Fixed broadband hits major milestone

We recently authored this blog post over at Adva Optical’s Technically Speaking blog:

By the end of 2018, fixed broadband is expected to reach a major milestone – one billion served – supporting nearly 50 percent of total households around the globe. While this number pales in comparison to mobile broadband at nearly six billion subscribers (per Ericsson Mobility Report – November 2018) its significance cannot be overlooked.

This number represents a billion opportunities for service providers and application developers to extract additional revenue streams while offering consumers more value, more speed and more services (read more….).

Network Convergence Opportunity Driving 10G PON Deployments Confirms Global Survey

Broadbandtrends recently conducted a global service provider survey of  broadband operators regarding their plans to deploy 10G PON technology within their network. 10G PON offers operators the opportunity to offer both higher bandwidth and symmetrical services, while simultaneously addressing the bandwidth, latency and the densification requirements of the emerging 5G network.

Key findings of the survey include the following:

  • XGS-PON is the 10G PON technology of choice to serve both residential and business segments
  • Cost remains the greatest concern facing operators planning to deploy 10G PON
  • The ability to have a converged architecture supporting multiple applications as well as reusing the existing passive ODN are the key drivers for implementation of 10G technologies.
  • Business services will be the primary initial applications for 10G PON deployments, followed by residential triple-play, with mobile network support in the future
  • Deployment of 10G PON for residential applications is not expected until 2020 for the majority of operators
  • Although 10G PON can offer very high bandwidth – the majority of operators only plan to offer 2-5Gbps to the residential market segment
  • The majority of operators are expected to take a step-wise migration path in their 10G PON evolution, with NG-PON2 adoption not expected until 2020 or later for most operators
  • The need for even higher bandwidth PONs (25G) is not expected until 2024 or later
  • ADTRAN was the perceived 10G PON leader across all categories followed by Nokia and Huawei

GPON remains the most prevalent FTTH technology.  However, its current bandwidth capabilities and its asymmetric characteristics do not provide enough capacity to support the expected growth in bandwidth demand.  Therefore, operators are looking at the latest iterations of the PON standard – 10G PON – for their future network requirements.  At present, there are a variety of 10G options available to operators – including 10G EPON, XG-PON, XGS-PON and NG-PON2.

NG-PON2 is considered the ‘ultimate” future proof technology – offering multiple wavelengths supporting up to 40Gbps (and even higher in the future!) and capable of serving multiple/different segments on each individual wavelength. Additionally, the ability to bond wavelengths together to offer even higher bandwidth options, positions this technology well for future bandwidth growth.

Key characteristics that are attracting operators to these next-generation PON solutions include the ability to offer a converged network for both residential and business services, along with the ability to re-use many portion of their existing optical distribution network (ODN).  However, the cost associated with 10G and the ROI timeframes remain key concerns.

Unlike previous PON networks – which primarily served residential customers; the variety of applications that can be supported with 10G PON along with new market segments could help ease cost concerns for operators.  As such, many operators are initially targeting the high-value business/enterprise segments for their early deployments to achieve a faster ROI.  Finally, a number of vendors are offering flexible optics that allows a 10G PON OLT to utilize multiple types of optical transceivers to achieve best cost alignment and ease cost concerns.  Finally, vendors are also introducing innovative solutions to over-come the “interoperability” concern, helping to accelerate time to market for new product introduction.

10GPON_Objectives

Broadbandtrends’ Global Service Provider 10G PON Deployment Strategies survey analyzes the results from interviews with 36 incumbent and competitive operators in all major regions, about their plans and deployment strategies for 10G PON.  The report provides a global overview of the results as well as commentary on any notable regional differences found in the results.

