In order to advance NG-PON2, Verizon Ventures takes the reins on $4.5 million investment round in Portuguese optics vendor

In order to drive the development of NG-PON2, Verizon Ventures invests in PICadvanced, which is building a new chip with optical components. (Verizon Ventures)

Verizon Ventures is strengthening its NG-PON2 hand by leading a $4.5 million financing round in PICadvanced, which has been supplying Verizon with tunable lasers for its NG-PON2 deployments.

While Verizon has previously named other NG-PON2 vendors, such as Adtran and Calix, Wednesday marked the first time it has mentioned PICadvanced (PICa.) Joining Verizon Ventures in the round was a 200M Co-investment Fund managed by PME Investimentos, which makes co-investments in high-growth Portuguese startups.

Founded in 2014 and based in Ílhavo, Portugal, PICa has been active in the development of optoelectronic transceivers for NG-PON2. In addition to optical, PICa, which derived its name from photonic integrated circuits (PIC), also develops electronics and software.

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RELATED: Verizon seeks to simplify its network with NG-PON2, a converged core and automation

Verizon announced two years ago that it was going directly from GPON to NG-PON2. NG-PON2 has four 10 Gigabit wavelengths that increase the reliability of the service. If one PON card goes down, the other wavelengths are able to continue providing service. The NG-PON2 wavelengths work on top of the GPON service and NG-PON2 doesn’t' require active amplification due to signal loss.

A key element of NG-PON2 is the tunable lasers that PICas provides. Tunable lasers allow operators to assign different subscriber types to different wavelengths. Using dynamic load balancing, a service provider could move a data hog to a separate wavelength via a provisioning command to the optical network tuners (OTL.) In Verizon's GPON deployment, there's a separate broadband network gateway that the OLTs "talk" to.

NG-PON2 is also a core piece of Verizon's previously stated goal for driving down its cost per bit by 40% year over year as part of its Intelligent Edge Network initiative.

Samy Ben Aissa

Using its fiber network, NG-PON2 will also create a universal access platform for Verizon across its consumer and business verticals. Samy Ben Aissa, managing director at Verizon Ventures, said that 5G small cell deployments were also a driver for NG-PON2.

Ben Aissa works in tandem with Verizon's core network team, which does the network planning for Verizon's network. He said PICa has deployments with global and European telcos, but they're not listed on PICa's website.

"We've been very active in deploying capital to augment the strategies that we have set for Verizon and communicated publicly, one of which is NG-PON2," Ben Aissa said. "We felt we could augment the partnership that we have with a little company out of Portugal called PICadvanced. We reached the point with our network planning team where it was very strategic for us to deploy capital to help them further innovate very critical R&D."

Ben Aissa said PICa, which has about 20 employees, is using the funding to further develop its optical ambitions. While Verizon relied on PICa for first generation optical transceivers that were compliant with the NG-PON2 standard, NG-PON2 is headed towards an optical refresh.

"Their future generation of optical transceivers is based on integrated photonics, a technology breakthrough that allows multiple optical components to be packed together to execute high complexity functions," Ben Aissa said. "It’s achieved by fitting all required optics components onto a single chip — one of PICa’s specialties."

The chip will reduce the size and complexity of manufacturing the optical modules, according to Ben Aissa. PICa will unveil features of its new chip at upcoming industry conferences in September and December.

RELATED: AT&T tees up 1-Gig XGS-PON speeds in more than 40 cities

While Verizon is taking the NG-PON2 route, AT&T has opted for XGS-PON. In March, AT&T announced it used XGS-PON to launch 1 Gbps speeds in over 40 U.S. cities. XGS-PON is a fixed wavelength symmetrical 10Gbps passive optical network technology. AT&T has cited the cost benefits of going with XGS-PON over NG-PON2.

Verizon has a NG-PON2 test underway in Tampa, Florida, which was also the location of one of its first Fios deployments in 2004. Verizon declined to say whether it has been deployed in other locations. In addition to Verizon, UK Fiber, NTT and Vodafone are also kicking the tires on NG-PON2.

Verizon Ventures

As its name implies, Verizon Ventures is the corporate investment arm for Verizon. Ben Aissa said Verizon Ventures currently has about 70 companies in its portfolio. According to Crunchbase, Verizon Ventures has made 114 investments and has a total funding amount of $14 million.

"We're funded by our balance sheet," he said. "So we don't really have a separate budget. And from my side of the portfolio, we're very strategically driven in the investments that we make. We can deploy capital from Series A, which we're doing here, all the way to Series D."

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