Jeff Heynen, Author at Dell'Oro Group

Chinese operators are moving quickly to the next phase of residential fiber deployments by extending fiber inside homes and into individual rooms through a unique combination of a centralized ONT (Optical Network Terminal) and subtended ONT access points designed to ensure advertised speeds with the option of wired and Wi-Fi connections in each room of a home. The net result of this surge in FTTR deployments has been a steady increase in FTTR-optimized ONT shipments.

Through the first half of 2023, more than 6M FTTR ONT units have been purchased by the three major operators. To provide some perspective, this total is less than 20% of the total ONT shipments in China in that same time frame. However, that growth has come in just a little over a year and a half, which signals the strategic importance of the application to the operators. Further, that growth comes from just a handful of major regional branches of China Mobile and China Unicom. China Telecom is just now getting underway with FTTR, having set forth its plan to purchase 500K FTTR ONTs earlier this year.

The three operators are expected to rapidly expand the availability of FTTR services and packages throughout the rest of this year and into 2024, as the application is viewed as a critical driver of four overarching business goals for their fixed broadband business units:

Increasing ARPU (Average Revenue Per User)
Reducing subscriber churn
Reducing energy consumption in the home and throughout the network
Reducing service and support costs by improving the quality of service

From Gigabit Cities to Gigabit Homes

Back in 2013, the Chinese Government set an ambitious goal of delivering gigabit speeds to 400M households in China’s largest cities by 2020. The project reach approximately 200M homes before the COVID-19 pandemic delayed further expansion. In 2021, the Government re-issued its objectives and set a goal of achieving the 400M home goal by the end of 2023. At this point, it is believed the total number of gigabit homes is nearing that 400M mark, as over 100 cities have now been designated as Gigabit Cities.

Historically, though, operators delivered fiber to the floor of a building and then connected each apartment via DSL or Ethernet or dropped fiber to a single ONT or ONT gateway inside the home. To expand Wi-Fi coverage in the home, subscribers could either purchase their own access points or could use those supplied by the operator. Nevertheless, in very densely-populated cities, subscribers often ran into channel contention issues, reducing the throughput of their Wi-Fi connections and reducing the overall quality of service, particularly during peak hours.

These challenges became more acute during the pandemic when cities and buildings were locked down and service provider technicians could not access residences to diagnose and troubleshoot Wi-Fi and other connectivity issues. So, even in China’s showcase Gigabit Cities, subscribers were getting far slower speeds than what was being touted by their service providers.

To solve these issues, the three major operators realized that the only way they could guarantee consistent throughput throughout the home was to extend fiber to each room. The most economical way to do this was to use the same architecture as their PON access networks, but just on a smaller scale, using a passive splitter in front of the primary ONT gateway. From there, the operators worked with domestic equipment manufacturers and cabling and component suppliers to develop solutions that would allow technicians to easily install flat fiber or fiber electric composite cables to each room, depending on whether the ONT access point required an external power supply.

Flat fiber installation tools were developed that allowed a technician to run fiber along baseboards, doors, and window frames, minimizing the obtrusiveness as much as possible. Additionally, software tools were developed to allow the technician to quickly determine the shortest route and quickest installation approach before commencing the work. The net result is that the average installation time is reported to be around 30 minutes or less.

Even before the technician arrives, the upfront work of determining demarcation between building owners and the service provider is completed, so that the FTTR service can be marketed throughout the building and installations can be scheduled and completed as quickly as possible.

Up-Front Costs, Long-Term Benefits

In a competitive environment like China, where broadband ARPU tends to be low and fairly static, FTTR has turned out to be a source of new revenue for the operators, as well as a way to get subscribers to commit to longer-term contracts. Subscribers can choose to pay 2000 RMB (US$277) up-front to cover the costs of the installation, as well as the additional ONTs, or they can commit to a multi-year contract, paying 30-40 RMB (US$4-$5) per month for a minimum of 2-3 years. Historically, broadband service contracts were limited to one year. Because of the additional labor and equipment costs associated with FTTR, operators were allowed to extend the contracts. With the additional costs of the ONTs bundled in, the operators have anecdotally said that the ARPU uplift for FTTR is around 30%. With mobile ARPUs getting squeezed, FTTR is seen as a way to recoup some of those lost margins while also ensuring improved QoS.