Key Questions Answered in this study includes the following:

  • What are operator timelines for the deployment of 10G PON?
  • Which 10G PON technology will be deployed and which market segments will it serve?
  • What are the key drivers for deployment of 10G PON technology?
  • What are the top challenges/concerns related to the deployment of10G PON technology?
  • Which services will be deployed via 10G PON?
  • What is the timeframe for residential 10G PON deployment?
  • What multi-gigabit speeds will operators offer in the residential market?
  • Which 10G PON migration path will operators take?
  • What is their timeframe to migrate to NG-PON2?
  • How important is Nx10G Wavelengths for NG-PON2
  • When do operators expect to need 25G PON solutions?
  • Which vendors are operators most familiar with for 10G PON Solutions?
  • Which vendors are perceived as leaders for 10G PON Product Performance, 10G PON Deployment Experience, 10G PON Product Roadmap, 10G PON Pricing, and 10G PON Service & Support?

Vendors evaluated included:  ADTRAN, Calix, DASAN/Zhone Technologies, Fiberhome, Huawei, Iskratel, KEYMILE, Nokia, ZTE, and ZyXEL.

This Report is 25-pages in length with (19) Figures and (1) Tables is available for purchase for $2495(USD).  To order this report, please contact us at 540.725.9774 or via email at mailto:sales@broadbandtrends.com. Additionally this report may be purchased online at www.broadbandtrends.com/reports

Faster Speeds >250Mbps Overtakes Competitive Environment as Key Driver for G.fast Deployment

Broadbandtrends recently release its latest Global Service Provider Survey: 2017 G.fast Deployment Strategies & Vendor Leadership.

Ultra-broadband copper technologies, such as G.fast, are breathing new life into the copper plant, offering faster speeds that will support the wide range of high-bandwidth applications on the horizon, while providing operators with a time to market alternative to FTTH – often at a fraction of the cost. G.fast (ITU-T G.9700/9701) is a fiber-to-the-distribution point (FTTdp) architecture offering up to 2 Gbps aggregate speeds on copper over very short loop lengths.

With aggregate speeds up to 2Gbps, G.fast is offering operators an opportunity to address both the competitive environment and time-to-market pressures, but it is the ability to offer these faster speeds that is the #1 key driver for operator interest in G.fast.

KeyDrivers_2017_Gfast

Operators appear to be tactical in their deployment over the next two years with much of the focus on MDU deployment; however, it is expected that emerging capabilities that have recently been approved in the G.fast standard, such as increased aggregate speeds, higher frequencies, longer loop lengths and larger DPU sizes – will be highly valued by operators.

Broadbandtrends’ Global Service Provider G.fast Deployment Strategies survey analyzes the results from interviews with 28 incumbent and competitive operators in all major regions, about their plans and deployment strategies for G.fast.  The report provides a global overview of the results as well as commentary on any notable regional differences found in the results.

Key Questions Answered in this study includes the following:

  • What are operator timelines for the deployment of G.fast?
  • What are the key drivers for deployment of G.fast technology?
  • What are the top challenges/concerns related to the deployment of G.fast technology?
  • What are the expected shortest, average and longest loop lengths for G.fast deployment?
  • What are the average downstream/upstream speeds expected to be offered with G.fast?
  • Will operators offer symmetrical speeds over their G.fast Networks?
  • What are the top use cases for G.fast?
  • What is the deployment potential for each G.fast use case?
  • What is the average size for G.fast DPUs by use case?
  • Which backhaul technology is most likely to be used for the DPUs?
  • What are operator plans with respect to using Reverse Powering in a G.fast environment?
  • What percent of the network will be capable of supporting G.fast in 2017 and 2018?
  • How will operators implement Persistent Management Agent (PMA)?
  • Which emerging G.fast capabilities are most important to the deployment of G.fast?
  • Which vendors are perceived as leaders for G.fast Product Performance, G.fast Deployment Experience, Product Roadmap, Pricing, and Service & Support?

Vendors evaluated included:  ADTRAN, Calix, DASANZhone, Huawei, Iskratel, KEYMILE, Nokia, ZTE, and ZyXEL.

This Report is 31-pages in length with (21) Figures and (2) Tables is available for purchase for $2995(USD).  To order this report, please contact us at 540.725.9774 or via email at mailto:sales@broadbandtrends.com. Additionally this report may be purchased online at www.broadbandtrends.com/reports

Google Fiber May Disappoint, But It’s Not a Failure

As news hit social media channels that Google Fiber was pausing its roll-out of gigabit broadband – many thoughts came to mind.

