By Christophe de Saint-Martin Director of Marketing for Europe Fixed Networks

Benefits & Challenges of Next Generation FTTx Networks FTTH Council Europe 2012 Conference Feb 16th, 2012

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Agenda

Bandwidth Challenge

Benefits & Challenges of New Generation DSL Technologies

Benefits & Challenges of XG-PON1

Benefits & Challenges of NG-PON2

Traffic Explosion Ahead

Global internet Traffic

Smart Phones & Tablets Adoption

Video Traffic Growth

Smart TVs Adoption

Source: Informa - June 2011

Source: Informa – Sept 2011 Source: Informa - June 2011

Global Internet Traffic will be multiplied by 7 in 5 years and reach 1.2 million Petabytes by 2015

Wi-Fi enabled devices are gaining momentum and will boost traffic 63% of the mobile traffic is generated by tablets & smartphones (BT)

Video will account for 50% of all internet traffic by 2015 There will be 10 times more connected TVs by 2016

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Agenda

Bandwidth Challenge

Benefits & Challenges of New Generation DSL Technologies

Benefits & Challenges of XG-PON1

Benefits & Challenges of NG-PON2

Accelerating Copper based Technologies Performances

2005/6 2009 2010 2011 2012

50M

100M

150M

200M

500M

1G

2007 2008 2013 2014 2015 2016

VDSL2

System level Vectoring

+ Bonding + Phantom

Deployments

G.fast

Deployments

Vectoring ITU-T Standard (G.993.5) approved in April 2010

Bandwidth

Up to 1Gbps @ 200 meters

30M

VDSL2 meets Digital Agenda Requirements

Bonding ITU-T Standard (G.998.1 & G.998.2) approved in 2005

50Mbps @1 000m 100Mbps@500m

Coverage or bandwidth is doubled with 2 pairs

Coverage or bandwidth significantly improved

2 pairs transfer 3 VD2 signals increasing rates by 30%

G.fast ITU-T SG15 Q4 Project was launched in 1Q11

+ Bonding

More Revenues

Higher TCO Savings

FTTN/C

FTTB

Benefits & Solutions of Vectoring Technology

Copper

FIBER

MDU

OLT

Central Office Street Cabinet

Copper

FIBER

MDU

OLT

Central OfficeBuilding

Distance: between 100m & 800m Bandwidth Gain @ 400m : +50%

Distance: less than 100m Bandwidth Gain @100m: +70%

BW without

Vectoring

Up to 80% gains

BW with Vectoring

With increased bandwidth, operators can provide a broader variety of services to end-users, thus increasing revenues%

Increased Coverage: Less central offices or street cabinets needed Higher Power efficiency : power consumption per port per Mbps is decreased by 16% Lower cost per Mbps offered by VDSL2 with vectoring compared to VDSL2 alone Preserved investment: System-level vectoring avoids to change line cards and control cards No rewiring needed: the stronger disturbers are managed automatically by System-level vectoring

Regulatory framework

Availability

Sub-Loop Unbundling

Bitstream

Challenges & Opportunities of NG DSL Technologies

Availability of multiple pairs for bonding G.Fast is not standarized yet

Comply to the Digital Agenda requirements: 30 Mbps for all by 2020 Is VDSL2 approved and allowed by NRAs? Impact of EC public consultation making copper less attractive with lower wholesale access price

DSLAM A CPE

Remote Cabinet

DSLAM B

Central Office

CPE

Copper

Copper

ADSL

VDSL

OLT A MDU A CPE

Copper

FIBER

OperatorB

OperatorC

Operatorn

Vectoring used by 2 operators in SLU is either not appropriate or difficult to achieve Legacy ADSL can coexist with Vectored VDSL making SLU feasible with an average of 40% Bandwidth gain

Pay as you grow approach for Alternative operators limiting their initial investments All operators get maximized bandwidth and increased revenues with New Generation DSL

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Agenda

Bandwidth Challenge

Benefits & Challenges of New Generation DSL Technologies

Benefits & Challenges of XG-PON1

Benefits & Challenges of NG-PON2

Leverages xPON Experience Lower Power Consumption

Benefits of XG-PON1

Higher OPEX savings with lower power consumption levels Lower CAPEX offered by economies of scale Same protocol used for time synchronization for mobile backhaul for GPON & XG-PON1

Coexistence with GPON

No overlaps in wavelengths No change in existing Optical Data Nodes No change in existing GPON ONUs Possible coexistence leads to preserved initial investments

Higher Reach

Up to 40km coverage with design based on APD technology Reduced TCO with less OLTs needed

XG-PON1 networks offer lower consumption levels compared to VDSL and P2P technologies

