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Two Dominant Wireline Strategies |
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Broadband to the U. S. Residence - Two Dominant Wireline Strategies
The International Telecommunications Union defines Broadband in ITU-T I.113 as:
"A Service or System requiring Transmission Channels capable of supporting Rates greater than the Primary Rate"
Traditional narrowband telephony services operate at rates up to 64 Kbps while wideband circuits can carry data rates up to 1.54 Mbps. Broadband services, however, range in capacity from over 1.54 Mbps up to 600 Mbps. Just what does this increase in bandwidth mean? Increased data transmission rates means an increase in the carrying capacity of the channel. Increased capacity means more and faster channels available to transport a combination of voice, data, video, and high-resolution images. To the consumer, the technology platform itself is just a novelty. They are only interested in what new applications that the technology makes available to them. Broadband technology supports the delivery of video broadcast, interactive video, video with text services, telephony, data and any combination of these services.
The last decade has witnessed industries such as telecommunications, consumer electronics, information technology, cable television, and consumer entertainment merging to create new opportunities in the marketplace. This industry convergence has spawned new products and businesses like CD-ROM, the Internet explosion, pay-per-view movies and sporting events, private broadcasts, SEGA's interactive television games, DirecTV's direct satellite broadcast system, and the rapid growth of multi-media PC applications. Figure 1 illustrates the market convergence that has taken place to date.
Figure 1
Source: "Multimedia: Evaluating the Market," Steven M. West, Multimedia Over the Broadband Network: Business Opportunities and Technology
Broadband technologies are capable of delivering all of these services to the residential market today. Numerous telco and cable operator field trials are being conducted nationwide to evaluate both broadband technical deployment issues and service offering packaging options. Current market drivers are high-speed Internet access, near video on demand, distance learning, and home office needs. Thus, the consumer market needs for broadband's increased bandwidth focus on entertainment, interactivity, and information. Some of broadband's potential markets include real time market research through viewer profiling, truly interactive video and music on demand, home telemetry and alarm functions, multi-player video games, high speed PC applications, and multi-feed telecasting. Short term forecasts outline the following timeline for the broadband transformation.
Capitalizing on the broadband market opportunity will depend on three factors:
The service providers' ability to met each of those needs is highly dependent on the choice of the network infrastructure - the delivery facility. The choice of the technology deployed has a major impact on the service offering pricing due to the initial capital cost associated with the infrastructure construction and the supporting intelligent electronics. Network flexibility is also key to the service providers' deployment choice. Current residential broadband revenue streams hardly justify a major capital expenditure but the potential market is promising in the long term. How long is long term? And how does a service provider position for today's reality and tomorrow's broadband potential by its choice of a deployment technology today?
The two dominant broadband wireline strategies in the United States are a hybrid-fiber coaxial (HFC) cable design and the fiber-to-the-curb (FTTC) technology. With HFC, fiber is run from the headend (central switching point) to a node (distribution point) that typically serves from 300 to 2000 users. From the node, customers are served by copper coaxial cable drops similar to the cable television drops that are used today. (see Figure 2)
Source: Adopted from "State of the Art: Residential Broadband," Bill Washburn, Telecommunications.
HFC's ability to carry as much as 80 analog and 80 compressed digital channels in conjunction with two-way narrow- and broadband transmission over a single line directly to the home is a major improvement over today's existing infrastructure capacity. Because HFC can carry both video and traditional telephony services, can provide line powering, and is compatible with both analog and digital services, installed facilities can deliver existing services while offering a transitional platform for the first broadband services. HFC's primary drawback is that it necessitates the installation of a completely new infrastructure as in the case of most telcos, or it involves a major end-to-end overhaul of existing cable television coaxial networks. Another hindrance to HFC's deployment for broadband use is transmission ingress or noise. Noise is deadly to successful transmission of high speed data rates. A third area of concern is the total bandwidth available for upstream communications with the asymmetric nature of HFC. Historically, cable television companies have utilized the majority of coaxial bandwidth for transmission downstream from the headend to the end user. True interactivity can only be achieved by adding significant upstream channel capacity which will encroach on the service provider's content bandwidth.
FTTC represents much deeper penetration of fiber into the distribution network than HFC. The closer the fiber is run to the home, the greater the bandwidth potential to the end user, and the more costly the infrastructure becomes due to more electrical to optical conversion (E/O) needs. In FTTC, only the drop wires into the home remain copper or coaxial cable. (See Figure 3)
The FTTC star configuration of drops offer a better transmission path and less noise than HFC but they also contain more E/O points and thus more powering problems. FTTC has huge traffic capacity and can supply up to 1500 interactive digital video channels on demand. The allure of FTTC rests in its simplicity. The broadband signals are optical the vast majority of the transmission path so there is no need for loss inducing conversions from fiber to coax. This reduces the need for expensive amplifiers or intelligent network interface modules. Full FTTC offers much cleaner signals in both directions due to the absence of amplifiers in the network and totally digital transmission.
FTTC's major drawback is cost. Construction of the fiber backbone involves expenses associated with placement of both aerial and buried cable, and the pricey supporting multiplexers and distribution nodes. An additional cost is associated with the parallel analog system that today must be placed in conjunction with FTTC. Because FTTC networks cannot carry analog signals, network operators that want to offer analog video channels must either do analog-to-digital conversions at the headend video server and convert the signal back again at the home, or they must build a parallel analog network. Neither option is very efficient. If new battery technology can be developed to deliver emergency power for fiber-optic transmission in the home, and video servers would quickly migrate to all digital video transmission, the need for coaxial cable in addition to the drop to the home would be eliminated.
