Analysts ponder pace of Verizon GPON rollout

Verizon Communications has vowed to begin deploying gigabit passive optical networking (GPON) gear for its fiber-to-the-premises (FTTP) service before year’s end, but industry analysts say that deployment won’t start to ramp up until next year, and the pace will be set by the readiness of the gear itself.

When Verizon named its chosen GPON equipment suppliers in late July—Alcatel, Tellabs and Motorola—the carrier vowed to begin deploying Alcatel’s gear first, later this year. And nothing has changed since then, a Verizon spokesperson said today.

Ken Twist, vice president of technology consulting and broadband networks at Ovum-RHK, said “meaningful” GPON deployment won’t begin until next year’s first quarter. “I believe [Verizon’s 2006 GPON deployment] will be limited and not in volume until the GPON equipment is fully available from the vendors in volume and proved in,” he said.

In a note this week, Lehman Brothers analyst Marcus Kupferschmidt predicted Verizon will deploy the current generation of PON—lower-speed BPON—to at least 2 million homes next year. (At the end of this year, Verizon expects its FTTP network to pass about 6 million homes.) “Alcatel's ‘first-to-market’ GPON system is not ready to take meaningful market share from Tellabs,” Kupferschmidt wrote.

Alcatel could not be reached immediately for comment.

In July, Tellabs said it expected Verizon to start deploying its GPON gear in the first quarter of 2007, switching over from the vendor’s lower-speed BPON gear, which Verizon has already widely deployed. Motorola, Verizon’s other BPON supplier, said it expected Verizon to start deploying Motorola GPON gear in next year’s third quarter.

The only mention of GPON in Verizon’s lengthy FTTP update Wednesday came when chief financial officer Doreen Toben said, “On the cost to connect…we think technology, whether it’s GPON or another technology, will allow us to improve even further.”

“I think Tellabs made it less exciting to move to GPON when they said [they would] match the BPON pricing with the GPON stuff,” said an analyst who requested anonymity. “If you’re Verizon and you [think you] don’t need the technological advantages of GPON today, you might just keep going with what you’ve got for a while longer.”