Demand for 10G PON Equipment Will Pick Up in 2013

LONDON - Next-generation technology for fiber to the home has arrived, but outside China the market demand for 10G PON components and equipment will remain low until 2013, according to telecom analyst firm Ovum.

In a new report, Ovum says that although component companies have been under pressure by equipment vendors and service providers to develop 10G EPON components, the momentum has slowed. Julie Kunstler, Ovum analyst and author of the report, comments: “The pressure worked, ... multiple vendors have commercial-ready 10G EPON components and testing has been carried out by service providers. However, while several provinces in China have begun deployments, 10G EPON equipment deployments will remain negligible until late 2012 in China and 2013 for other global regions. Demand for XG-PON will also remain low, although the readiness of XG-PON components and equipment is lagging that of 10G EPON.”

According to the report, demand for 10G EPON and XG-PON has slackened for several reasons. First, these technologies were expected to be used primarily for fiber-to-the-building deployments, but China’s service providers are now favoring fiber-to-the-home technology over fiber-to-the building because of both operational costs and competition around bandwidth.

Wireless backhaul traffic is still expected to be a strong market driver for 10G PON, but commercial deployments have not yet ramped up. In addition, the costs of PON equipment have dropped significantly, widening the cost gap between 10G PON and the current generation of technology - 1G EPON and 2.5G GPON.

Price Not a Long-Term Problem
Kunstler does not believe price will remain a long-term problem for 10G PON. She comments, “The costs of 10G PON optics and equipment will decline rapidly once purchase orders are signed and deployments begin. A bigger problem is the lack of applications for 10G PON [MDUs and wireless backhaul].

“The plan for upgrading 1G EPON FTTB MDU equipment to 10G EPON equipment was simple and straightforward, involving the same service provider and subscribers on an existing FTTx (fiber-to-the-x) network. While this application still exists, the volume of replacements will decline as some FTTB-based MDUs are moved to FTTH.”