Next-Generation Carrier's Network - Architectures, Economics and Forecasts

Market Studies

Telecom Business Transformation Series

1394 Market and Technology Study

Next-Generation Carrier's Network - Architectures, Economics and Forecasts

Published: July 2009

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The history of the networking business is largely based on network evolution steps that were determined by the geniuses at Bell Labs. Another group of geniuses at the same institution determined end-user (station apparatus) capabilities. The famous beginning of the telephone industry might have been, in today’s terms, “Watson, come here. I need your cell phone number.”

It has been said that there have been three network designs: the telegraph network, the telephone network, and the Internet network. Each had its particular end-user apparatus – the telegraph, the telephone, and the computer. As we have changed from each of these paradigms to the next, we have seen massive business transformations by the major players. Some companies made the transformation; they survived and prospered; some did not and died. This report is about how to make those transformations and specifically about what network will be coming next — the next-generation network!

Report Features

This report reviews the techniques for NGN planning and some of the drivers in today’s market for that planning activity. It includes the following major areas:

  • The general forecast for the U.S. economy and particularly the U.S. telcos.

  • Forecasts of CapEx for the next five years.

  • A survey of what major players are doing in NGN planning.

  • Interviews with some of the top thinkers in the telecommunications business today about NGN.

  • The changing face of the network – why it is changing and how.

  • A discussion of what the major carriers are doing in related areas.

  • Our characterization of the NGN – access, speed, and flexibility.

  • Our forecast for the next-generation network architecture – access, transport, and control.

  • A presentation of architectural options facing a telecommunications company it the advanced access area, and a model of the related economics.

  • A discussion of standards activity related to NGN.

  • A description of the major technology groups in the NGN, with forecasts for their deployment.

  • A listing of major vendors of NGN hardware and software.

Why have an NGN? — Why change networks?

If we have a perfectly good, working network, why do we change it? Why do we evolve it?

Here are some reasons:

  1. We find a way to make it cheaper to operate. (e.g., changing from open wire to plastic sheathed cables).

  2. We find a way to make it cheaper to grow. (e.g., we add cross-boxes).

  3. We find that we need more capacity. (e.g., we convert from cable-derived circuits to T-1-derived circuits).

  4. The end-user devices (station apparatus) demands that we provide more or different functionality. (e.g., HDTV delivery).

Of course, particularly with items 1, 2, and 3, there is often a mixture of motives for change. Often the need for more, cheaper capacity will combine items 2 and 3, for example. Over time, the importance of these reasons has changed.

As a part of this report, we will find that now the reason for changing networks is to meet end user-demand for services. The rationale for changing networks is moving from technology/cost savings to customer-driven!

Customer is King!

In most businesses, this would not be such a radical statement, but in the networking business, it is! The discussion above notes that station apparatus is driving network change. It really means that the end customers will buy station apparatus that reflects their needs, and that the network providers will strive to meet those needs. The history of the networking business, as noted before, is that network evolution steps were determined monolithically, and so were end-user capabilities. Now there are hundreds, maybe thousands, of companies devoted to the development of station apparatus to meet customers’ needs as they see them. Network evolution is driven by the competitive desire of the multiple network providers to have networks that are capable of interfacing with this station apparatus.

This idea, that the customer is king, runs through all of our interviews with industry leaders later in this report. Particularly, see Didier Lombard, CEO and chairman, France Telecom Group, who proclaims, The customer is at the heart of our approach to innovation.”

This is part of a major series of reports being published by Information Gatekeepers on the subject of telco business transformations and the next-generation network. Many of the world’s telcos are now involved in redefining the way they do business, and the kind of network they need in their planned new environment. This series of reports will be a “how to” manual as well as a report on activities by the various major players, and forecasts for the resulting next-generation network.

The new series of reports consists of the following:

  • Next-Generation Carriers Network – Planning for Business Transformation — This is a comprehensive report on how to approach transformation planning, and on the next generation network that is the result of transformation planning. This is the all-encompassing report that covers all of the related topics. It is the keystone to the Information Gatekeeper’s Series on Transformation Planning.

  • Next-Generation Carrier’s Network – Architectures, Economics, and Forecasts” — This report is devoted to discussing and forecasting the NGN. It discusses the major systems and technologies that will be involved; it provides forecasts for the most important of these technologies; it discusses architectural options; it forecasts market impacts on the NGN, including capital forecasts and economic analysis of major NGN options; and it provides a detailed listing of many of the major vendors of the NGN. In addition, it discusses the drivers for changing networks and provides graphic views of how our networks have changed and are going to change. This report is now available from IGI.
  • The Telecommunications Market Today” — This is the first of a series of reports devoted to telecom business transformation and next-generation networks. This is a general report on the status of today’s (2009) telecommunications market, with an emphasis on those changes that are driving the market. It includes extensive forecasts, especially CapEx forecasts.

  • “Business Transformation Planning” — This report is a how-to report on the transformation planning process. It contains the directions on how a transformation project must start, and how to accomplish it. It includes quotes from exclusive interviews with some of the best thinkers in the business today.

Table of Contents

Table of Contents

Table of Figures

The Lightwave Network Series of Reports

The Lightwave Network

The Lightwave Series of Reports

General Reports on the Network
General Market Reports
Specific Systems Reports


The Impact of Competitive Networks

Transformation Planning

Why Do We Change Networks?

Customer is King!

This Report

US Telecommunications Economic Forecast

General Economic Background

Telecom Economic Background

Possible Positives for Telecom in 2009

Telecommunications Capital Forecast

Telecommunications Economic Forecasts Summary

Telecommunications Economic Forecasts - 2009

Survey of Next Generation Network Activities by Major Players


BT (British Telecom) – “21CN’


NTT (Japan)

Orange/FT (French Telecom)

Telstra (Australian)





Changing Face of the Network

Why Change Networks?