But the #1 thought – was simply this:  without Google Fiber disrupting the market there would be no GigaPower, GigaBlast, Gigabit Pro, Gigaspeed, etc. especially from the likes of AT&T, Cox Communications, Suddenlink, etc.

Yes, many of the Telcos would still be rolling out FTTH services – but their top tiers would likely be 100Mbps or perhaps 250Mbps – but there would certainly be no rush to offer 1 Gigabit.

In fact, Google Fiber’s greatest contribution to the industry was turning the business model on its head.  And here’s how:

Pricing

When Google Fiber introduced its pricing for Kansas City – it was unlike anything the industry had seen to date.  In fact – here is a comparison of Google against some of the competition when it launch in 2012 versus current pricing.

As you can see – most operators have significantly dropped their prices for gigabit broadband following Google Fiber’s lead.

Operator Internet 2012 Monthly Cost 2016 Monthly Cost
Google Fiber 1GB/1GB $70 $70
Verizon 300MB/65MB $209.99 300M Symmetrical

$169.95

Chattanooga (EPB) 1GB/1GB $349.95 $69.95
Lafayette Utilities 100MB/100MB $199.95 $109.95

In 2012, we referred to Google’s strategy as a “game shifter” – rather than a game changer.  Unlike other operators – Google Fiber appeared to be able to deploy FTTH at significantly lower costs than most operators.  This was due in part to careful planning (fiberhoods and pre-registration) – which helped to guarantee adoption rates, as well as  in-house equipment development – which allowed them to better control costs.

City Partnerships

When Google announced its “Think Big with a Gig” program – interest in becoming a Google Fiber was immense (and frankly, still is).  However, in order to be considered – cities had to offer A LOT of concessions.  These included providing Google with complete access to its facilities, assets and infrastructure and will not  imposing any charges for access to or use of any City facilities; as well as permit and inspection fees. Infrastructure includes, but will not be limited to, conduit, fiber, poles, rack space, nodes, buildings, facilities, CO locations, available land, and others (TBD). In addition, the partner cities, must allow Google to have access to necessary rights-of-way on property owned by City and includes a commitment to review and respond to any documents that require approval by City within five (5) working days of submission by Google.

And they have.

Of course, every other operator has now stated that if cities want them to build gigabit then they will need the same concessions and for the most part they have received them.

So, once again – Google moved that needle for everyone.

Mind share

Google Fiber single-handedly put gigabit broadband into the vernacular of the general public.  Prior to their entry in the market – consumers did not have a sense of what gigabit broadband could offer – but now they do – even if they can’t get it.

More importantly, Google Fiber made every other operator – cable and telco – become better at what they did and what they offered.  Since the introduction of Google Fiber – virtually all broadband operators have made significant investments within their networks to provide faster speeds, better services and improved customer satisfaction.

Gigabit Reality Check

What they did not anticipate was simply the physical nature of building a FTTH network – Labor is expensive and often slow and there remains a lot of unpredictability – especially, when entering the home and/or building.  As such, it is no surprise that Google Fiber acquired Webpass – to use a millimeter wave technology for the final mile.

In the past few years that Google Fiber has been around – they have never really disclosed how many homes they have passed and how many they have connected.  And perhaps, they are beginning to realize that their ROI is not happening on the timeline they anticipated.

Nonetheless, despite the disappointment that is now being felt by many communities that are being “paused” – it would be unfair to call Google Fiber a failure.  And I believe this quote sums it up best:

“Only those who dare to fail greatly can ever achieve greatly.” – Robert F. Kennedy

And while Google Fiber may not be achieving the success it had anticipated – the overall industry has greatly benefited from their willingness to fail.

Australia’s NBN Tackles the Challenges of “Broadband For All”

Building broadband infrastructure is hard.  It takes a lot of time and money and requires significant amounts of planning.  Something that Google Fiber is finally admitting, while Verizon and any other provider that has tackled a large-scale FTTP project sits back and says “we could have told you that”.

