Why Do We Need Fiber?

A Study on Video Over IP and the Effects on PON Architectures It can be argued that eventually, everything will be IP; Voice, Data, Video and even wireless, completing the “IP Quadruple

Why Do We Need Fiber?

(The need for more speed)

A Study on Video Over IP and

the Effects on PON Architectures

(The need for more speed)

Why Do We Need Fiber?

A Study on Video Over IP and the Effects on

PON Architectures

It can be argued that eventually, everything will be IP; Voice, Data, Video and even wireless, completing the “IP Quadruple Play.” When and how soon is anyone’s guess, but the impact

on existing and future networks is going to push the need for more speed (bandwidth)

IP to and in the home will usher in a new range of entertainment and services:

− Voice over IP (VoIP)

− IPTV (SDV – Switched Digital Video)

− Music Distribution

− Personal Video Recorder (PVR)

− Video On Demand (VoD)

− High Definition TV (HDTV)

− Interactive Television

− IP Enabled Appliances (Smart Appliances)

− Security, Environment (Smart Home)

Of these services, video is the most demanding in terms of bandwidth and more significantly, how we view the quality of the entertainment (QoE) CED magazine has written several articles highlighting video bandwidth needs such as; “The Big Squeeze,”

by Craig Kuhl, Contributing Editor, April 1, 2006 and “Bracing for the Impact,” by Jeff Baumgartner, Editor in Chief, CED magazine and xOD Capsule, July 2006

So, what is IPTV? For many, the acronym conjures up

visions of hundreds of “on-demand” entertainment

channels delivered anytime, anywhere IPTV (Internet

Protocol Television) describes a system where a digital

television service is delivered using the Internet Protocol

over a network infrastructure, which may include delivery

by a single broadband connection For residential users,

this type of service is often provided in conjunction with

Video on Demand (VoD) and may be part of combined

Internet Services such as Web access and Voice over IP

(VoIP), where it may then be called Triple Play Anything

over IP is typically supplied by a broadband operator

using a single infrastructure It promises total control by

the user to customize their multimedia experience for

true interactive uni-casting entertainment and services

For many operators, IPTV holds the allure of tapping

into new revenue sources with the delivery of advanced

multimedia services over broadband networks

IPTV is being enabled with the transition of moving from

an analog format to an all-digital format Advances in

video compression techniques are making it easier to

deliver both standard and high definition audio and

video The growth in bandwidth, coupled with digital

video and better compression techniques, broadband can

be delivered to an ever-increasing subscriber base over

anything Digital Subscriber Line (xDSL) or passive optical

networks (PON) networks With increased consumer

demand fueling the fire, competition is on the rise

As competition grows fiercer, what’s the best way to

deploy IPTV? The answer, there is no single answer

Today, the basic delivery mechanisms include Digital

Subscriber Line (DSL), Passive Optical Networks (PON) as

in fiber-to-the-home (FTTH), traditional CATV over Hybrid

Fiber Coax (HFC), or some combination Each has its

advantages and challenges

This study investigates the key elements of IPTV over PON

deployments by addressing the following four aspects:

Technology: What are the enabling technologies and

their availability timeline?

Capacity: What are the differences between various

PON implementations? Can they meet the service

requirement?

Cost: What are the cost differences among various PON

options?

Business: How are the services priced? What is the

impact on revenues? Is cost a significant portion of the

revenues?

Technology

Starting with a brief bit of history about IPTV and some

of the standards that dictate how we deliver video

combined with audio over an all IP format Digital

Broadcast Satellite (DBS) (i.e satellite TV) is not discussed

in great detail

Direct Broadcast Satellite (DBS) is a term used to

refer to satellite television broadcasts intended for home reception, also referred to as direct-to-home signals It covers both analog and digital television, radio reception, and is often extended to other services provided by digital television systems including limited video-on-demand and interactive features A "DBS service" usually refers to either a commercial service, or a group of free channels available from one orbital position satellite targeting one country DirecTV and EchoStar are a couple

of examples

Typical xDSL Development and the Moving Picture Experts Group (MPEG)

