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cable services dsl technology

Mahesh S. Raisinghani
Texas Woman’s University, USA

Hassan Ghanem
Verizon, USA


Subscribers had never thought of cable operators as providers of voice services, or telephone companies as providers of television and entertainment services. However, the strategies of multiple system operators (MSOs) and telecommunication companies (telcos) are changing, and they are expanding their services into each other’s territory. The competition between the MSOs and the telcos is just brewing up.

Many factors influence communications carriers’ future and strategies. Among these factors are Internet growth, new Internet Protocol (IP) services such as Voice over IP (VoIP), regulatory factors and strong competition between the carriers. In the past, RBOC’s have centered their competition among each other and ignored the threat of the cable MSOs. The cable modem service has a bigger market share than the digital subscriber line (DSL) service, and as the concept of the VoIP technology is being refined and validated, the cable companies will become major players in providing this service at a cheaper price than the regular telephone service and will compete with the RBOCs. Incumbent carriers are seeking ways to encounter the cable MSOs’ threat.


RBOCs are concerned about the VoIP technology, since this concept will pose a serious threat to their voice market. Vonage, a leader in VoIP over Broadband (VoB), has about 50,000 subscribers, compared to 187.5 million access lines that the RBOCs have. Cable operators can move into the telcos’ territory and offer VoB as they did with Internet access. The cable companies could do this by offering this service through a partnership or by building their own services.

The VoB service is offered to broadband subscribers whether they are cable modem or DSL users. VoB providers do not have their own networks; they simply use the cable MSOs’ or the telcos’ broadband networks to carry their services. The appeal of the VoB services is the result of its cheaper packages. VoB companies such as Vonage and Packet8 are targeting cable MSOs as partners. For cable companies, this would create a bundle that includes cable modem services and VoB, which will provide a great appeal to the subscriber. Cable MSOs already are in the lead in providing broadband services to subscribers; by adding VoIP via broadband, they will be able to offer telephony at lower prices and have another advantage over the telcos.

Major cable operators have announced their interest in VoIP technology. Time Warner Cable has formed an alliance with MCI and Sprint, and the group has announced that by the end of 2004 it will offer VoIP to 18 million subscribers. Comcast is another cable operator already in the process of testing VoIP in many states, and will offer this service in the nation’s largest 100 cities (Perrin et al., 2003a). The MSOs have continued to upgrade their networks to have a bigger share of Internet access and to enter the lucrative voice market. On the other hand, the telcos have continued to develop their networks around DSL and voice service, ignoring television and video services (Jopling & Winogradoff, 2002).


To deal with the threat of VoB providers, telcos have to upgrade their networks to compete with the cable MSOs. FTTP is a potential alternative to DSL. It is a great initiative to meet the growing demand of consumers and business to a faster Internet connection and reliable medium for other multimedia services. Since signals will travel through fiber optic networks at the speed of light, FTTP delivers 100 mega bits per second (Mbps), as opposed to 1.5 Mbps for DSL. Thus, FTTP delivers a higher bandwidth at a lower cost per megabyte than alternative solutions. This substantially increased speed will enable service providers to deliver data, voice and video (“triple play”) to residential and business customers. As a result of this increase in speed, a new breed of applications will emerge and open horizons for the RBOCs to venture into a new territory. The deployment of FTTP will help eliminate the bandwidth limitations of DSL. DSL will still be a key player for the near future, but in the long run, DSL customers will be migrated to the new fiber network. FTTP will pave the way for the RBOCs to compete head to head with cable providers. Comcast Corp., based in Philadelphia, is the largest cable provider based in the United States. It is upgrading some of its customers’ Internet services to 3 mega bits per second, which is significantly more than what phone companies can offer through their DSL network. FTTP will simulate competition in the communication industry and entertainment providers, and will provide RBOCs a medium with which to compete against cable companies.