I’ve been writing about National Broadband Networks – in particular both Australia’s NBN and the UK’s Openreach for a long time (over 8 years to be exact).  That’s when  Openreach started trialing both its FTTP and FTTC networks and when NBN rose from the ashes of Australia’s failed plan to build a National Broadband Network through a consortium of partners.

At this time, the Australian government announced that it would establish a new company that will invest up to $43 billion (AUD) over 8 years to build and operate a National Broadband Network, a wholesale-only, open access network that will (1) connect 90 percent of all Australian homes, schools and workplaces with broadband services with speeds up to 100 megabits per second; and (2) Connect all other premises in Australia with next generation wireless and satellite technologies that will deliver broadband speeds of 12 megabits per second.

In the original plan, 93% of homes were to be connected by FTTP, while 4% would be served by fixed wireless access (FWA) and 3% by satellite.

Fast forward to today and a few things have changed.  First the target is to provide minimum speed targets of 25Mbps/5Mbps for 100% of premises with the expectation for the following:

  • 86% – 50Mbps or greater
  • 68% – 100Mbps or greater
  • 45% – 500Mbps or greater
  • 40% – 1Gbps or greater

The second major change is the technology mix, which has shifted to the following:

  • 2.0-2.5M Premises or 17%-21% – FTTP
  • 5.1-6.5M Premises or 43%-54% – FTTN/B/dp
  • 2.5-3.2M Premises or 21%-27% – HFC
  • 500-630K Premises or 4% – FWA
  • 400-470K Premises or 3% – Satellite

For the record, for those customer that desire FTTP, but are located in a FTTN/B/dp area, may request FTTP through NBN’s Technology Choice program – however, this will be at their own expense.

Why this shift in strategy?  A couple of reasons.  The first  being Time to Market – it was clear from the initial roll-out (2012-2014) that NBN would not be able to hit its deployment targets.   This resulted in lower than expected take-rates and revenues.  For instance, in FY2013 the FTTP goal was 1.3M premises Ready For Service (RFS).  The actual number was 150,000.

Furthermore, a strategic review conducted in 2015, indicated it would take at least 3 additional years to hit its deployment targets.  The result: “An unrealistic assessment by key internal and external stakeholders of the complexity and  time required to complete the task

The second key reason, is that at the time of the initial planning for NBN – technologies such as DOCSIS 3.1, VDSL2 Vectoring and G.fast did not exist (except perhaps on paper and in the lab).

For reference purposes, VDSL2 Vectoring can deliver downstream speeds of 100Mbps @400m, and faster speeds at shorter distances. Using the VDSL2 35b profile, speeds of 250Mbps are achieved at the same distance.

G.fast can deliver speeds of 500 Mbps at 100m; 200 Mbps at 200m; and 150 Mbps at 250m, while future enhancements to the standard will allow longer distances and faster speeds

gfast_ratereach

Finally,  the cost to implement these alternative solutions is significantly less than FTTP, while offering speeds in excess of the targets. As of today, a brownfield FTTP deployment cost more than 2x more than other technology solutions per premise.

A shift in direction accelerates deployment

By building the network to meet the current needs, while including capacity and upgrade paths to allow for future evolution in demand,  has enabled NBN to make significant progress in its deployment.

At present, nearly two-thirds of the nation are either in design, construction or already able to order NBN services.  During FY16, NBN doubled the number of premises Ready for Service (2.89M), doubled the number of premises activated (1.1M) and doubled the revenue to $421M.

As shown, peak build will occur in FY 18 with 3.7 premises made RFS, while peak activations will occur in FY 19 with 2.5 million premises activated.

By the end of the build, the expected  penetration rate of NBN will be 68%.

nbnprogress

Surprisingly,  despite the availability of high-speed packages to end-users, 33% take a minimum speed package (12Mbps/1Mbps), while 45% use 25Mbps/5Mbps and 16% select 100Mbps/40Mbps. There are currently no 1Gbps packages available on the NBN network, despite having nearly 1.6 million premises wired for FTTP.  A challenge for NBN will be to get end users to move up the speed chain to higher cost packages.

A Pipeline of Innovation

NBN was very clear to fend off criticism of its decision to move towards a technology mix, by showing the evolution path to all of its technology choices through 2020.