With current video compression technologies, neither Symmetric High Bit-Rate Digital Subscriber Loop (SHDSL) nor Asymmetrical DSL (ADSL) can provide the bandwidth required for IPTV ADSL2+ at 26 Mbps and Very high-speed DSL (VDSL) at 50 Mbps offer more bandwidth, but the tradeoff is in the distance Subscribers need to

be close to the Central Office (CO) or remote terminal

as the speed over any xDSL network decreases over longer distances Many operators find IPTV deployment over xDSL more attractive given existing investments

in the copper plant and the need to deliver services quickly However, one of the key problems in xDSL is the delivery of standard definition and high-definition

TV over MPEG2 With MPEG2, HDTV currently requires approximately 20 Mbps per channel compared to 2.5 – .5 Mbps for standard-definition TV (See the Table 1 below for broadcast bandwidths of MPEG2.)

MPEG4 is the next step in compression techniques and

is a standard similar to MPEG2 that primarily compresses the audio and video (AV) digital data Introduced in late

1998, MPEG4 is the designation for a group of audio and video coding standards and related technology agreed upon by the ISO/IEC Moving Picture Experts Group (MPEG) The services used over the MPEG4

Table 1 Bandwidth Requirements Under MPEG2 Standards

<0.84 Mbps Video conference (MPEG4)

<1.5 Mbps Video in a window (MPEG1) 1-2 Mbps VHS quality full screen (MPEG2) 2- Mbps Broadcast NTSC (MPEG-2) 4-6 Mbps Broadcast PAL (MPEG-2) 8-10 MBPS Professional PAL (MPEG-2) 12-20 Mbps Broadcast HDTV (MPEG-2) 27.5-40 MBPS DVB satellite multiplex (MPEG-2 Transport) 2-40 Mbps Professional HDTV (MPEG-2) 4-50 Mbps Contribution TV (MPEG-2-1)

140 Mbps Contribution HDTV (MPEG-2-1)

168 Mbps Raw NTSC (uncompressed)

216 Mbps Raw PAL (uncompressed)

270 Mbps Raw contributin PAL (uncompressed) 1-1.5 Gbps Raw HDTV (uncompressed)

standards include video on the web (Streaming Media),

CD distribution, conversation (videophone), and

broadcast television MPEG4 uses enhanced features of

MPEG1 and MPEG2 and other related standards, while

adding new features such as (extended) Virtural Reality

Modeling Language (VRML) that supports D rendering

Other MPEG4 features include object-oriented composite

files (including audio, video and VRML objects), support

for externally-specified Digital Rights Management, and

various types of interactivity such as video on demand

(VOD) Most of the features included in MPEG4 are left

to individual developers to decide whether to implement

them, and this has caused some of the delay in making

MPEG4 commercially available This means that there

are probably no complete implementations of the

entire MPEG4 set of standards In order to combat this

issue, the standards include the concept of "profiles"