Speaking of QoS, the operators have reported that the combination of FTTR plus Wi-Fi 6 improves overall speeds by up to 80% over previous-generation Wi-Fi 5 access points. Much of the gain is in the improved rates and reach of Wi-Fi 6. But using fiber as a backhaul technology from the local access point to the primary ONT gateway also helps to improve speeds and reduce latency by up to 30%. More importantly, operators know that each home will have full Wi-Fi coverage, rather than assuming the subscriber has correctly placed the access points to eliminate dead zones. That helps to reduce support and troubleshooting calls.

Finally, from an environmental perspective, the use of passive splitters and components in the home offsets the increased number of powered ONT access points. But these units are also more power-efficient than previous generations of access points. When combined with the reduced power needs of PON access networks, in general, the FTTR architecture is a net reduction in carbon footprint.

Global Opportunities

Nearly all FTTR deployments have occurred in China, though there are already signs of international expansion in Hong Kong, UAE, and Brazil. Certainly, countries with high fiber penetration combined with a high percentage of MDU-based residences are the low-hanging fruit for FTTR. This is why we expect to see increased FTTR activity in markets such as Hong Kong, Singapore, the UAE, and Korea over the next two years.

In addition to high fiber penetration, regulations clearly defining the demarcation between building owners and service providers must be in place, as well as updates to building codes that clarify approved installation methods for flat fiber and best practices for fiber maintenance. In countries with low fiber penetration, these standards have yet been developed due to the need has not been there. Or in countries with FTTH deployments, standards, and demarcations have been defined for a single drop point to the customer’s residence—simply updating architectures that have been in place for decades with twisted pair and coaxial cable.

Time will tell whether an increase in fiber ISPs’ results in those ISPs differentiating their service with an FTTR offering. ISPS may offer FTTR as a premium service. At this point, however, all eyes are fixed on Wi-Fi 7 gateways and access points as the cure-all for spotty coverage and capacity issues.

Growing interest among operators to use PON technologies to offer enterprise customers an alternative to traditional Ethernet services is increasing 25GS-PON-capable OLT ports being deployed into service provider networks. Because of the increase in total 25GS-ready ports, as well as the consensus that a growing percentage of those ports will be used to deliver enterprise and leased line services, we have increased our forecasts for 25GS-PON equipment revenue (both OLT ports and ONTs).

In our most recent forecast, published in July, we increased cumulative 25GS-PON equipment revenue between 2022 and 2025 from $315M to $588M worldwide, with the majority of revenue coming from the North American and Western European markets. While that increase is significant by itself, it’s important to bear in mind that cumulative XGS-PON equipment spent during that same period will easily push $7.7B. But XGS-PON will be the dominant technology across residential FTTH networks, whereas 25G-PON will be used strategically by operators for high-end residential services, enterprises, campus environments, access network aggregation, and wholesale connections.

Through the end of 1Q23, a total of 550K 25Gbps-Capable OLT ports have been delivered to the market, largely via combo cards and optics that can support 2.5Gbps GPON, XGS-PON, and 25GS-PON from the same hardware and using the same ODN. If we assume that an average of 100-200K 25GS-capable OLT ports are purchased by service providers every quarter, by the end of 2023, there will be >1M 25GS-capable OLT ports. Continuing that incremental increase through 2025 yields over 2 million 25GS-capable OLT ports purchased by service providers. Further, let’s assume that a low single-digit percentage of those total ports are turned up to deliver enterprise services. The potential net result is anywhere from 500k-700k OLT ports in service delivering enterprise, wholesale, and mobile transport services.

That is the relatively modest strategy behind 25GS-PON: To finally expand the applicability of PON technologies beyond residential networks. Though it has been discussed by vendors and operators for years, we are finally seeing that many operators have earmarked PON as a network-flattening technology across their residential, enterprise, mobile transport, and wholesale networks. Though there certainly have been instances of operators using GPON for mobile backhaul and business-class Internet access, those use cases have been relatively limited. The combination of XGS-PON and 25GS-PON is really the first to give operators the flexibility they require to be able to address many customers and applications across the shared infrastructure. While some operators envision sharing an ODN across these use cases, others prefer to separate their ODNs because of concerns around security and significantly different SLAs. Nevertheless, PON technologies beyond XGS-PON are already central components of a larger discussion around simplifying access and edge network connectivity.