For example, GPON can evolve to XGS-PON and/or NG-PON2 to offer speeds up to 10Gbps, FTTN/B/dp locations can move from  VDSL2 vectoring towards G.fast, while even G.fast can evolve to support multiple enhancements, before moving towards XG-Fast.  Additionally, some of these locations will be migrated towards FTTP. For its HFC networks, DOCSIS 3.0 will evolve to 3.1 and eventually towards a Distributed Access Architecture with virtual Converged Cable Access Platform (vCCAP).  Carrier Channel Aggregation can be introduced into Fixed WIreless networks for speed gains, while Additional Satellite capacity and new modems up the speeds on Satellite broadband services.

Tackling the Challenge

Australia is a country with a population of 24 million with approximately 12 million premises.  While a large majority of the population resides in urban areas – there remains a portion of the population that is considered very rural.

australia-remote

While most operators will choose not to service these “difficult to serve” locations, NBNco is actually prioritizing these unserved and underserved locations as part of its build.  Per NBN, there are approximately 1.8 million premises that fall into this category,  primarily located in the regional and remote areas of Australia, or small pockets of poor service in metropolitan areas.

And if you want to truly understand rural – go visit Alice Springs or take the train across the Nullarbor Plain.

Technology Partners

NBN is working with a number of technology partners for its network deployment.  This includes Nokia Networks for its FTTP, FTTN, FTTB and FTTdp solutions; ARRIS for its HFC solutions; and Ericsson for its FWA solutions. For satellite, NBN launched the Sky Muster satellite, with network operations handled by Ericsson and Flight operators handled by Optus.

At present there are over 50 Retail Service Providers (RSPs) offering NBN broadband services.

Expect the Unexpected

Even as I write this blog, the criticism against NBN and its deployment plans remains rampant. Everything from “they should have continued down a FTTP path” to “its taking too long to build” are stated daily.

It should be noted that it took Verizon over a decade to pass 20 million homes with FTTP – most of them in high density areas, with overhead cable.  And even with this aggressive buildout, there are many premises  in metro markets such as Boston and NYC that do not and will not have access to its FiOS service.

I live in a non-FiOS Verizon market and it is pretty frustrating to be marketed services that don’t and will not exist.

Google Fiber is also learning how hard it is to go all fiber as it drastically cuts back on its roll-out plans and slows the build in its current market.

Building this new infrastructure requires significant civil engineering and design work.  In addition, there must be access to power and existing infrastructure such as the  associated telephony connection cabinet. Others areas of considerations include access to the location for both installation and maintenance, surveying for underground structures or obstacles; as well as the visual impact on the area – nobody wants a big telephony cabinet blocking their views.  An unlike some countries such as China – with its extensive greenfield opportunities – most of the premises in Australia are considered brownfield – meaning there is no cookie cutter deployments.  Each and every premise must be surveyed and engineered for connection to the network.

The lesson:  expect the unexpected – because it will happen everytime.  No two deployments are the same and surprises are present at every turn.

Is NBN perfect? No.  Could it have built a FTTP only network?  Yes – but it would have taken far longer and cost significantly more.  For those without access to broadband – time is of the essence as the world quickly moves towards a digital economy.

And as we are seeing with NBN – the goal is to connect everyone – as quickly as possible,  by using a variety of technologies and architectures that all offer an evolution to gigabit or greater speeds.

Kudos to NBN for taking on a challenge to offer Broadband for All.  While other countries talk about it – Australia is actually doing it.  If NBN can achieve its goals (and it appears they have the right team in place to make this happen) – then Australia will likely have something no other country in the world has – Broadband for All by 2020.

 

Full disclosure:  Nokia Networks and NBN hosted a handful of analysts to gain a better understanding of the NBN network and the challenges it faces to provide broadband for all.

 

Verizon Looks to Future-Proof its Access Network with NG-PON2

Verizon announced on Wednesday June 20, 2016 that is was initiating a 3-6 month lab trial of NG-PON2 technology at its Innovation Lab in Waltham, Massachusetts.

