Capabilities and Economics - OECD · FTTH/PON (Verizon/Surewest) FTTH/point-to-point (Utopia) HFC DOCSIS 3.0 (Comcast) BPL (Current/Duke) Fiber. Copper. Coax. Powerline. These services

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FTTn/VDSL2 Broadband Networks

Capabilities and Economics

Richard N. ClarkeAssistant Vice PresidentAT&T - Public [email protected]

Fibre Investment and Policy ChallengesOECD Workshop

Stavanger, Norway10-April-08

Page 2

Overview of presentation

What is AT&T’s fiber strategy?

What is FTTn/VDSL2 network architecture?

What are its capabilities?

What are its economics?

Why is it a good broadband strategy?

The FTTn/VDSL2 technologies, architectures, services and costs described in this presentation are generic – unless explicitly

identified to be those of AT&T U-verse

Page 3

Competitive NGN environment in the USA

Wireline deploymentsADSL2+ (Covad/Embarq)

FTTn/VDSL2 (AT&T)

FTTH/PON (Verizon/Surewest)

FTTH/point-to-point (Utopia)

HFC DOCSIS 3.0 (Comcast)

BPL (Current/Duke)

Fiber

Copper

Coax

Powerline

These services currently offer throughputs up to 50 Mbps and at prices as low as $15/month

Wireless carriers

Wireless (terrestrial)

HSPDA/HSUPA/HSPA+ (AT&T)

EV-DO Rev.A/B (Verizon/Sprint)

Wi-Fi (Earthlink/T-Mobile)

WiMAX (Clearwire/Sprint)

LTE (AT&T/Verizon)

Satellites

Satellite (HughesNet/WildBlue)

Page 4

AT&T’s fiber strategy

Reach more customers in less time

Invest efficiently

Deploy quickly to compete sooner in the marketplace

Deliver a pure IPTV solution

Build a converged broadband platform for the future

AT&T U-verse FTTn/VDSL2 platform

Pass 30 million living units over 5 years (2006-2010)

Cost per home passed in the low-US$300 range


What is FTTn/VDSL2 network architecture?

Page 6

GW

NID

STB

STB

PC

PCCentral Office

ISP Backhaul / Backbone

WWW

FTTn/PON(Greenfield)

FTTn/VDSL2

FTTn/VDSL2 schematic

Fiber cable

Copper-pair cable

VDSL2 fiber node

Page 7

Broadcast RF video 2

3456789

2 3 4 5 6 7 8 9

25

VideoServiceProvider

23456789VideoService Provider

2 3 4 5 6 7 8 9 2 3 4 5 6 7 8 9

63 97

• Network must support all content simultaneously from head end to customer

• Content limited by total bandwidth

Video distribution technologies

VDSL2: switched IP video

7

3

5VideoService Provider

Video switch

• Switched multicast IP distribution of content• Network delivers to home only the customer’s chosen content• Shared platform with VoIP and HSIA

2 3 4 5 6 7 8 9

23456789


What are FTTn/VDSL2’s capabilities?

Page 9

Service Profile 2007 2008 Future?

HDTV

SDTV

SDTV

SDTV

HSIA (≤6 Mbps)

VoIP line

VoIP line

HDTV streams

SDTV streams

Internet

VoIP lines

25 Mbps

HDTV

HDTV

SDTV

SDTV

HSIA (≤10 Mbps)

VoIP line

VoIP line

25 Mbps

HDTV

HDTV

SDTV

HSIA (≥10 Mbps)

VoIP line

VoIP line

HDTV

25-37 MbpsTarget

throughput

Evolving service capabilities

Service capabilities improve as bandwidth expands and/or video encoding/compression becomes more efficient

Page 10

Service requirements

Standard definition IPTV (SDTV)

MPEG2 coding: ~3 MbpsMPEG4 AVC/H.264 coding: generally at 1.5-2 Mbps

High definition IPTV (HDTV)

MPEG2 coding: ~16 MbpsMPEG4 AVC/H.264 coding

Currently: 8-9 MbpsFuture: ≤ 6 Mbps

High speed Internet access (HSIA)

Voice over Internet Protocol (VoIP)

HIG

H D

EFIN

ITIO

NS

TA

ND

AR

D D

EFIN

ITIO

N

2H04 1H05 2H05 1H06 2H06 1H07

16

14

12

10

8

63

2.5

2

1.5

1

.5

Mbps

MPEG2

MPEG4 AVC

MPEG4 AVC: better picture at half the bit rate of MPEG2

Compression industry estimates

Figures are industry approximations and not an indication of AT&T’s actual encoding rates

Page 11

Hybrid between CBR and VBR

Variable bit rate video encoding enables HSIA to use bandwidth not being currently used by video streams

VDSL2 QoS service segmentation protects quality of VoIP and video while allowing HSIA data to “burst” into video bandwidth

25 Mbps 25 Mbps

HSIA

SDTV

SDTV

SDTV

HDTV

Constant bit rate Capped variable bit rate

Transmission innovations: capped VBR

Figures are industry approximations and not an indication of AT&T’s actual encoding rates