FTTH Roll-out Costs

European Commission Funding

3G/LTE Mobile Backhauling

3G/LTE networks Offload

Challenges & Opportunities of XG-PON1

Launch of the pilot phase of the “Europe 2020 Project Bond Initiative” in the period 2012-2013: 230 million euros “Connecting Europe Facility” funding plan : 9.2 billion euros between 2014 & 2020 (at least 7 billion euros could be used for the infrastructures)

FTTH cost is impacted by civil works and VDSL2 is 5 times cheaper to roll-out Up to 270 billion Euros of investment are required to bring fast broadband to all households by 2020 in Europe

XG-PON1 access 3G NodeB or LTE eNodeB in FTTH deployed area to realize FMC

XG-PON1+WLAN offloading for 3G mobile data services Reduce wireless network congestion

Global Cost for Nationwide Coverage in UK (Source: Analysys Mason)

Mobile Usage is Mostly @Home

XG-PON1 is Key for Wi-Fi Offload Strategies

Wifi Usage is Gaining Momemtum

Opportunities

Benefits & Challenges

Wi-Fi usage multiplied by 3 between 2010 & 2011 over fix subscriptions France (Orange) Among 1.5 million tablets sold in France in 2011, only 23% have a 3G connection mostly not used by customers: over 77% of the Tablet customers use Wi-Fi (GFK study ) 63% of traffic generated by smart phones and tablets will transfer onto the fixed network via Wi-Fi and femtocells by 2015 (Juniper Research - April 2011)

Mobile & fix ops: offload 3G/LTE mobile traffic on the fix network with new Wi-Fi APs outside the home or with existing Wifi enabled ONUs Fix ops: Leverage street cabinets with new Wi-Fi APs or leverage existing Wifi ONUs: Increase Revenues

Benefits Wi-Fi offload will reduce the traffic on the 3G/LTE network by using FTTH network XG-PON1 provides up to 10Gbps and is ready for « high speed » Wifi (300Mbps – 802.11n)

Challenges Seamless authentication procedures have to be put in place Wi-Fi is not a 3GPP standard & an unlicenced spectrum New 5Ghz band has to be available on all devices

Always & Mainly in the

home41%

Use equally in/ouside of

the home34%

Always & Mainly

outside the home25%

Mobile Broadband Usage(OFCOM Research - 1Q11)

Always & Mainly in the

home15%

Use equally in/ouside of

the home50%

Always & Mainly

outside the home31%

Don't know4%

Mobile Device Usage(OFCOM Research - 1Q11)

Mobile broadband usage is mostly at home: 41% 65% of mobile device owners can do it at home

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Agenda

Bandwidth Challenge

Benefits & Challenges of New Generation DSL Technologies

Benefits & Challenges of XG-PON1

Benefits & Challenges of NG-PON2

NG-PON2 Timeline & Targets

GPON XG-PON1 NG-PON2 Candidates

Multiple wavelength

stacked TWDM-PON

Full wavelength divided multiplex

WDM PON

Single wavelength

speed increased OFDM-PON

Others

GPON XG-PON1 NG-PON2 Standard 2005 2010 2013-2015+

Commercial 2007-2012 2012-2018 2018-2025

Bandwidth (D/U) 2.5G/1.25G 10G/2.5G 40G/10G

Bandwidth per Household (FTTH)

<50M 100M~300M 100M~1G

Coverage 20km 40km 40km-100km

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Challenges

Benefits & Challenges of NG-PON2

Unbundling Friendly: Open Access: each operator can use its own wavelength to offer dedicated services to end-users.

Lower TCO: TWDM PON leverages XG-PON1 OFDM PON can use cheaper & programmable components TWDM PON & WDM PON: tunable colorless lasers in ONUs are easier to install and maintain

Higher Revenues: Higher Bandwidth = Increased Revenues Dynamic allocation of subcarriers with OFDM PON optimizes the bandwidth needs by each ONUs

Higher Security Unshared symmetrical bandwidth with WDM PON

Time to market: Standard expected in the 2013-2015+ time frame & commercial deployments are expected to start after 2018. Coherent detection for HD WDM PON requires a long industrialization period

Unbundling: Regulation to be defined at European & local level

Power consumption Medium to high prospective cost

Smooth Evolution Benefits

Coexistence with existing ODN & ONUs offering preserved investments

Higher Capacity: TWDM PON: between 100Mbps & 1Gbps per user WDM PON: 1Gbps/ 1Gbps dedicated bandwidth

Higher Reach: TWDM PON / OFDM PON : Up to 40km WDM PON: Up to 100km

Higher density: Up to 1 024 users/port with High Density WDM-PON solution

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Summary

Video Traffic will foster FTTx Networks roll-outs

Improved DSL performance will help operators to preserve Investments, lower TCO and increase revenues in short & mid-term

NG-PON2 candidates are promising and will meet operators challenges in the long-term

XG-PON 1 will boost revenues with increased Bandwidth & Lower TCO with Increased Coverage in short & mid-term

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