and "levels" allowing a specific set of capabilities to be

defined and used in a manner appropriate for a subset of

applications and networks

The New Industry Standard

Already ratified as part of the MPEG-4 standard

— MPEG-4 Part 10 — and the ITU-T’s latest

video-conferencing standard, H.264 are now mandatory for the

HD-DVD and Blu-Ray specifications (the two formats for

high-definition DVDs) and ratified in the latest versions

of the DVB (Digital Video Broadcasters) and GPP (rd

Generation Partnership Project) standards Numerous

broadcast, cable, videoconferencing and consumer

electronics companies consider H.264 as the video

codec of choice for their new products and services This

adoption by a wide variety of open standards means that

any company in the world can create devices — mobile

phones, set-top boxes, DVD players and more — that will

offer the newly formatted HDTV specifications Currently,

these devices are not yet ready for prime time and when

they will be released is uncertain

The one area that has been settled with MPEG4 Part 10

is the need to compress the video and audio even more

making it easier for various network architectures and

their delivery mechanisms (See the Table 2 below for

broadcast bandwidths of MPEG4 Part 10.) How many

video feeds that can be offered to the consumer is of

particular importance in delivering IPTV

Requirements for Multiple Video Feeds

After investigating the drivers for more video feeds per subscriber, the findings show that multiple video feeds are no longer independently driven by the number of TV sets per household Today, 98.2% of all U.S households have a television set, and 74.% of those households, have two or more sets (Source: Nielsen Media Research) Another recent statistic shows that four of every five TV sets sold today are HDTV Sets (Source: Harvard Research) Table  below shows the HDTV Subscriber Growth in millions of households (Source: The Yankee Group, Company reports, public statements, NAB, NCTA.)

An additional driver in the push towards digital video broadcasting is that the Federal Communications Commission (FCC) TITLE VII—DIGITAL TELEVISION is mandating the termination of analog broadcast by February 2009 Studying the currents trends of the local broadcast stations, these stations are not just going digital, but they are using “high definition” digital This alone is going to place a burden on the current delivery systems and the future delivery systems

Use Scenario Resolution and Frame Rate Data Rates Example

Internet/Standard

Table 2 Bandwidth Requirements

Under MPEG4 Part 10 Standards

3.4

8.3 16.2 27.5

57.5 59.3

7.1

12.1 19.3 29.9

43.9 42.2

0 15 30 45 60

Number HDTV Sets Number Homes Receivin g HDTV Services millions

Table  HDTV Subscriber Growth

Title VII Mandates the addition of labels on analog TVs, apprising consumers of the termination of analog broadcast

in February 2009 Calls for additional consumer education

on the upcoming digital transition, including the formation

of a DTV Working Group on Consumer Education, Outreach, and Consumer Education Allows "down-conversion" of digital signals to analog by cable operators seeking to serve their analog customers.Reinstates the FCC's 2000 rules requiring video description of digital programming, designed

to serve sight-impaired audiences.”

PON Capacities

The objective when examining the PON capacity is to

determine whether a particular PON implementation can

meet a given service bandwidth requirement This is not

only important in the southbound PON Port capacities,

but more importantly in the northbound interfaces where

multi-casting techniques will be initiated

PON capacity must meet maximum usage without video

blocking for any given take rate The PON architecture

must be engineered to handle regular usage by the

given take rates and have the ability to ensure video

service during peak times in the network Individual PON

capacity determines the maximum number of video feeds

per subscriber, when the video compression techniques

are initially set at the MPEG2 Standards Again,

multicasting is going to be critical in the ability of any

PON architecture to be able to provide adequate video

services to the subscriber

Video Compression

MPEG-2

Total SD Channels

Total HD Channels

BPON 622Mbps

1:32

BPON

1.25Gbps 1:32

GEPON

1.25Gbps 1:32

GPON 2.5Gbps

1:32/1:64

Service Offer

MPEG-4 Part 10

Systems commercially available

Systems commercially available

Components commercially available

H.264 Standard Ratified

350 325

35 25

15

Systems commercially available

Standard Amendment Ratified

Systems commercially available

Components commercially available 802.3ah Standard Ratified

Systems commercially available

Components commercially available

2004 2005 2006 2007 2003

2002 2001

First Major PON Deployments

2008

PON

2004 2005 2006 2007 2003

2002

300

G.984.3 Standard Ratified

Systems commercially available

Components commercially available G.983

Content Provider Adoption

Table 4 Timeline for PON Bandwidths, Video Compression, and Service Offering

Exhibit 1 PON Capacities in the Northbound and

Southbound Interfaces

OLT Trunk Capacity (North Bound Interface)

OLT CO

N subs PON Capacity 1:N Split

N subs

1:N Split

N subs

1:N Split

PON Bandwidths and MPEG Comparisons

This section will focus is on the support of IPTV by various PON architectures, including Broadband PON (BPON), with data rates of 622/1.2 Mbps Down Stream (DS), Gigabit Ethernet PON (GEPON), with data rates of 1.2 Mbps DS, and Gigabit PON (GPON), with data rates of 2.4 Mbps DS