Lab testing will focus on several features of NG-PON2, including tuning performance, ability to carry residential and business services on the same platform, as well as interoperability and conformance testing to meet Verizon ONT specifications.

As part of this announcement, Verizon also stated that it was working with Ericsson (in partnership with Calix with Ericsson providing systems integration and back office work ) and ADTRAN.  Neither vendor is currently an incumbent vendor at Verizon for its FiOS network.  Incumbent vendors include (Nokia, Tellabs, Arris (via Motorola)).

According to Verizon, NG-PON2 is a natural evolution of its FTTx network, which started in 2004 with BPON and moved to GPON in 2007.  Even based on this evolution, the network remains approximately 50% BPON and 50% GPON.

Verizon, who has been very active in the standards organizations related to NG-PON2, issued an RFI on the technology in 2014, followed by an RFP in October 2015.  Six vendors responded to the RFP – with ADTRAN and Calix/Ericsson offering features and capabilities that proved to be attractive to Verizon.

Interoperability is Key

Verizon stated that the trial would focus significant attention on interoperability between the OLT and ONTs from multiple vendors.  Verizon is expanding on the  OMCI specification in hopes that it will eliminate the issues its had with its BPON/GPON implementation where it was held hostage to same vendor equipment for both the OLT and ONT.  A key feature of its OMCI specification will be related to the amount of time (<50ms) for optics to tune to a different wavelength.

Another feature that garnered Verizon’s attention was related to wavelength bonding. Calix has demonstrated this capability, enabling the ONT to bond together 2 wavelengths (4 in the future)  to effectively double the bandwidth available (20Gbps) to the end user. While this capability is not currently in the NG-PON2 specification, it will likely be added as an amendment in the near future.

Finally, both ADTRAN and Calix have been focusing considerable attending on implementing SDN principles into their access solutions – also proving attractive to Verizon.

Business First, Residential Second

The immediate target of NG-PON2 is to offer business services, which are expected in 2017.  On today’s current GPON network, business services require a dedicated OLT – as to in order to meet SLA requirements.  With NG-PON2, both residential and business services could be served from the same platform – via different wavelengths – offering platform optimization and better OPEX.

Although there is a desire to eventually offer residential services via NG-PON2, the cost of the solution needs to make sense.  However, Verizon is actively working with both its trial partners and chip vendors to make this a reality within the next couple of years.

XGS-PON

PON solutions have gone through a number of iterations over the years to address the need for additional bandwidth.  One solution, now known as XGS-PON, offered symmetrical 10G capabilities.  However, there has been little to no market demand for this solution.  Per Verizon, the cost differential between XGS-PON and NG-PON2 is negligible.  More importantly,  XGS-PON does not offer the bandwidth capabilities of NG-PON2 – making it unattractive not only as a business services platform, but as an evolutionary technology for their network.

What about the incumbent vendors?

Perhaps the biggest shock of the lab trial announcement was the lack of mention of Nokia – who has been the leading incumbent solution provider for GPON to Verizon.

Does this mean they are out of the running for NG-PON2?

It’s doubtful considering their large embedded base of equipment.  The same platform used for GPON is capable of supporting NG-PON2.  However, the majority of GPON subscribers are residential versus business.

As such, this opens up potential new opportunities for both  ADTRAN and Calix/Ericsson to deploy into different market segments – whether business services or even mobile/cell tower backhaul.  And if both vendors should  meet Verizon’s requirements in key areas (interoperability, scalability & wavelength tunability) –  Nokia could be out of the running for this first round of deployments or act as a fall back vendor if one of the selected vendors is unable to fulfill timelines.  It is also possible that Nokia could find itself as a Phase II vendor – as Verizon shifts some focus to the residential market at a later date.

Keep in mind, that Nokia was not selected as a vendor for the BPON build – instead it had to wait until GPON before it was selected – so anything is possible.

Nonetheless, kudos to both Calix and ADTRAN on their lab trial selections.

 

A difficult path lies ahead for DASAN Zhone Solutions Inc.