The infrastructure costs of FTTC and HFC are roughly in line with each other until the distribution node location. When fiber is run past the distribution node to curb or to inside the home, the cost for initial deployment becomes significantly higher for FTTC. Table 1 illustrates this cost differential. Table 1 focuses on the cost for telephone companies (telcos) to build broadband networks based on either wireline deployment strategy. Since cable operators already have HFC networks or are upgrading to them, these companies are not strongly considering FTTC. The analysis does not include telco switch costs since these elements are already present in their networks. However, the cost of line switch cards is included. The costs are based on one hundred homes passed per mile. The basic infrastructure costs incorporate the headend and transport equipment that a telco would need to purchase and also includes up-front expenses like fiber, coax, and fiber nodes. For video-on-demand (VOD) and near video-on-demand (NVOD), the cost per digital channel and modulator (HFC only) are shown as cost per basic video subscriber assuming a 20 percent subscription rate and a 20 percent peak usage rate. Using this set of assumptions, aerial HFC is the lowest cost solution. As Table 1 illustrates, a fully loaded network is expensive - ranging from $1,000 to $1,300 per home.
Table 1
HFC and FTTC Costs
| Basic Video Network | Cost Per |
HFC Aerial |
HFC Buried |
FTTC Buried |
| Basic Infrastructure | Home passed | $280 | $450 | $490 |
| Set Top Box | Subscriber | $120 | $120 | $120 |
| Drop | Subscriber | $ 40 | $ 40 | $ 60 |
| Total | $ 440 | $ 610 | $ 670 | |
Incremental Costs |
||||
| Voice (HDT, etc.) | Subscriber | $ 230 | $ 250 | $ 320 |
| NVOD (Modulator, STB) | Subscriber |
$ 220 |
$ 220 |
$ 180 |
| VOD (Video server, etc.) | Subscriber |
$ 100 |
$ 100 |
$ 100 |
Table 2 layouts where the major US telcos stand on adopting either wireline deployment technology.
Table 2
Where They Stand
Technology |
Proponent |
Hybrid fiber/coax (HFC) |
Ameritech, Pacific Telesis, BellSouth, SBC, GTE, SNET, U S West (through Continental) |
Fiber-to-the-curb (FTTC) |
Bell Atlantic, SBC |
Source: "The Big Shift," Shira McCarthy, Telephony, May 27, 1996.
The key question for both the telcos and cable operators is: How many customers will subscribe to the new services that broadband technology makes possible, and how much are they willing to pay for these services? If only a small percentage of the subscriber base will buy a new service, an incremental deployment strategy makes the most sense. HFC networks fit best as an incremental deployment strategy. The capacity of the network can be easily and inexpensively expanded to many times its initial installed size. Due to its flexibility, HFC can add additional service precisely where it is needed. Meanwhile, initial capital outlays for HFC are generating revenue from telephony and near video-on-demand services now rather than sitting tied up in a non-productive capacity waiting for the future demand to materialize. However, there are significant advantages to FTTC when a carrier anticipates considerable broadband business such as real interactive video. FTTC is the network for the future because it offers the most room for growth in the long term. In the short term, however, using FTTC technology for one way video or voice is questionable for the amount of the initial investment involved.
Bibliography
The following articles from IEC's Multimedia Over the Broadband Network: Business Opportunities and Technology, Professional Education International, 1996.
Washburn, Brian "State of the Art: Residential Broadband," Telecommunications, 1996.
Wheat, First Securities, Inc., "Broadband Technologies, Inc. - Company Report," InvesText, Dec. 7, 1994.
McCarthy, Shira, " The big shift," Telephony, May 27, 1996.
Philmon, Earl, "A tale of two systems," Telephony, April 29, 1996.
Cadogan, William J., "Broadband in the Local Loop: Moving Beyond the "Architecture Wars"," Telecommunications, January 1996.
McCarthy, Shira, "All the right moves," Telephony, August 26, 1996.
Saltwick, Steve, " Competing of complementary technologies?," Telephony, June 10, 1996.
Inan, Dana, "Fasten you broadband belts," Telephony, February 12, 1996.
"Emerging Technologies: Broadband Networks", Bellcore Training and Education Center, 1996.
"Understanding Local Exchange Competition in the US: CATV, Wireless Cable, and Competitive Access," Telecommunications Research Associates, 1994.
"Understanding SONET, ATM, and Other Broadband Technologies," Telecommunications Research Associates, 1994.
Internet sites:
www.iec.org www.adc.com www.bbt.com www.bellsouth.com
www.nynex.com www.sbc.com www.bellcore.com
Outline
I. Definition - Broadband to the Residence
1. ITU-TI. 113
2. Laymen
II. Market Analysis
1. Residential Services
A. Current
B. Potential
2. Strategies
III. Infrastructure Issues
1. Cost
2. Flexibility
3. Reliability
IV. Dominant Deployment Technologies
1. Hybrid Fiber Coaxial (HFC)
2. Fiber-to-the-Curb (FTTC)
3. Cost comparison
V. Recommendation
VI. Bibliography
