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Summary

Amidst the most recent announcements of consolidation among US cable operators, namely Charter's plans to acquire Bright House Networks, the US PON equipment market is facing likely upside. Bright House was one of the first cable operators to deploy PON, focusing on high-ARPU business services such as mobile data backhaul (MBH).

Charter's acquisition will accelerate FTTx PON deployments

Many cable operators have been focusing on business customers due to higher ARPUs (average revenue per user) than residential customers; Bright House has exceled in this area. Bright House Networks began to deploy PON equipment in 2006, focusing on business services, including MBH. In 2013, Alcatel-Lucent announced Bright House as a customer for its 10G EPON DPoE (DOCSIS provisioning of EPON) solution, with 10G providing even greater bandwidth for business services. It is likely that Bright House has been leasing (also known as wholesaling) its FTTx PON network to at least three wireless operators for MBH.

While PON's fit for MBH is not perfect due to traffic timing and synchronization requirements, Bright House has made it work. Further, cable operators in Europe and Asia-Pacific have sought out Bright House's expertise in this area. The economics are powerful. Residential ARPU for triple-play services (voice, video, and data) may reach $170 in the US. The leasing of 1G MBH services provides monthly revenues of around $2,500, with 10G providing twice that amount. PON is not the only fiber-based approach for MBH, but if an operator is planning on servicing both residential and business customers, it becomes an attractive approach. In Bright House's case, its FTTx network focused first on business services, bringing in relatively high revenues that could then support FTTH deployments.

Bright House's successful use of PON is likely to permeate into Charter's network, increasing sales for PON equipment vendors. Amidst the flux in the US cable operator market, PON equipment vendors are facing upside.

Appendix

Further reading

Update on PON for Mobile Backhaul ‒ Focus on North American Market Opportunity, TE0006-000919 (August 2014)

"Alcatel-Lucent wins over Bright House Networks with 10G EPON," TE003-000588 (October 2013)

PON for Mobile Backhaul, TE003-000569 (August 2013)

Author

Julie Kunstler, Principal Analyst, Components and Intelligent Networks

julie.kunstler@ovum.com

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