is questionable whether GPON will be enough in five years.
The good news is that upgrading from GPON to XGS-PON is very smooth and inexpensive. First, the fiber plant (fiber optic cables laid in the field) does not require an upgrade or replacement. This is important as it is the most expensive part of the network so not having to touch it is a must for fiber development. The only changes required are to the active part of the network – these include OLTs (Optical Line Termination), which are access nodes typically found in central offices, and ONTs (Optical Network Termination), which are fiber optic modems at customers at home.
Solutions are currently available that can offer GPON and XGS-PON on the same access node and port. This eliminates the need to make changes in the OLT during upgrades. For example, you can start with GPON and easily switch users to XGS-PON remotely when needed, without having to visit the head office.
How will these technologies develop in the future?
Gigabit PON (GPON) is still the most widely used fiber technology, but XGS-PON is expected to overtake it in terms of deliveries this year or next. XGS-PON is breaking new ground in many markets, encouraging large operators, new players, alternative operators, smaller regional service providers, etc., giving them a competitive advantage and more revenue. XGS-PON offers a larger pipeline and enables more monetization options – either by offering higher bandwidth services at a higher price or by using the additional capacity to provide enterprise services, 5G transport, wholesale, etc.
In terms of consumer bandwidth demand, GPON is running out of steam, especially in markets with gigabit service offerings. PON runs a fiber from the OLT, which is then routed through a splitter to reach individual households – typically around 30, sharing bandwidth between them. If you want to offer gigabit services, your customers must be able to access gigabit speeds at all times, which requires around 1 gigabit of headroom. This, in turn, leaves about 1.5G for all subscribers connected to a given PON – and based on projected usage, this means that GPON’s capacity is likely to be insufficient by 2025, so it won’t be long before that XGS-PON will continue to provide gigabit speeds, making it the more future-proof option.
25 GPON is the most efficient next step beyond XGS-PON, with more than 20 operators worldwide pursuing or deploying it. 25 GPON reinforces the value proposition for XGS-PON as it can be deployed over the same hardware if the increased capacity is required in the future. Fiber is a huge investment for operators, so they need to monetize it with high-bandwidth consumer services as much as possible, and they also want to be able to use it for as long as possible. 25 GPON makes this possible by allowing providers to use the same fiber resources for decades.
With 50 GPON and 100G on the horizon, the future of fiber broadband seems unstoppable. While 25G PON is a straightforward evolution based on the existing components but runs faster, 50G and 100G are more of a technology leap requiring a new generation of components that have yet to mature.
These different types of PON technologies help operators make the best choice for their development – based on cost, service focus, competition, business priorities, timing, or usually a combination of these. Different flavors allow operators to use the right “toolkit” and better compete in their own markets. And most importantly, they enable service development on the same fiber infrastructure so it can be monetized for decades to come.
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