PONs look to make a big splash

Some companies are hoping to bring optical networking to smaller businesses and to the consumer through a technology known as passive optical networking (PON), but at least one analyst hadn’t seen the light and said the mass marketing of PONs is at least four years away.

Still in its infancy, PON is a technology that allows passive splits of fibres and allows two-way symmetrical broadband traffic to flow over a single strand of fibre.

Tom Nolle, chief executive officer of Voorhees, N.J.-based CIMI Corp., said he is skeptical about the PON market. While mass rollout of the technology is coming, he predicted the earliest North America would see it is 2005. It’s possible some early ventures into the market will happen by the end of the year, he added.

“My general perception of current conditions is considerably less exciting than typically people want to hear,” Nolle said.

According to Christopher Nicoll, vice-president of telecom at Current Analysis in Sterling, Va., PON is a last-mile solution for broadband access. Companies like Atlanta-based Terawave Communications Inc. have focused their efforts on the technology and have trials underway. Quantum Bridge of Andover, Mass., already have PON products on the market.

With its TeraPON product, which is currently being tested by France Telecom R&D of Paris, Terawave is claiming its products can reach 622 Mbps on a single strand of fibre.

According to Terawave’s Sam Trotter, director of market development in the firm’s Hayward, Calif. office, the global PON market will be valued at approximately US$2 billion by 2003.

“Basically, this is going to be a large market in a couple of years or so,” Trotter said.

When looking at PON, there are two main categories of the technology, Nolle said. The first category is PON technology designed for delivery of things like cable television. The second category is PON technology designed for two-way communications. The standards for the latter form are based on asynchronous transfer mode (ATM). Nolle said it is sometimes referred to as APON (ATM PON).

“PON is the premier technology for the creation of a very broad-based digital broadband residential/business infrastructure, and it’s not intended to be a point solution approach,” Nolle said. “In fact, the whole reason for conceptualizing PON is the assumption of broad-based deployment. And that makes PON totally a hostage to the regulatory framework.”

It is the regulatory requirements that will keep it from coming to fruition in North America any time soon, he added.

According to Nolle, deployment of PON on a wide scale is much more likely in the Asia-Pacific region because the technology is best suited to high-density populated areas. So that makes it very difficult to deploy in a country like Canada where the land mass is great and the population is widely dispersed. Most trials of the technology have been outside North America with Japan having had the largest PON trials to date, he said.

The earliest adopters of the technology are businesses – mainly multi-tenant unit (MTU) buildings, business parks, shopping malls and the like, Nicoll said.

“It could be used for broadband residential services, although I’m not sure that’s a key application as of yet,” Nicoll said. “It does run over fibre and since there’s not a lot of fibre going into homes at this point, it’s more of a commercial application, although if you do finally get fibre to the home, PON is a great way of dividing up the bandwidth.”

Nicoll believes one of the leaders in PON technology is Quantum Bridge, which released its first PON products in August 2000. Jeff Gwynne, senior vice-president of marketing for the company, is perhaps the most optimistic about the market.

“We’re just at the beginning of [massive rollout], and 2002 will be the year of PON, not only for business users but also as a nice infrastructure for a variety of other technologies, such as wireless,” Gwynne said.

Optical access in general does have its limitations for deployment, Gwynne added. Right now, only about three to five per cent of businesses have fibre, but the carriers are designing fibre optic networks and trying to get them into the ground. Deployment of fibre has been accelerated with an increase in the number of companies doing it, he said.

The current economic climate is only adding to the problems of companies trying to make a business out of the PON industry, Nolle said.

“You couldn’t get funded for this now if you had God’s personal thumbprint on your business plan,” Nolle said. “PON was never a popular concept in terms of new company support because everybody pretty well recognized that regional Bell operating companies and PTTs (post, telephone and telegraphs) and big facility carriers were not going to buy something like access technology from a startup.”