Though the ITU has determined that single channel 50G PON as defined in its G.hsp.50pmd specification is the next generation technology it will move forward with, the increasing use cases for PON combined with those use case requirements for additional speeds beyond what XGS-PON can provide have opened the door for 25GS PON as a potentially important tool in operators’ toolboxes. The current strength in fiber buildouts and the need to address new use cases today has resulted in a list of operators who simply can’t wait for 50G PON to be fully standardized, tested, and productized. As such, other industry standards group, including the Broadband Forum, are working with 25GS-PON and looking at developing testing and interoperability standards for the technology.

While standards bodies have traditionally defined which technologies get adopted and when there are certainly cases where operators have placed their thumbs on the scales in favor of a preferred option. These choices don’t generally go against what the standards bodies recommend or are working towards. Instead, they satisfy a more immediate internal requirement that doesn’t mesh with the proposed standardization, certification, and product availability timeline defined by the standards bodies and participating equipment suppliers.

Larger operators, including AT&T, BT Openreach, Comcast, and Deutsche Telekom, have also become far more comfortable over the last few years defining standards and pushing them through other industry organizations, such as ONF and the Broadband Forum. These operators know they have the scale, market potential, and, most importantly, internal technology and product development engineering teams to drive standards and thereby influence the product roadmaps of their incumbent equipment suppliers.

And that’s what appears to be happening with 25GS-PON. The growing list of service providers taking part in the 25GS-PON MSA has a general consensus around their PON technology choices: Use GPON and XGS-PON today for the bulk of your residential FTTH deployments, and then add in 25GS-PON using the same equipment and ODN where it makes strategic sense.

This strategy is no different from other access technology strategies and deployment models seen in the past. From ADSL to ADSL2+, VDSL to G.fast, and GPON to XGS-PON, broadband access networks are in a constant state of upgrade. It just so happens that they are now being extended to support other use cases and other end customers. The PON market, as well, has always been one offering different technology options to suit each operator’s unique use case requirements and competitive dynamics. That flexibility is proving to be particularly beneficial in today’s hypercompetitive broadband environment, in which each operator might have a different starting point when it comes to fiber deployments, but likely has similar goals when it comes to subscriber acquisition and revenue generation. In this environment, many operators have clearly said that they simply can’t wait on a promising technology when they need to establish their market presence today. And so, the vendor ecosystem has responded again with options that can steer them down a path to success.

As analysts, we are increasingly asked to speculate on how Artificial Intelligence will impact various segments of enterprise and service provider networks. My colleague, Stefan Pongratz, began our collective responses to these requests with an excellent piece on how AI will impact mobile RAN investments.

For my piece on how AI will impact broadband networks, I thought I would start by posing the question to ChatGPT, the generative AI platform, to see what it would suggest as AI’s impact on broadband networks and services. My specific query was “How will artificial intelligence impact broadband networks and services?” Here are the verbatim results:

Artificial Intelligence (AI) is poised to have a significant impact on broadband networks and services in several ways. Some of the key impacts include:

