Will the last mile go optical?

Fiber to the home. Free-space optics. Direct wavelength access. Passive optical networks. Next generation last-mile solutions and architectures were in full regalia at NGN Ventures, but all the preening by vendor executives couldn't suppress the strong undercurrent that the economic downturn is forcing vendors to prove these technologies provide a better economic model for carriers.

Carriers need cost-effective access to customers of broadband services, said Jim Dunn, CEO of AirFiber, an optical wireless company.

“The gap between copper and fiber is huge,” he said.

But not huge enough for carriers to dive right into new solutions such as free-space optics, which uses line-of-sight lasers to connect buildings in a mesh topology. Vendor LightPointe has nine carriers in field trials and hopes to announce a major carrier contract next month, said John Griffin, president and CEO of LightPointe. Although vendors tout optical wireless' cost, provisioning and portability advantages, the attenuation problem caused by dense fog remains an obstacle for adoption.

Race for the last mile

Company	Financing raised to date	Description
AirFiber	$90 million	Wireless optical gear that delivers 622 Mb/s access to buildings in urban and industrial areas
LightPointe	$18.5 million	Carrier class optical wireless equipment that transmits at up to 1.25 Gb/s
Terawave Communications	$133 million	Optical access solution using passive optical networking and DWDM
Optical Solutions	$104 million	Fiber to the home passive optical network for voice, video and data
Source: Company information

Quantum Bridge Communications is testing free-space optics with partners, but securing rooftop access for a mesh network “doesn't seem like it is going to be as easy in practice as advertised,” said Tony Zona, president and CEO of Quantum Bridge.

Terrestrial solutions such as fiber to the home (FTTH) promise large monthly cash flow from a wide array of broadband customer services such as digital television and video-on-demand, but market movers such as RBOCs will be slow to adopt it until they start losing customers to other access technologies, said Darryl Ponder, chairman and CEO of Optical Solutions.

Indeed, FTTH vendors have found their biggest traction with municipalities and developers, not traditional carriers, Ponder said. It will be two to three years before large interexchange carriers deploy FTTH, when deployments move from small towns to larger cities, he said.

“Their networks are [currently] being eaten at the edges,” Ponder said.

For most last-mile optical technologies, greenfield opportunities will be limited. For example, early sales traction in passive optical networking (PON) is with carriers wanting to leverage existing in-ground fiber, Zona said. An incumbent carrier that has 12 fiber pair in a remote terminal may want to use PON for DSLAM aggregation or to service one-off corporate customers.

“It seems a stretch to see people rebuilding for the last mile,” Zona said.

However, optical wireless could let carriers prospect for new customers in a building before sinking capital into landline fiber connections, Griffin said.

Last-mile optics does have some aces in the hole, such as mesh topologies, which are replacing ring topologies for good economic reasons, according to Joseph Lias, president and chief operating officer of Terawave Communications. For example, putting many subscribers on a single central-office node goes against the grain of how companies buy services. Services are not ordered in groups by customers but are driven by the service-order due date, he said. Subscribers are also usually geographically isolated. That means carriers usually end up with two-node instead of multiple-node rings, he said.

For wireless optical providers, point-to-point networks don't effectively leverage the cost or difficulty of getting rooftop access, Dunn said. A mesh topology, on the other hand, lowers the cost of delivering incremental services to every building within the line of sight.

Vendors believe that it is only a matter of time before last-mile optics move past the early adopter phase and into a tornado market. But time could be critical for NGN vendors, which typically are more than two years old, have payrolls of more than 150 employees and depend on venture capitalists for financing.

“If fiber isn't cheaper than copper or cheaper than doing anything,” it won't go anywhere in terms of first-mile deployments, said John McQuillan, president of McQuillan Ventures and conference host. “It's very much application-driven, but it's very much ROI-constrained.”