Cheaper Operation:
Cheaper to Grow
Need for More Capacity:
End-User Demand.

How the Network Is Changing

Historical Network
Recent Network
Future Network

“Watson, Come Here – I Need your Cell Number!”

The Next Generation Network

NGN – Characterization


NGN - Architecture

NGN – Access
NGN – Transport


• Soft switches
• Metro DWDM


• OC-768 and SONET Advances
• IP
• “Big Iron”

NGN – Control

New Competitors vs. Super Competitors View of Control

Control Forecast – A Compromise

1. Direct Control
2. Common Control and the Intelligent Network
3. NGN Control

Summary of NGN Forecast

Economic Analysis for Various NGN Advanced Access Architectures

Comparison of Three Major Approaches

BellSouth's Fiber to the Curb (FTTC)
AT&T's Fiber to the node (FTTN)
Verizon’s FTTP (Fiber to the Premise)

Summary of Fiber Requirements

An Economic Model NGN - AAA Architectural Differences

Fiber Required for Each Architecture

Cost of Fiber Needed for Each Architecture

AT&T’s New Plans for BellSouth – A Hybrid FTTC/FTTN

The Technologies of the Next Generation Network

Advanced Access Architectures

Bell South

NGPONs - Advanced Options - 10-GPON and WDM-PON

Vendors of WDM-PON

Other WDM-PON Activities

Vendors of WDM – Listing and Summary of Status


Achieving SONET-like Control in Optical Networks
Evolution to the Edge

NGN Standards Activities



Comparison of ITU and IEFT NGN Views

Forecast for NGN Technologies

Advanced Access Architectures Forecast

Forecasts for Deployment

AAA Forecast Summary

Forecast Size of Deployments

Forecast of Homes Passed
Penetration Rates
Growth of AAA and Reduction in xDSL

ROADM Forecast

Model for Forecast Core and Metro ROADMs

Assumptions of Model

Model for Forecast — Edge ROADMs

Systems — Forecast

US Market Forecast

Vendors for the NGN

Advanced Access Architecture Vendors

Acterna (acquired by JDSU)
Advanced Fibre Communications Inc. (AFCI) (Now Tellabs)
Alloptic Inc
Amino Technologies plc
Avanex Corporation (now Oclaro)
Corrigent (now Orckit)
Entrisphere Inc. (Acquired by Ericsson)
Fiberxon (Now Source Photonics combined with Luminent)
Finisar Corporation
FlexLight Networks (Defunct)
Genone3 Technologies Inc.
Hitachi Communication Technologies Ltd.
Humax USA Inc.
JDS Uniphase
Kreatel Communications AB (Acquired by Motorola)
LG Electronics
LightComm Technology
Novera Optics (owned by Nortel / LG JV)
O-Net Communications Ltd
Oplink Communications, Inc.
Optiviva Inc.
Optical Solutions (Acquired by Calix)
Osaki Electric Co. Ltd.
Paceon (Mitsubishi)
Passavé (Acquired by PMC-Sierra)
Quantum Bridge Communications (Acquired by Motorola)
Salira Optical Network Systems
Scientific-Atlanta (Cisco)
Source Photonics (Combined with Fiberxon and Luminent)
Tandberg Ltd. (Ericsson)
Terawave (Acquired by Occam Networks)
Tut Systems (Acquired by Motorola)
Vinci Systems, Inc. (Acquired by Tellabs)
Wave7 Optics
Worldwide Packets, Inc. (Acquired by Ciena)
Zhone Technologies

ROADM System Vendors

System Vendor Listing

Adva Optical Networking
Huawei Technologies
Mahi Networks (formerly Photuris) — Meriton (now Xtera)
Marconi Corporation plc (Ericsson)
Meriton Networks (now Xtera)
Movaz Networks (ADVA)
NEC America Inc.
Nokia Siemens (NSN)
OpVista Inc.
Tropic Networks (Alcatel-Lucent)

Table of Figures

Figure 1, Lightwave Network

Figure 2, Telecommunication Capital Expenditures Actual and Forecast

Figure 3, Telecommunications Economic Forecasts

Figure 4, Historical Network

Figure 5, Recent Network

Figure 6, Near Future Network

Figure 7, NGN – Characterization

Figure 8, Next Generation Network

Figure 9, Transformation from Opaque to Transparent

Figure 10, Control Migration to Network Edge

Figure 11, BellSouth FTTC

Figure 12, AT&T Uverse (FTTN)

Figure 13, Verizon FiOS (FTTP)

Figure 14, Fibers Required per Year for Each Architecture

Figure 15, Amount of Fibers for the Architectures

Figure 16, Length of Fiber for the Architectures

Figure 17, Fiber Costs of the Three Architectures

Figure 18, Fiber Cost per customer - Each Architecture

Figure 19, AT&T - BellSouth Hybrid FTTC

Figure 20, Fiber Required Upgrading to Hybrid FTTC

Figure 21, Identified Technologies of the NGN

Figure 22, ROADMs to the Network Edge

Figure 23, Differences between ITU and IEFT NGN Views

Figure 24: Forecast Homes Passed Cumulative — All Technologies

Figure 25: Forecast Homes Passed Annually — By Company — All

Figure 26: FTTX vs. High-speed Accesses vs. US Households

Figure 27, AAA Growth vs. Legacy XDSL

Figure 28: ROADM System Unit Forecast — US

Figure 29: US Market — Change in Predominant Type of ROADM
over Time

Figure 30: US Edge ROADMs Systems

Figure 31: ROADMs Market Forecast — US

Figure 32: OADM vs. ROADM Market — US

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