In May 2003, BellSouth, SBC and Verizon agreed on common specifications for FTTP. This agreement has paved the way for suppliers to build one type of equipment based on the specifications provided by the three companies. By mid September, the three companies had short-listed the suppliers, and the equipment was brought to labs to be tested by the three companies, where they will select finalists based on the test results and proposals. The technology being evaluated is based on the G.983 standard for passive optical network (PON) (Hackler, 2003). This standard was chosen based on its flexibility to support Asynchronous Transfer Mode (ATM) and its capacity to be upgraded in the future to support either ATM or Ethernet framing.

As the cost of electronic equipment has fallen dramatically in recent years, it is more feasible now to roll out FTTP than it was a few years ago. Many equipment manufacturers, such as Alcatel, Lucent, Nortel and Marconi, are trying to gain contracts from the big three RBOCs to manufacture and provide FTTP components. The bidding war for these contracts will be very competitive, and providers have to choose equipment suppliers based on the price and specifications of the equipment.


The regulatory environment will also be a major factor in the progress of the FTTP rollout. At the time of this writing, it was still unclear how the Federal Communications Commission (FCC) will handle this issue. Service providers are optimistic that the FCC decisions will favor them. RBOCs are hoping that the FCC will provide a clear ruling regarding national broadband networks.


Several existing technologies can accommodate the triple-play services. For example, Asynchronous DSL (ADSL) is a broadband technology that can reach 8-10 Mbps, and ADSL2 has an even higher range of 20 Mbps. The ADSL technology can be deployed with a fast pace by using existing copper wiring. The disadvantage of the copper-based networks and DSL technology is that they have a regulatory constraint to be shared with competitors, which makes it less attractive to invest in this medium. Another disadvantage is that signals do not travel a long distance. They need expensive electronic equipment to propel the signal through. This expensive equipment will result in high maintenance and replacement costs. Another weakness of DSL technology is that the connection is faster for receiving data than it is for sending data over the Internet.

Another broadband technology to be considered is cable technology. It has bandwidth capacity in the range of 500 Kbps to 10 Mbps. It can deliver data, voice and video and is 10 times faster than the telephone line. But cable technology has its weaknesses, too. It is less reliable than DSL and has a limited upstream bandwidth, which is a significant problem in peer-to-peer applications and local Web servers. Another weakness is that the number of users inversely impacts performance and speed of the network (Metallo, 2003).

On the other hand, fiber will deliver a higher bandwidth than DSL and cable technologies, and maintenance costs will be lower in comparison with copper-based networks. As mentioned earlier, FTTP will use PON, which will minimize the electronic equipment needed to propel the signals. Once the network is in place, the cost of operations and maintenance will be reduced by 25%, compared with copper-based networks.

One company that already had a head start with FTTP technology is Verizon. It will invest $2 billion over the next 2 years to roll out the new fiber network and replace traditional switches with softswitches (software switches). These softswitches will increase the efficiency of the network and eliminate wasted bandwidth. The traditional circuit switch architecture establishes a dedicated connection for each call, resulting in one channel of bandwidth to be dedicated to the call as long as the connection is established. The new architecture will break the voice into packets that will travel by the shortest way over the new network; as soon as the packet reaches its destination, the connection is broken and no bandwidth is wasted.

At the design level, softswitches and hard switches differ drastically. Features can be added or modified easily in the softswitch, while they have to be built into the hard switch. Also, FTTP will be the means to deliver the next generation of products and services at a faster speed and with more data capacity (i.e., send up to 622 Mbps and receive 155 Mbps of data compared to 1.5 Mbps that DSL or cable modems are capable of (Perrin et al., 2003b). This will create an opportunity to develop and sell new products and services that can only be feasible over this kind of technology, which will result in generating a new revenue stream.


Fiber will be the access medium for the next 100 years or so. But in the meantime, the migration from copper to fiber must not be viewed as a short-term initiative. It will take 5 to 10 years to become a reality. FTTP technology deployment is very different from DSL deployment. While DSL deployment was an add-on technology, where the network and operations systems impact was relatively minor, FTTP deployment will undertake a new infrastructure and will require major changes in support systems.

