Ovum: Split Ratios for Passive Optical Networks Decline

  • FTTH
  • PON
LONDON - Passive optical networking (PON) has become the dominant fiber-to-the-home technology largely because it facilitates splitting optical signals among multiple customers, thus conserving fiber and active electronic equipment. Generally, these networks support "split ratios" of 1 to 32 or 1 to 64. However, a new study by research firm Ovum finds that telecom providers are splitting signals much less than they could in theory and that split ratios have declined significantly since 2007.

Lowering the split ratio raises the cost per customer but provides greater potential bandwidth per customer - which is especially important if the "customer" is an entire multiunit apartment building. To some extent, the observed ratio is also a matter of timing; providers try to time their purchases of customer-premises equipment to match customer sign-ups, so customer-premises equipment may be purchased long after the central-office equipment it communicates with.

Ovum analyzed shipment data for customer-premises equipment (ONUs/ONTs) versus central-office equipment (OLTs) for PON networks on a worldwide basis and for selected countries. For Japan, Korea and China, Ovum found that shipments were all below the theoretical split ratios (that is, fewer than 32 customer premises per OLT port) but that these three countries have different equipment shipment ratio patterns. The underlying reasons include the stage of FTTx network deployment, the bandwidth per subscriber goals set by service providers and the ratio of fiber to the home to fiber to the building.

Julie Kunstler, Ovum principal analyst and coauthor of the report, comments, “It is important to compare shipment ratios with FTTx subscriber data to understand network utilization. While a single ONU can support many FTTB (fiber-to-the-building) subscribers, the bandwidth per subscriber may become very low. Therefore, a country may have very low shipment ratios due to a high rate of FTTB subscribers and the service provider’s desire to keep bandwidth per subscriber at a reasonably high level.”

Different Countries, Different Patterns
Using historical shipment ratios, Ovum forecasts future shipment ratios along with subscriber growth forecasts. Japan’s shipment ratios follow a “wave” pattern, with a high ratio of 33 in 3Q07 followed by a low of 10 in 2Q09 to a ratio of 23 in 1Q11. The ratio appears to move in waves, with subscriber adds followed by additional network buildout, and Ovum expects this wave pattern to continue in coming years. “Japan has room on its FTTx networks as more OLTs have been shipped than are needed to support the existing and forecasted FTTx subscriber base. However, service providers may be choosing to provide more bandwidth per subscriber; consequently, we expect to see additional shipments of both OLTs and ONUs/ONTs," says Kunstler.

In Korea, the ratios of ONUs/ONTs to OLTs have been low, and are likely to remain low, because of the high ratio of FTTB to FTTH subscribers. FTTB subscribers mask the true number of subscribers supported by an OLT. The current networks do not appear to have excess capacity. Additional subscriber adds will require additional OLTs.

China’s split ratios have also been very low, but for a different reason: Providers are focusing on central-office readiness ahead of deployment to customers. Ratios have sharply declined in the past two years, from a high of 21 in 4Q08 to an average of less than 4 in 1Q11. OLT shipments are expected to continue to be strong for the next several years, so low ratios are likely to continue in the next several years. Eventually, shipment ratios will increase as more subscribers are brought onto the FTTx networks.

Verizon, by contrast, shows a “controlled” pattern, in which split ratios have increased significantly as Verizon focuses on adding subscribers to existing service areas.

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