Network Optimization: AI can be used to optimize the performance of broadband networks by analyzing data in real-time and making adjustments to network configurations. This can lead to better utilization of network resources, reduced congestion, and improved overall network efficiency.
Predictive Maintenance: AI-powered analytics can help predict potential network failures or issues before they happen. By analyzing data from various network components, AI can identify patterns that indicate impending problems, allowing for proactive maintenance and reducing downtime.
Enhanced Customer Service: AI can be employed in customer service applications to provide personalized support, answer customer queries, and troubleshoot common issues. AI chatbots can handle a significant portion of customer interactions, improving response times and overall customer satisfaction.
Quality of Service (QoS) Improvement: AI can monitor network performance and prioritize certain types of traffic based on user demands. This can ensure that critical services, such as video conferencing or online gaming receive higher priority and a better quality of service.
Network Security: AI can play a crucial role in identifying and mitigating cybersecurity threats on broadband networks. By analyzing vast amounts of network data, AI can detect unusual patterns, potential attacks, and vulnerabilities, helping to enhance network security.
Network Traffic Management: AI can optimize network traffic routing, especially in scenarios with dynamic traffic patterns. It can analyze real-time data to redirect traffic through the most efficient paths, reducing latency and improving user experience.
Content Optimization: AI can analyze user behavior and preferences to personalize content delivery. By understanding individual preferences, AI can recommend content, advertisements, and services that are more likely to resonate with specific users.
Network Planning and Expansion: AI can assist in planning and expanding broadband networks by analyzing demographic and usage data. This can help service providers determine where to invest in network infrastructure, ensuring that resources are allocated efficiently.
Resource Allocation: AI can help allocate network resources based on demand and usage patterns, dynamically adjusting bandwidth to accommodate peak periods and preventing network congestion.
Network Virtualization: AI can be utilized in software-defined networking (SDN) and network function virtualization (NFV) to optimize the allocation of virtual resources, making networks more flexible, scalable, and cost-effective.

While AI offers numerous benefits to broadband networks and services, it also presents challenges, such as ensuring data privacy, addressing ethical concerns, and maintaining transparency in decision-making algorithms. As AI continues to evolve, its impact on broadband networks and services is likely to become even more profound.

This might be dangerous to say, but I couldn’t have said it any better myself. All of the network impacts ChatGPT identified are definitely aligned with what we hear from broadband service providers around the world. This is especially true when it comes to proactive network and infrastructure management.

We are already seeing a small, but growing list of operators using machine learning tools as a first step in improving the overall reliability of their broadband access networks. Comprehensive, active monitoring of fiber broadband networks and optical assets has generally been reserved for long-haul and metro Ethernet networks. But for broadband access networks, fiber monitoring has generally been limited to identifying physical fiber cuts or bends and then rolling a truck so a technician can use a handheld OTDR or PON power meter to determine the location of the physical issues. Broadband network operators have always struggled with balancing cost and reliability, which is why they have typically relied on reactive toolsets as opposed to proactive ones.

But with the increased investment levels and long-term strategic significance of fiber broadband networks for both enterprise and residential applications, service providers are increasingly introducing machine learning and AI platforms to help them anticipate and correct network issues before they are impactful. Self-healing broadband networks are the goal.

Beyond ChatGPT’s fairly astute responses, there are also other impacts that AI will have on broadband network spending and services:

AI will Result in Additional Subsidies to Expand Broadband Accessibility and Affordability

COVID-19 was the first of a two-part wave of governments understanding the need for their citizens to have access to broadband and, in many cases, subsidizing the expansion of broadband networks to reach previously unserved locations as well as subsidizing the affordability of those services to learn, work, and engage in commerce from home.

AI—particularly generative AI—is the second part of that wave that will keep governments investing in the broadband networks and services of the future. Somewhat lost amidst all the speculation of how transformative generative AI will be to GDP, as well as how individuals even interact with the Internet and each other, is the fact that no government and no service provider, for that matter, wants to be known as the entity that left its citizens or its subscribers behind.

Therefore, we expect legislators in many countries will push for additional investments to be made to expand the availability and affordability of broadband services. Along those lines, AI tools will prove very useful in the critical task of mapping and identifying locations and communities that lack necessary broadband speeds. In the US, for example, AI tools are being used throughout the BEAD (Broadband Equity Access and Deployment) process to get the most accurate determination of broadband availability at the census block level to start. Ultimately, these datasets can be further parsed so that availability and performance can be determined at a per-street level. The goal, of course, is to ensure that the capital is used as efficiently as possible to eliminate broadband deserts. But AI tools will eventually help governments and service providers determine where their speeds and service levels might not be evolving quickly enough to support the needs of their communities and ensure that a broadband divide doesn’t become an AI divide.

The combination of AI and the Metaverse will Drive Increasing Traffic Requirements

The metaverse is often cited as a reason why service providers need to deploy fiber networks despite today’s applications and content generally not taxing those connections. Though the metaverse will ultimately have an impact on broadband service requirements in both enterprise and residential networks, it is the combination of generative AI and the metaverse that will really be a catalyst for speed growth and continued latency and reliability improvements.