Based upon the timeline in Table 4, deployment strategies should take advantage of mature technologies such as

MPEG-2 and BPON while ensuring an upgrade path to the new technologies of GEPON and GPON as well as MPEG4

As shown in Exhibit 2, channel lineup and VOD usage

may result in changes in the Optical Line Termination

(OLT) trunk capacity to the video head end Depending

upon the VOD services offered, channels may utilize

multicasting techniques or they may be unicast

Multicast is the ability of one network node to send

identical data to a number of end-points (Usually

associated with multicast video techniques where the

source will send a single stream and multiple end-points

will accept the stream.) Multicast is the transmission

of information to a group of recipients via a single

transmission by the source, in contrast to unicast or

broadcast In IP multicast, there is a one-to-many transmission, where a host may join or leave a group at any time Unicast is the transmit operation of a single PDU (protocol data unit) from one source to a single destination In Unicast video, this is one channel delivered

to a single interface device Point-to-point transmission requiring the source to send an individual copy of a message to each requester

By using multicast techniques, the PON network will be able to distribute the total PON bandwidth allocation more efficiently With unicast, both the OLT and PON trunk capacities will increase significantly

Engineering for Targeted Take Rates

Much of PON capacity is based upon the subscriber take rate Not all PON networks are going to be fully utilized with

a 100% take rate and with a 100% Video Services take rate

As shown in Exhibit  below, there are huge differences in bandwidth requirements at different take rates

In Exhibit , some assumptions are made in regards to the number of premium and standard channels offered for “bundled services.” Here, the assumptions are that for the premium services bundle, there are three () Standard

Exhibit 2 PON and OLT Capacities by Services

Distinct HD video streams (h)

PON

PON

OLT

SDTV

HDTV

SD VOD

HD VOD

SDTV channel multicast group HDTV channel multicast group

Channel

Multicasting

All channels are unicast

Distinct SD video streams (s)

Engineered for Maximum Usage

Regular Usage

SDTV HDTV

SD VOD

HD VOD

0

10

20

30

40

50

60

70

80

90

Premium 100%

Standard 0%

Bandwidth Requirement per PON based on

Maximum Usage (Normalized)

Premium 75%

Standard 25%

Premium 50%

Standard 50%

Premium 40%

Standard 0%

Premium 30%

Standard 10%

Premium 20%

Standard 20%

Video Service Take Rates 100

Exhibit  PON Bandwidth in Reference to Video Service Take Rates

Definition Video Feeds, and two (2) High Definition

Video Feeds For the standard services bundle, there are

two (2) Standard Definition Video Feeds, and one (1)

High Definition Video Feed Initially, the video services

are based upon MPEG2 standards with a single High

Definition Data Rate set at 19.2 Mbps, and the Standard

Definition Data Rate set at .5 Mbps

As you will see in Exhibit 4, when bandwidth

requirements are set in place for each PON architecture

the groups will deliver the same capacity per subscriber

Conversely with the PON Deployment Groups, only the number of subscribers or split ratio will vary

The PON Effective Capacity is the number of distinct video channels allowed per subscriber It measures the true video transport capability by combining the impacts

of video compression and deployment groups

In using Exhibit 4 graph, use the corresponding Table 5 to review actual bandwidth requirements based upon split ratios and PON Technologies

622

1.25G

2.5

8 1 4

2 16

8 4

I II

III IV

GPON BPON

Downstream

Bandwidth (Mbps )

