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Summary

TWDM PON is moving from lab testing to early commercialization as evidenced by the recent announcement of field-testing of Alcatel-Lucent's solution by Energia Communications in Japan. This announcement matches findings from Ovum's discussions with component and equipment suppliers as we prepare our annual Optical Components FTTx forecast.

TWDM PON gains traction; some operators skip over 10G

Ovum forecasts that TWDM PON sales will begin in 2017 as several CSPs move from testing to field deployments. While the deployments will be small in terms of optical components and equipment ports, they signal that operators are assessing future residential bandwidth demand and nonresidential customers and applications.

Energia Communications chose TWDM PON as a differentiator to its competitors that are moving to 10G EPON or 10G GPON in Japan. Although Energia is initially deploying a single 10G symmetrical wavelength, additional wavelengths can be added over time with TWDM PON's pay-as-you-grow architecture. Energia's TWDM PON network is using the same ODN as its 1G EPON network. Energia plans to use its TWDM PON for nonresidential services, such as wholesaling mobile backhaul (MBH).

Ovum believes that other CSPs may follow Energia's approach, namely skipping over 10G PON deployments and moving directly to TWDM PON. CSPs, including smaller operators such as Energia, see the potential revenues streams from supporting nonresidential services. Energia, a wireline operator, would wholesale MBH services, while an operator such as Vodafone could use TWDM PON to support internal MBH needs. Vodafone is currently testing TWDM PON.

The biggest challenge for TWDM PON is the cost of tunable optics. The cost of a GPON ONT transceiver/BOSA is around $10, compared to several hundred dollars for a symmetrical TWDM PON 10G tunable ONT transceiver. Vendors of PON optics and equipment are exploring technologies to lower the costs, but in the short term TWDM PON will be focused on higher-ARPU, nonresidential applications.

Appendix

Further reading

OC FTTx Forecast Spreadsheet: 2014–20, TE0017-000046 (June 2015)

Market Share Spreadsheet: 1Q15 FTTx, DSL, and CMTS (Revenues), TE0006-001073 (May 2015)

Market Share Spreadsheet: 1Q15 FTTx, DSL, and CMTS (Units), TE0006-001072 (May 2015)

Ovum White Paper – TWDM PON is on the horizon (October 2014)

Author

Julie Kunstler, Principal Analyst, Components and Intelligent Networks

julie.kunstler@ovum.com

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