In gaming, VR, and AR applications, the combination of generative AI and the metaverse will dramatically improve how users interact with their environments. The ability to use natural language to create new worlds or to navigate those worlds while also being able to request statistics about those environments in real-time will result in a whole new universe of content creators, and game and application designers. Their ability to successfully create and interact with their 3D and immersive environments will depend largely on their connectivity.

Obviously, the data centers running the real-time engines powering these immersive environments will experience the biggest demand. But there is expected to be some distribution of processing at the device level and at the edge of networks, which means that broadband capacity and throughput will also have to scale up based on users’ requirements.

The impact of using natural language to search, shop, and interact online, as well as to control in-home or in-building IoT sensors, for example, will have a significant impact on overall traffic growth. Where online searches used to be fairly-static requests for particular URLs, using natural language to make similar requests, while a convenience for users, requires significantly more language model processing and broadband connections that can support high downstream and upstream speeds.

And it goes without saying that securing these interactions will be critical, which will also introduce additional bandwidth requirements as well as SLAs and service tiers that match subscribers’ levels of risk tolerance.

The US broadband market has certainly become the most dynamic in the world. For decades, cable operators dominated net new subscriber growth, added millions of new homes passed annually, and compiled a dominant position in the market with a penetration rate of 65% or more. Even during the pandemic, cable operators saw their net subscriber additions per quarter accelerate, as they were able to poach dissatisfied DSL customers and attract first-time subscribers with the help of the FCC’s Affordable Connectivity Program.

But just as cable operators had reached their peak of subscriber growth, the rapid expansion of 5G-based fixed wireless access services put an end to cable’s quarterly gains. Now, the largest US cable operators are dealing with flat to modest net subscriber growth on a quarterly basis, with some quarters showing net subscriber declines. As a result, cable operator CEOs have started to change their tune slightly, moving away from calling fixed wireless an “inferior technology” to acknowledging its impact in creating a “high churn environment.”

But cable operator executives still continue to downplay the long-term impact that 5G FWA will have on their addressable share of broadband subscribers. They will claim that the pull-forward of broadband net subscriber additions during the pandemic combined with the general slowdown in new housing starts and moves—the typical drivers of subscriber growth—is the reason for the poor quarterly performance in new subscriber additions. They will continue to argue that 5G fixed wireless just doesn’t measure up to current DOCSIS service tiers—let alone any of the upgrades they are making through their mid- and high-split activities.

And yet both T-Mobile and Verizon continue to add FWA subscribers (both residential and small business) at a furious clip, with T-Mobile emphasizing that 51% of its fixed wireless customers come from cable operators. Verizon just announced the net addition of 384K FWA subscribers in 2Q23, pushing the company’s total subscriber base to 2.26M. Consumer FWA additions were 251K, while business additions were 133K. T-Mobile is expected to post even stronger subscriber gains in the second quarter, even as its FWA subscriber base in 1Q23 reached 3.2M through a net increase of 523K subscribers.

Source: Dell’Oro Group Broadband Access & Home Networking 1Q23 Report

T-Mobile has a stated goal of serving 7-8 million subscribers by the end of 2025, while Verizon has a goal of serving between 4-5 million subscribers by the end of 2025. Collectively, that’s a potential subscriber base of anywhere from 11-13M subscribers. Those numbers don’t include the entry of AT&T in the 5G FWA market via its Internet Air service, which could net anywhere from 1.5-2M subscribers by the end of 2025, according to our estimates. Unlike T-Mobile and Verizon, which are offering their FWA services nationwide, AT&T’s service is aimed at retaining current DSL customers who are located in areas that will not be offered a fiber alternative as part of the company’s 30M-location fiber buildout. According to our estimates, that leaves an addressable market of approximately 13-15M locations. Though our take rate estimates are relatively low for the service, it is possible that AT&T could expand the reach of Internet Air if the service shows early signs of success at securing new subscribers and keeping churn rates low.