Subs per PON (or split ratio) GEPON

Exhibit 4 PON Bandwidth Requirements by Split Ratio

Table 5 PON Deployment Groups

DEPLOYMENT

GROUPS PER SUBSCRIBER MAX CAPACITY

Table 6 PON Effective Capacity

DEPLOY GROUPS MPG-2 MPG-4 Tier-5 16 x n Channels

IV Tier-4 Tier-5 Tier-4 8 x n Channels III Tier- Tier-4 Tier- 4 x n Channels

II Tier-2 Tier- Tier-2 2 x n Channels

I Tier-1 Tier-2 Tier-1 1 x n Channels

Video Compression Gain Effective Capacity

Home Gateway

Home Gateway

Home Gateway

Switched Digital

Video Head End

PON OLT

Metro Core

CO

OLT

ONTs

Network Interfaces

Common Equipment PON Interfaces

Exhibit 5 PON Equipment Component Cost

Cost

PON Cost Components

PON costs for components and interfaces will change

over time relative to different PON architectures Today,

typical BPON costs are significantly lower than GEPON

or GPON simply due to the maturity of the technology

and the availability of the chip sets However, when

comparing the cost to technology, BPON may lack the

bandwidth requirements needed to provide adequate

support for Video over IP When looking at the total cost

for any PON deployment, the findings show that the

PON Central Office Electronics and installation accounts

for only about 8% of the total cost While the outside

plant (OSP) hardware and labor typically account for only

about 40% of the total costs and the Customer Premise

Equipment (CPE) and CPE installation account for over

50% of the total cost

The PON equipment component costs are found in the northbound network interfaces that physically connect the Video Head End to the PON OLT, the common OLT equipment, and the PON interfaces to the outside plant Research presents a clear positive relationship between technology changes and the interface costs Higher line rate, higher split ratio and newer technology all lead to a higher PON interface cost

As stated above, BPON is expected to incur a lower initial cost due to its technology maturity and higher volume, while GPON is expected to have a faster cost reduction rate This may be partially due to the spreading out

of the GPON cost over 64 subscribers over time and

as MPEG4 becomes readily available When that time comes, the cost differences between BPON and GPON will become less

Exhibit 6 PON Interface Cost

0

10

20

30

40

50

60

70

80

90

100

Relative Cost

622M

BPON

1:32

1.25G BPON 1:32

1.25G GEPON 1:32

1.25G GPON 1:64

2.5G GPON 1:32

2.5G GPON 1:64

2.5G GPON 1:128

Cost increase

due to higher

line rate

Cost increase due to newer technology

Cost increase due to higher split ratio

Cost increase due to higher line rate

Cost increase due to higher split ratio

Cost increase due to higher split ratio

PON Revenues

Several revenue streams were realized when comparing

PON architectures, which lead us to consider a few

options 1.) Is this a Greenfield deployment where as

the incumbent, I can expect or should expect 100 %

take rate where all the service revenues are new? 2.)

Am I over-building myself where the existing subscribers

already were my customers for voice and data, and the

only new revenue streams will come from video .) Am

I overbuilding myself to stem the tide of competition coming into my territory? If so, am I forced to move into

a copper solution first?

Triple play services represent significant revenues Hence there may be a high opportunity cost for delaying deployment and losing market share

Exhibit 6 shows us that in 2005, Capex spending for PON architectures exceeded revenues (Source: Verizon financials 2005) However, with MPEG2 Video already in-place and the advent of MPEG4 on the horizon, the additional revenue that video will bring far out-weighs the risk of not deploying PON

When studying service take rates, it is assumed that 40% of all subscribers will be taking video and 64% will subscribe

to High Speed Internet by 2010 A 40% triple play take rate translates to 60%+ revenue or $1.8 million per serving area (SA) by 2010, where each SA encompasses approximately 2000 single family units or multiple dwelling units For the small business units, revenues and service take rates will vary (Source: Yankee Group Forecasts for 2006 – 2010)

Exhibit 6 PON Revenues vs Expenses

-40%

-20%

0%

20%

40%

60%

80%

100%

2005

Revenues GEPON 1.25G, 1:32 Capex GPON 2.5G, 1:64 Capex BPON 1:16, 622M Capex

Exhibit 7 PON Forecasted Take Rates

3P Premium 3P Standard POTS + HSI POTS 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

40% video subs by 2010

Service Take Rates

64% HIS subs by 2010