Shenzhen First Mile Communications Ltd.
The fiber-to-the-home (FTTH) technology has been widely adopted as the once-for-all broadband access solution in Japan and the U.S.A, where the number of users now reaches around five million. In China, it also attracts growing attention. Being the first company in the country to focus on the R&D of FTTH and fiber-to-the-desktop (FTTD) devices, Shenzhen First Mile Communications Ltd. (FirstMile) has gathered first-hand information from our customers on the application requirements of FTTH in China. Based on the information, we believe that the high investment cost is the major factor hindering the application of FTTH technology in the country; therefore, the development of low-cost FTTH products that caters to the Chinese market is of great importance.
1. Higher Investment Cost Resulting in Lower Investment Return on FTTH
Although the cost of the FTTH products is as high as 1000 U.S. dollars per line, the telecom service providers in Japan, the U.S.A and other developed countries manage to provide their FTTH services by charging relatively high service fees from the end users. For example, the monthly fee for an FTTH user in Japan is 5000-6000 Japanese Yen (equivalent to 400-500 RMB); and the monthly charge for an American FTTH user is 80-100 US dollars. The investment on the FTTH networks in these countries can usually be paid off in two to three years; whereas in China, there is a completely different business case. Due to the intensive market competition, the monthly access fees for the ADSL or CAT5-based broadband access in many cities are below 50 RMB, with the higher end at around 100 RMB in Shenzhen. Seeing the resulting payoff time being as long as 10 years, telecom service providers balk at investing on the FTTH network. Therefore, lowering the cost of FTTH is crucial for its application in China, and we estimate that a cost of 1000-2000 RMB per line or even lower would be reasonable for larger-scale FTTH deployment in the country.
2. FTTH Access Technology Suitable for China
The cost of the FTTH equipment is correlated with the adopted solution of FTTH. There are currently two major access solutions for FTTH: the passive-optical-network(PON)-based Ethernet PON (EPON) and Gigabit PON(GPON), and the fiber P2P technology that is based on the active optical network (AON).
PON came into being ten years ago when the cost of fiber optic ranged from one to several dozen RMB per meter, which is far more expensive than today’s price of less than one RMB per meter. The P2MP-based PON technology, when the optical splitter is close to customer premises, used to have the advantage of being cost-effective and easy to maintain and manage. Nowadays, the cost advantage of PON is no longer prominent with the price of fiber optic dropping below that of the copper coaxial cable. Moreover, given that the targeted users of the FTTH are residents of high-density residential compounds in mid/small cities, where remote offices are available to accommodate the service providers’ broadband access equipment, the PON loses its advantage of being passive in such a case. Several disadvantages of PON, such as higher equipment cost, bandwidth shared by multiple users, too many optical splitter nodes, inflexible choice of service providers, lower occupied rate of access ports and inflexible network topologies, can either be overcome or avoided by AON. It is worth mentioning that the much higher cost of PON, as opposed to that of AON, is the major factor hindering the application of PON to FTTH. We therefore believe that the AON-based P2P technology is a more suitable solution of FTTH in our country.
3. FirstMile’s Low-Cost FTTH Systems
FirstMile is the first company in China to focus on the R&D of FTTH devices. Based on the market characteristics of FTTH, FirstMile has developed the OnAccess FTTH product series targeted at providing low-cost and flexible FTTH solutions within China.
(1) FTTH Broadband Access Solutions
As shown in Fig.1, an OnAccess5xxx optical switch is deployed in a remote office as an optical line terminal (OLT), whereas several OnAccess401/ OnAccess405 optical network units are located at customer premises as the optical network units (ONU). Single or dual single-mode fiber is used for transmission. An OnAccess5xxx optical switch supports up to 24 OnAccessH1001 optical network units. Up to 4 computers or IP phones can be connected to an OnAccessH1001 network unit. The OnAccess1001 optical network interface card connects a computer to the Internet through a dedicated fiber. Customer bandwidth is 100Mbps for both upstream and downstream traffic and the operating distance is 20km.
(1) Triple-Play FTTH Solution for Broadband Access, CATV and Telephony
As shown in Fig.2, this triple-play solution is based on an OnAccess2224 optical Ethernet switch that offers 24 single single-mode 100Mbps fiber optic ports, one CATV headend port for wavelength 1550nm and two 1000Mbps data ports. The switch is P2P connected with the OnAccess404 optical network units at customer premises, providing them with 100Mbps upstream and downstream high-speed Internet access, CATV and telephony services. Each OnAccessH1004 optical network unit offers a single single-mode fiber optic interface for connection with OnAccess2224 optical Ethernet switch, one 75Ω coaxial RF cable port for CATV, four 10M/100M RJ45 interfaces and one RJ11 telephony interface. The CATV signals are assigned a dedicated channel on the fiber and HDTV signals are fully supported. FirstMile also provides access solutions using dual- or triple-fiber for cost reduction purpose.
(2) Advantages of FirstMile’s AON-Based FTTH Solutions
FirstMile’s AON-Based FTTH Solution offers several advantages.
l Lower cost. (As an estimate for reference, the cost of broadband access devices ranges from 1000 to 1500 RMB per line; and the cost of triple-play devices ranges from 2000 to 3000 RMB per line.)
l Triple-play solution that supports broadband Internet access, CATV and telephony.
l Choice from single and dual fiber connection.
l 100Mbps or 1000Mbps data bandwidth for both upstream and downstream as leased lined connection.
l Flexible network topology and low operating and maintenance cost.
l Service provider being user-selected.
l No extra fiber-laying between central and remote offices.
l High port utilization, capacity expandable.
l Many future services supported: videophone, VOD, digital cinema, telecommuting, online exhibition, tele-education, telemedical care and services, data storage and backup, etc.
(4) Investment Return Analysis on FirstMile’s FTTH Solutions
As far as the broadband access FTTH solution is concerned, we assume the following for each end user: the average equipment price is 1300 RMB per line, the cost of fiber laying is 500 RMB (which amounts to 1800 RMB per user), each user is charged 100 RMB monthly for broadband data access, and the operating and maintenance cost accounts for 50% of the access fee (which is 50 RMB). Based on these assumptions, the monthly profit from each end user’s subscription is 50 RMB, and our estimation is that the service provider’s investment on FTTH can be paid off in about three years.
As far as the triple-play solution is concerned, we assume the following for each end user: the average equipment price is 2500 RMB per line, the cost of fiber laying is 3000 RMB, each user is charged 100 RMB monthly for broadband data access, 50 RMB monthly for CATV, 400 RMB for one-time CATV account fee, and the operating and maintenance cost accounts for 50% of the monthly fees (which is 75 RMB). Based on these assumptions, the monthly profit from each end user’s subscription is 75 RMB, and our estimation is that the service provider’s investment on FTTH can also be paid off in about three years.