In total by 2025, the three major mobile operators could have a combined FWA subscriber base of nearly 15M, with a good percentage of those having shifted over from cable. And this only represents the potential subscriber drain caused by FWA. By 2025, fiber overbuilders will have dramatically increased their footprint with a product that is certainly going to have better take rates than any flavor of DSL offered over the last two decades. Suddenly, that 65% share of broadband subscribers in the US looks like it is poised to potentially drop well below 60% by 2025.

Cable operators will point to capacity issues as a major impediment to further FWA growth beyond the stated subscriber goals. But with the operators ready to unleash more C-band spectrum and likely to use that spectrum to harvest additional FWA subscribers, the short-term pain for cable operators doesn’t look like it is going to disappear.

And let’s not forget that if capacity does become an issue in certain markets, then both AT&T and Verizon can offer fiber as an alternative to ensure they don’t lose subscribers. From this perspective, T-Mobile is a bit of a wildcard. However, we believe T-Mobile will advance a strategy of partnering with open-access fiber network providers to offer a residential fiber service in markets where FWA capacity might be constrained.

Weathering the Storm

Cable operators aren’t standing still, of course. They are increasing the bandwidth and mix of service tiers through a combination of band splits and spectrum improvements in their access networks. They are improving the reliability and signal quality of their networks through DAA deployments. Compared with fiber overbuilds, these are relatively inexpensive upgrades that will pay dividends down the road.

But in the short term, the two most important tools cable operators have to combat subscriber churn are price-competitive fixed-mobile bundles and RDOF- and BEAD-subsidized rural and edge-out projects. The subsidized projects, which major cable operators like Charter have already used to expand their homes passed footprint and will continue to use through 2025, will be a major source of annual homes passed, especially in a market where new home construction through the first half of 2023 remains lower than in 2022. These subsidized buildouts are in markets that are expected to have very high penetration rates and a guaranteed return on investment. Additionally, while the number of passings for the subsidized buildouts is well-defined, there are likely to be thousands of what are known as “synergy passings,” where locations outside the subsidized census blocks can also be addressed and captured.

On the fixed-mobile bundle side, the large cable operators have consistently added a disproportionate share of new mobile subscribers over the last few quarters and are also seeing the penetration rates among their broadband subscriber base increase. This mobile growth certainly provides a counter to FWA growth. But all things being equal, the major cable operators would rather have those broadband subscribers back.

The push and pull of subscribers isn’t expected to slow down anytime soon. Certainly, with inflation continuing to put pressure on household budgets, consumers are going to be focused on keeping their communications costs low and looking for value wherever they can find it. That means we are returning to an environment where subscribers take advantage of introductory pricing on services only to switch providers to extend that introductory pricing once the initial offer expires. That shifting and its expected downward pressure on residential ARPU will likely be countered by increasing ARPUs at some providers as they move existing DSL customers to fiber or, in the case of cable operators, move customers to multi-gigabit tiers.

The US broadband market is definitely in for a wild ride over the next few years as the competitive landscape changes across many markets. The net result is certain to be shifts in market share and ebbs and flows in net subscriber additions depending on consumer sentiment. One thing that will remain constant is that value and reliability will remain key components of any subscription decision. The providers that deliver on that consistently will ultimately be the winners.

Driven largely by the renewed focus on fixed broadband networks and services, industry standards bodies and their members are increasingly defining fixed network evolutions with cadences similar to those found in the world of mobile networks. Designed initially to enhance the benefits that 5G is bringing to mobile networks worldwide, these overarching frameworks of technology requirements, use cases, and implementation guidelines are intended to give service providers a blueprint for network evolutions that both complement mobile network evolutions while also enabling new capabilities for fixed broadband networks.

ETSI is the primary organization defining these frameworks through its Fifth Generation Fixed Network (F5G) working group. Prior to its establishment in 2020, there really was no coordinated effort among various standards organizations to define standards and goals for fixed networks. In the mobile world, the ITU, 3GPP, and GSMA have historically cooperated and delivered the standards for each new technology evolution. But on the fixed networks side, separate standards from the ITU, IEEE, ETSI, Broadband Forum (BBF), and the Optical Internetworking Forum (OIF) have resulted in a disjointed evolutionary path.