On Tuesday April 12, 2016, Korean based  Dasan Networks said that it will acquire Zhone Technologies through share swap.   Under the deal, Zhone will acquire Dasan Network Solutions from DASAN networks and in exchange, will issue  Zhone common stock representing 58 percent of the combined company.

The new merged entity  will be named Dasan Zhone Solutions and will enable a backdoor listing of Dasan Networks on NASDAQ in the U.S.

Dasan Zhone Solutions Inc.  will have two co-CEOs and a board of directors will four board members appointed by DASAN and three appointed by Zhone.

Similar to many other Telecommunications mergers & acquisitions, the combined company will benefit from a larger combined customer base, as well as leverage economies of scale from operators, support, engineering and sales.

The deal is expected to close by the end of the third quarter 2016.

Zhone

Zhone Technologies was formed back in September 1999 by former executives of Ascend Communications Jeanette Symons, Mory Ejabat and Robert Dahl and quickly went on an acquisition spree during its product development phase.  It became a public company via its merger with Tellium Networks in 2003. In its first 6 years of operation, Zhone made a dozen acquisitions, with the most notable being Paradyne in 2005 – and by notable I mean, it was one of the only acquisitions to actually improve its revenues and market position, but not significantly and not for long.

Zhone’s challenge has always been – in my opinion – its lack of focus.

It has been selling on a global basis since its inception without any particular focus.As such, it has never had an impact in any region and counts no  Tier 1 wins to its credit.  It has also been slow to introduce both new platforms and new technologies.

While it does have a DSL platform that continues to ship a few hundred thousand ports per year – its strongest years are long behind them in 2007/2008.  In addition, while the market has shifted its focus towards VDSL2 Vectoring and G.fast – Zhone has been noticeably silent on these topics for years.

To understand its DSL position is to compare its cumulative DSL port shipments (8 million) against its competition.  Calix – with a sole North America focus on DSL has shipped over 10 million,  ADTRAN over 74 million (includes Nokia Siemens DSL biz), Nokia at nearly 300 million

From a FTTH standpoint – Zhone has clearly put more effort into this segment – focusing on a ripe Middle East market to sell its solutions into Etisalat and Du, while also spending considerable efforts on the Passive Optical LAN segment.  But the reality is that none of this is really contributing to its revenues  – which average around $24 million per quarter.

DASAN

While Dasan has been a key supplier of FTTH to its domestic market (South Korea) – it has also supplied its broadband technologies to a number of large customers such as BSNL, Viettel (Vietnam), Softbank & KDDI (Japan) as well as a number of other operators primarily located  Asia Pacific.  However, it has seen success with its FTTH products in Eastern Europe and Russia.

Dasan set up a US subsidiary in 2010 – with its focus on leveraging the growing demand for FTTH within North America.  Unlike Zhone, its product portfolio is more diverse – with products not only in Broadband Access, but also Mobile Backhaul and Ethernet Switches. To date, this subsidiary has made a negligible contribution to overall revenues.

Dasan Zhone Solutions

The combined company will offer a more balanced geographic customer base – with Dasan providing Zhone with a strong presence in Asia Pacific, while Zhone offers opportunity in North America, EMEA, and CALA.

There is significant product overlap – and although they have stated that they will continue to sell products from both companies and continue R&D on existing product lines – this seems both unrealistic and impractical to achieve some of the cost savings synergies.

However, it will provide Zhone with much needed ultra-broadband copper technologies as well as more advanced FTTH solutions, while Dasan will gain POL products.

The anticipated revenue of the combined company is expected to be $250 million annually – however, it is not clear if this will be achieved on Day 1 or if it is a longer term goal.

Final Thoughts

Although this combination will provide some immediate scale  – it is difficult to see the longer term play – with the exception that Dasan gets a seat at the NASDAQ table.

Although as combined,  they gain some strength in the market – they still remain a relatively insignificant player in the overall market – up against companies such as Nokia, Huawei and ZTE with far more extensive product lines and solutions, companies such as  ADTRAN, Calix, ECI, which are viewed as more established and reputable.

This may be a perfect example of too little too late and we foresee a difficult path ahead for Dasan Zhone Solutions Inc.