HSIA bursts into video bandwidth

SDTV

SDTV

SDTV

HDTV

Page 12

VDSL2 bandwidth capability

VDSL2 Bandwidth vs. Copper Loop Length

0

10

20

30

40

50

60

0 1000 2000 3000 4000 5000

Feet

Mbi

t/sec

Single pair

25 Mbit/sec

Design specification examples:

25 Mbit/sec•Single pair•3000 foot maximum copper distance

2 bonded pair

37 Mbit/sec

37 Mbit/sec•Single pair - 2000 foot max copper distance

•2 bonded pair – 2000 to 3000 foot max copper distance

Figures are from ATIS and are illustrative only, they not intended to depict AT&T’s particular experience. Actual throughputs will depend on the specific

characteristics of the loop plant and network equipment deployed.

Page 13

VDSL2 future

Available bandwidth is increasingImprovements in signal processing/crosstalk reduction

Pair bonding

Loop-shortening

Service-specific bandwidth requirements are fallingCompression technologies continue to improve

Transmission technologies allow increased utilization efficiency

Future of technical platform is bright


What are FTTn/VDSL2’s economics?

Page 15

Telecom network cost rules

The closer equipment is to the customer’s home, the greater its share of total network cost

Drops and loops are the most expensive on a per-home basis

Shared facilities further back in the network are less expensive on a per-home basis

The cheapest network equipment is the equipment that is already in place

Page 16

VDSL2 economics

Video service-specific infrastructure deployed out to Video Hub Offices

Fiber extended into neighborhoods until customers are within ~3000 feet (1 km) of a VDSL2 fiber node

Network linking fiber nodes is made highly resilient

VDSL2 reuse of embedded copper loops and drops – the most expensive network components

Minimal disturbance of neighborhood rights-of-way

Does not disturb customers’ lawns and driveways

Only required work is on the side of the customer’s house and possibly on the in-home wiring

Page 17

VDSL2 economics

Costs of the AT&T U-verse buildout have been reasonableCost to extend fiber into neighborhoods and install video multicast-capable nodes has been in the low US$300 range

Success-based costs (NID, STB, install) in US$600-$700 range

3 to 6 6 to 9 9 to 12 12+

7.3%

9.5%

13.4%

11.4%

MonthsS

hare

of

Ad

dre

ssab

le M

ark

et

Customer reaction has been strongGrowing market share

This response occurs in the face of highly-entrenched facilities-based competition from:

Cable television/modem networks (DOCSIS-HFC)

Direct broadcast satellite systems (DBS)

3 - 6 6 - 9 12+9 - 12

U-verse penetration


Why is FTTn/VDSL2 a good broadband strategy?

Page 19

FTTn/VDSL2 advantages

Absolute costCost per subscriber is about half PON FTTH cost of ~US$2000

Cost structureFTTn/VDSL2 costs are predominantly success-basedFTTH costs are more heavily fixed

Time to marketDeployment is much faster than FTTH

Real optionsCapabilities of VDSL2 are expandingCosts of fiber deployments are droppingHigh real options cost of deploying FTTH immediately

Page 20

Bandwidth debate:What is important to the customer?

Arguments for FTTH have focused on position that “more is better”–––––––––––––––––––––––––––

Without IPTV, video capacity is limited

Inability of current “network middle” to accommodate ultrahigh bandwidth access

Inadequate business case for delivery of ultrahigh bandwidth non-video applications

Extremely expensive – may not be broadly viable

Requires very high market sharefor financial success

But what matters to customers is available content, end-to-end performance and good value–––––––––––––––––––––––––––

Limitless carriage of IP video content

Consistent with evolving “middle of the network” capacities and costs

Sound business case based on demonstrated large-scale residential demand

Cheaper and more accessible to larger population

Accommodates facilities-based competition

Page 21

Conclusions

Both FTTH and FTTN/VDSL2 are:Exceptionally capable technologies

Able to offer customers vastly expanded services of all types

Require very significant capital investments

It is not obvious that one technology is a better choice than another from either a technical or economic point-of-view

It likely will take at least 5-10 years to resolve fully the relative economics and capabilities

We should be pleased that private companies are undertaking the investments today to deploy both of these advanced broadband networks


Thanks for your attention

http://www.att.com/gen/press-room?pid=5838http://www.att.com/Common/merger/files/pdf/Stankey_color.pdfhttp://www.atis.org/standardsdeliver/docs/DSL.pdf

http://www.att.com/gen/press-room?pid=5838

http://www.att.com/Common/merger/files/pdf/Stankey_color.pdf

http://www.atis.org/standardsdeliver/docs/DSL.pdf

Documents

Capabilities and Economics - OECD · FTTH/PON (Verizon/Surewest) FTTH/point-to-point (Utopia) HFC DOCSIS 3.0 (Comcast) BPL (Current/Duke) Fiber. Copper. Coax. Powerline. These services