From ETSI’s perspective, harmonizing standards and evolutionary requirements across fixed networks is the best way to ensure networks that both complement and enhance mobile network evolutions. The utility of these frameworks in mobile networks is clear. But in fixed networks, the relevance is less clear, especially since fixed networks encompass everything from core transport networks to in-home connectivity. Coordination in mobile networks is essential while in fixed networks it isn’t necessarily a requirement. This is due to the simple fact that in mobile networks, spectrum availability defines the technology. In fixed networks, technology determines spectrum availability- and there are many ways to deliver that spectrum in the form of optical wavelengths, RF spectrum, etc.

Nevertheless, there is certainly value in laying out an umbrella framework of technical requirements, applications, and use cases that will underpin fixed network upgrades that complement mobile network evolutionary steps. And certainly, there is value in applying the framework’s principles to the emerging F5G networks of today to the anticipated F5G Advanced networks of tomorrow.

Defining F5G

Back in 2019, 10 companies jointly launched the F5G working group, which was approved by ETSI at the end of the year. To help define the Fifth Generation Fixed Network, it was important to clarify the previous four generations and their underlying technologies—similar to how Wi-Fi generations were recently re-named.

First Front Fixed Network Generations
Generation	Broadband Technology	Speed
F1G	PSTN/ISDN	64 Kbps
F2G	ADSL	10 Mbps
F3G	VDSL	30-200 Mbps
F4G	GPON/EPON	100-500 Mbps

The group also set out to define the characteristics of the Fifth Generation, which is the network most operators are currently building today. The three primary technical pillars of F5G were:

Full-Fiber connections (FFC) to every residence, business, room, and desktop, along with an expansion of fiber-based connections and density by 10x.
Enhanced Fixed Broadband (eFBB) to deliver symmetric, gigabit speeds to residential locations and 10 Gbps speeds to businesses.
Guaranteed Reliable Experience (GRE), defined by delivering minimal packet loss, a 10x reduction in latency, microsecond delays, and 99.999% reliability across the network and to every endpoint.

Source: ETSI - F5G Reference Architecture

The underlying technologies of F5G are:

10G PON
Wi-Fi 6
200G/400G Optical Transport Networks

The coordinated evolution of in-home and in-building networks, the fixed access network, and transport networks is intended to provide enough bandwidth and Quality of Service to better accommodate today’s use cases, including online gaming, education, E-health, and the continued reliance on cloud applications in enterprise environments. Additionally, the goal is to be able to support forthcoming, high-bandwidth applications, including cloud-based VR and AR, as well as uncompressed 4k and 8k video. Finally, delivering a sustainable network built on passive fiber connections and active electronics that consume less energy and reduce network operators’ carbon footprints is a key tenet of the F5G framework.

Operators globally are certainly expanding their gigabit-capable fiber networks, with combined XG-PON and XGS-PON OLT port shipments jumping from 2.2 M in 2020 to 8.7 M in 2022. In part due to the supply chain issues that have plagued consumer electronics over the last two years, total residential subscribers connected to these speeds remain well behind the available infrastructure. Additionally, the current high interest rate environment has dampened consumers’ appetites for higher-cost, premium broadband connections in many Western markets. Nevertheless, operators continue to invest in 10G infrastructure as they continue to pass more homes and businesses.

Certainly, bandwidth consumption patterns aren’t going to change and will remain on their steady upward trajectory based on an annual CAGR of 35-40%.

Enter F5G Advanced

Because of this consistent growth in bandwidth consumption and because F5G was never envisioned as being the ideal end state of fixed networks, members of the F5G Working Group have proposed F5G Advanced as the next evolutionary step, ultimately leading to an F6G framework, following their colleagues on the mobile side who have proposed 5G Advanced to help 5G evolve to deliver a more robust set of capabilities. At its heart, F5G Advanced aims to improve upon the goals established within the F5G framework, with more widespread FFC, including fiber connections to the room and to a wider array of endpoints, faster eFBB through the deployment of 50G PON, and faster GRE through more widespread availability od deterministic bandwidth and latency.

In addition to those enhancements, F5G Advanced focuses on improved energy efficiency with a heavy focus on optical access networks and ONUs, in particular, which consume by far the most energy in aggregate.

