Fiber is the darling of the last mile access game, but the near-term reality for most incumbent telcos is that a hybrid copper/fiber implementation is the best method to deliver higher bandwidth and compete with cable MSOs, which are offering 50 and even 100 Mbps service over their existing Hybrid Fiber Coax (HFC) networks. Fortunately, there's still plenty of life left in existing copper lines.
Service providers are essentially leveraging three approaches to the hybrid copper/fiber architecture: Fiber to the Building (FTTB), Fiber to the Node (FTTN), and Fiber to the Curb/Cabinet (FTTC):
Fiber to the Building (FTTB): Designed to meet the needs of multi-dwelling unit deployments (i.e., condo complexes, multi-office buildings and apartment buildings), in a FTTB scenario the service provider will terminate a fiber in a building and then leveraging the buildings existing copper lines in the riser deliver the signal to the customer typically over a VDSL2 connection into each living space.
Fiber to the Node/Neighborhood (FTTN): Championed by both AT&T (NYSE: T) and CenturyLink (NYSE: CTL), in the FTTN scenario a service provider runs fiber-optic cables run to a cabinet serving a neighborhood and from that node, they will connect hundreds of customers via traditional twisted-pair copper cable. While there are certainly variations with FTTN, typically the area served by the Remote Terminal (RT) cabinet resides less than one mile away.
- Fiber to the Curb/Cabinet (FTTC): Initially FTTC pioneered by the former Bell South, which before being purchased by AT&T in 2006 had one of the largest FTTC-based networks in the U.S. With the FTTC architecture, a service provider will run fiber to either a RT, a pole-mounted mini DSLAM, or a controlled environmental vault (CEV) and serve customers via the existing copper.
Over these architectures, service providers are using a mix of ADSL2+ and increasingly VDSL2--the latest generation of the DSL technology family--which enables service providers to leverage their existing copper to deliver theoretical speeds between 20-100 Mbps. However, the reality with VDSL2 is that, like ADSL2+, actual speed and performance depends on the quality of the copper plant and how far away each home is from the RT cabinet.
Serving as a complement to VDSL2 to enhance rate and reach of VDSL2 are three emerging techniques that can also enhance rate and reach by mitigating crosstalk and interference that exists on twisted-pair copper:
Dynamic Spectrum Management (DSM): Pioneered for DSL networks by John Cioffi, now the CEO and Chairman of ASSIA, DSM enables service providers to enhance rate and reach by reducing or eliminating crosstalk and interference in a DSL network.
Vectoring: Like DSM, vectoring can also mitigate crosstalk issues that can effect large-scale deployments of DSL lines delivering 15 Mbps speeds and above. With the advent of DSM Level 3, a combination of DSM with vectored DSL, proponents claim the technology can not only help service providers expand their respective DSL speeds, but also provide information on how to isolate faults on the copper plant.
Phantom Mode DSL: DSL Phantom Mode creates what is called a virtual or "phantom" channel that supplements the two-pair wire configuration for copper transmission lines. Experimental lab tests conducted by both Alcatel-Lucent and Huawei demonstrated downstream transmission speeds of 300 Mbps and 700 Mbps downstream rate, respectively, over 400 meters.
Click here for a list of VDSL2 providers and their customers.
Momentum around VDSL2 continues to grow. At the end Q2 2012, Dell'Oro Group reported that VDSL equipment revenue overall jumped 15 percent year-over-year, a factor attributed to strong VDSL infrastructure (i.e., DSLAMs and BLCs) and CPE shipments.
Leading the VDSL network infrastructure race are ADTRAN (Nasdaq: ADTN), Alcatel-Lucent (NYSE: ALU) and Huawei.
Although it continues to see a strong uptick in GPON, Alcatel-Lucent has been very aggressive on the VDSL2 deployment front. The provider is involved in 90 VDSL2 deployments worldwide. Besides having a strong presence in AT&T as a key supplier, Alcatel-Lucent has recently garnered a number of new VDSL2 wins, particularly in Europe and the Middle East, with the likes of TDC Denmark, Belgacom and Turk Telecom.
Interestingly, players in the VDSL2 infrastructure segment are going through a migration of their own with both ADTRAN and Calix (NYSE: CALX) expanding their VDSL2 and overall access networking portfolios. In 2011, ADTRAN acquired the access network division of Nokia Siemens Networks, while Calix acquired Ericsson's access network division.
VDSL2 may be still be the new kid on the DSL service block, but at a time when telcos are looking for more economical ways to deliver higher speed residential broadband data and video, it is an attractive option that more telcos are turning to in their existing markets while building out FTTH in Greenfield markets.
What all of this points to is that VDSL2 is just enhancing the telco's 100-plus year love affair with their copper lines.
In the following chart, we list VDSL2 vendors delivering their products to a host of domestic, European and Asia Pacific-based telecom customers.