Another issue that will be facing RBOCs is DSL technology. RBOCs will be burdened to support DSL technology as well as FTTP technology. By supporting DSL after the complete deployment of FTTP, incumbents will endure extra costs that can be avoided by switching their customers to the FTTP network and abandoning the DSL network.

The FCC Triennial Review Order will put the new technology in jeopardy in case of a negative clarification or ruling. The Telecommunications Act of 1996 requires incumbents to lease their networks to competitors at rates below cost. If copper networks are retired, incumbents are required to keep providing competitors with a voice-grade channel. Another challenge will stem from providing video to customers. Cable companies are well established in this domain and have the advantage over RBOCs. In the 1980’s and 1990’s, RBOCs attempted to expand into entertainment services and failed miserably. But, their new strategies to enter entertainment services have to be well planed, and the companies have to learn form their previous failures.


Networks are laid down via aerial and carried via poles or cables under the ground. Using this infrastructure will enable FTTP to be deployed at a relatively low cost. The fiber will be installed at close proximity to the customer and will be extended to new build areas when needed. When the customer requests the service, rewiring will be added from the Optical Network Terminals (ONT) to the customer’s premises. This will keep a close correlation factor between deployment costs and return on capital. This will tie some of the FTTP expenditure to customer demand. Deployment can be started in areas where the highest revenue is generated, and move to other areas where the infrastructure is the oldest.


FTTP is promising to deliver the next-generation network with an advanced bandwidth. It will also be capable of delivering various services that may be available in the next few years. In 2003, Microsoft showed a beta demonstration of a live online gaming application with simultaneous voice, video and data services over FTTP. A new breed of gaming applications will be feasible with FTTP. Applications such as peer-to peer, where music files, video files and large data files are exchanged, would become more attractive with FTTP. Another application that will become viable is video on demand (VOD), where customers can order any movie of their choice at any time. Beardsley (2003) reports that broadband offers a new distribution path for video-based entertainment; a medium for new interactive-entertainment services (such as interactive TV) that need a lot of bandwidth; and a way to integrate several media over a single connection. For example, FastWeb, based in Milan, Italy, can now supply 100,000 paying households in Italy with true VOD, high-speed data and digital voice, all delivered over a single optical-fiber connection. As mature markets reach scale with large online audiences, broadband may start to realize some of its underlying—and long-hyped—potential for advertisers. The new advanced broadband will become a platform for many industries to deliver marketing, sales and communications services. Broadband is already changing the way companies do business and could alter the way markets work. For instance, remote learning will improve greatly, and educational institutions will be in a better position to offer services in remote locations. Many other fields, such as health care, public sector, retail and financial services, will also see the positive impact of broadband.


The incumbent carriers have to encounter cable operators’ attacks on their telephony market by expanding their services and offering similar services that the cable companies offer and more. Triple play will give the telcos an advantage over cable operators, or at least an equal edge. They have to deploy broadband networks that can provide subscribers with entertainment/television services, to compensate the telcos’ loss of revenues incurred from cable operators’ deployment of VoIP. For telcos, expanding into the entertainment market has to be based on the strategy of meeting consumers’ changing needs. Cable operators have already raged a battle against satellite companies, who are competing for the same customers. Another factor to be considered is the MSOs’ slow adoption of digital technology. On the financial side, MSOs are weaker than telcos.

The RBOCs are faced with staggering sinking costs. The idea is to come up with new killer applications suited for the new network that will appeal to (potential) customers’ tastes and are affordable, to lure subscribers. FTTP has to do more than current systems. Enhancing what the current technology is capable of doing does not justify the cost and/or effort that have to be invested in FTTP. A newer breed of “killer application/s” that would lure the subscriber has to be implemented and delivered with the service. They have to be flexible to tailor their bundle according to the customers’ demands and needs.

Fibonacci, Leonardo [next] [back] Fiber-to-the-Home Technologies and Standards - INTRODUCTION, BACKGROUND, Home Run, Active Star, Passive Star, ATM PON, Gigabit PON, Ethernet PON, FUTURE TRENDS

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