Tightly coupled with reducing energy consumption is adding significantly more network intelligence through AI and machine learning. AI is envisioned as both a means to improve the operation of the network as well as a service that can be provided to customers. For service providers, the use of AI and machine learning has very practical use cases, including allowing them to:

Support automatic network planning and capacity upgrades by modeling how the addition of services and capacity will impact current and future network requirements as well as the need to add switching and routing capacity to support application delivery
Implement network changes automatically, reducing the need for manual intervention and thereby reducing the possibility of errors.
Constantly provide detailed network monitoring at all layers and provide proactive fault location, detection, and resolution while limiting manual intervention.
Simplify the service and application provisioning process by providing a common interface that then translates requests into desired network changes.

Finally, F5G Advanced seeks to make fixed networks more aware so that faults can be anticipated, isolated, and resolved, whether they originate in the home, the access network, or the optical transport network. Also, awareness means allocating bandwidth and setting latency based on applications being used, not just statically delivered to users. This is the concept of experience-oriented SLAs as opposed to the traditional method of service guarantees through bandwidth alone.

Key Technologies

F5G Advanced builds on the underlying technologies of F5G and includes platforms that deliver additional capacity from the transport network all the way to the home and business, are more energy efficient, are autonomous, programmable, and intent-based, are more secure, and can support end-to-end network slicing and deterministic latency.

The key networking technologies of F5G Advanced include:

50G PON
Wi-Fi 7
800G Optical Transport Networks

The use of 50G PON, which introduces Digital Signal Processors (DSPs), is key to the overall architecture because it is viewed as a convergence technology for residential, business, and wholesale fiber networks onto a single ODN. Mobile midhaul and fronthaul applications, expanding IoT devices and services, wholesale fiber access to microcells, aggregation of Wi-Fi7 traffic in a business campus environment—all of these can, in theory, be delivered using 50G PON. Other applications and use cases are certain to emerge as operators continue to reap the benefits of converting their disparate networks onto a shared ODN, with throughput and services delivered via 50G PON.

F5G-Advanced’s Impact on the Market

It’s difficult to assess what—if any—impact F5G Advanced will have on global equipment markets. Service provider networks differ significantly, as do their competitive landscapes, which often dictate the adoption of broadband access and in-home Wi-Fi technologies. Though operators are certainly moving in the direction of all of these technologies—and have signaled their planned adoption and deployment of these technologies within the next few years, they are likely to do so at different intervals that are distinct and based on individual market dynamics.

Two technology components of F5G Advanced that will certainly see global adoption by operators are Wi-Fi 7 and 50G PON. Already, a growing list of operators has submitted RFPs for new residential and business CPE with Wi-Fi 7 support. The combination of an increase to 320 MHz of spectrum, 4096 QAM, and multi-link operation (MLO) is exactly what operators have been looking for in their customer endpoints.

Though early, Dell’Oro Group believes total 50G-PON equipment revenue will increase from less than $3M in 2023 to $1.5B in 2027. Much more significant growth is expected from 2027 on, as operators begin to evolve their 10Gbps PON networks to next-generation technologies.

Beyond being able to anticipate future bandwidth growth coming from consumer applications such as VR, AR, online gaming, videoconferencing, and 8k video, 50G PON positions operators to address business services. Specifically, 50G PON allows a provider to offer four 10G Ethernet connections, split among multiple businesses. Additionally, 50G PON is ideal for POL (Passive Optical LAN) deployments, where fiber can be run to the desktop and deliver connectivity with less power, rack space, and less cooling than traditional point-to-point Ethernet architectures.

Similarly, 50G PON has applications in the backhaul of public Wi-Fi hotspots as well as private wireless LANs, both of which will see significant bandwidth growth with the availability and deployment of Wi-Fi 6E and Wi-Fi 7. Wi-Fi 6E allows individual subscribers to burst to 9.6Gbps while Wi-Fi 7 quadruples that throughput to nearly 40Gbps. Additionally, the Wi-Fi 7 standard defines extremely low levels of latency and jitter, which the evolving 50G PON standard is also incorporating.

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