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Fiber to the Home:

Myths versus Realities

Michael Kunigonis
Corning Optical Fiber
Market Development Manager Asia
kunigonimp@corning.com

18 March 2004
Convergence India
Agenda
• Broadband Overview
• Myth: There are no applications that need FTTH
• Myth: FTTH is not economically viable
• Myth: FTTH is years away…“not in my lifetime”
• Myth: Last-mile fiber is a monopoly
• Apply these lessons learned to India

2 Convergence India 2004


Corning Optical Fiber
Fiber
Network description Copper / Coax
-- Holistic network
Long Haul Metropolitan Network Local Access Network
Network Feeder & Distribution Drop & Premises
Metro Core Metro Edge
cell
site

CATV

•• Copper
Copper replaced
replaced by
by fiber
fiber (95%)
(95%)
•• New
New construction
construction is
is fiber
fiber •• Majority
Majority is
is copper
copper (95%)
(95%)
Penetration of fiber
3 Convergence India 2004
Corning Optical Fiber
Global Broadband Statistics
-- An update

North America Europe


29 M subscribers 19 M subscribers
Broadband lines by region FTTH lines by region
Cable modem leads DSL leads North
North America
Growth starting to slow
America Strong growth
CALA
9%
32% 0%
150 k FTTH subs Asia 380 k FTTH subs
45% EMEA
23%
CALA Australasia
Asia
2% 68%
43 M subscribers
CALA
EMEA
21% DSL Leads
2 M subscribers
Deep penetration
DSL leads
Q4 2003 1.1 M FTTH subs
4
Growth picking up Convergence India 2004
Corning Optical Fiber
Trends and Drivers
-- Convergent Services
• Technology
Technology isis enabling
enabling carriers
carriers to eliminate service boundaries
• Carriers
Carriers are moving toward convergence of services
–– Offering
Offering the
the “triple
“triple play”
play” of
of voice,
voice, video
video and
and data
data in
in order
order to:
to:
•• Fend
Fend of
of competition
competition
•• Reduce
Reduce customer
customer churn
churn
•• Increase
Increase sagging
sagging revenues
revenues SERVICES
via
WIRELESS BROADBAND
WIRELINE
PUBLIC
VOICE
DATA
PRIVATE
VIDEO CONVERGENT
TRANSFORMATION
5 Convergence India 2004
Corning Optical Fiber
FTTH Myths
• There are no applications that need FTTH

6 Convergence India 2004


Corning Optical Fiber
Myth: There are no applications that need FTTH
-- Game On!
•• Internet
Internet games
games account
account for
for 9%
9% internet
internet of
of traffic
traffic
in
in 2002;
2002; 50%
50% forecasted
forecasted increase
increase for
for 2003
2003
•• Stressing
Stressing existing
existing networks
networks
–– X-Box
X-Box private
private network
network
–– PS2
PS2 controlled
controlled release
release of
of adapter
adapter
•• Gaming
Gaming industry
industry examples:
examples:
–– Driving
Driving broadband
broadband in
in Korea
Korea ;; 90%
90% Internet
Internet
users
users play
play games
games
–– iResearcher
iResearcher reports
reports Chinese
Chinese users
users for
for fee-
fee-
based
based online
online games
games will
will reach
reach 9.2
9.2 million
million in
in
2003
2003 and
and 14.3
14.3 million
million in
in 2004
2004
•• NetEase.com
NetEase.com earned
earned $8.5M
$8.5M in
in revenues
revenues
during
during Q4’04
Q4’04 alone
alone (31.8%
(31.8% increase
increase
QOQ;
QOQ; aa 222.2%
222.2% surge
surge YOY)
YOY)
7 Convergence India 2004
Corning Optical Fiber
Myth: There are no applications that need FTTH
-- Video On Demand (VOD)
Typical download rates for Braveheart • VOD increasing
increasing inin use
use
• Driver of bandwidth
bandwidth
Technology Minutes Hours Days demand
Modem 56 • Services offered via…
2
kb/s
– Digital Cable
Cable
ISDN 128
20 – VDSL
kb/s
– Movielink
12
– CinemaNow
DSL 1 Mb/s 2.5 – …but limited service or
Cable 2.5 selection
1
Mb/s
• Fiber
Fiber will
will be
be the
the inevitable
inevitable
45
solution to provide the
FTTP 0.4 most versatile service

Source: FTTH Council


8 Convergence India 2004
Corning Optical Fiber
Myth: There are no applications that need FTTH
-- Remote applications

• Telemedicine
–– The
The use
use of
of telecom
telecom to
to provide
provide medical
medical information
information and
and
services
services -- makes
makes specialty
specialty care
care more
more accessible
accessible to
to
underserved
underserved areas
areas
–– Store
Store and
and Forward
Forward -- Transfer
Transfer of
of digital
digital images
images
•• Teleradiology
Teleradiology (X-rays,
(X-rays, MRI)
MRI) &
& Telepathology
Telepathology (pathology
(pathology
slides)
slides)
–– Two-Way
Two-Way Interactive
Interactive Television
Television (IATV)
(IATV)
•• “Face
“Face toto Face”
Face” consultations
consultations
• Teleworking
–– By
By the
the end
end of
of this
this year
year 140
140 million
million teleworkers
teleworkers
–– Telework
Telework creates
creates win-win
win-win proposition
proposition for
for host
host companies
companies and
and
service
service providers
providers
–– Employee
Employee satisfaction,
satisfaction, work
work output
output and
and productivity
productivity increases
increases
–– Broadband
Broadband driver
driver -- Broadband
Broadband connectivity
connectivity is
is aa prerequisite
prerequisite --
Driving
Driving toward
toward symmetrical
symmetrical connectivity
connectivity
9 Convergence India 2004
Corning Optical Fiber
FTTH Myths
• There are no applications that need FTTH
• FTTH is not economically viable

10 Convergence India 2004


Corning Optical Fiber
Myth: FTTH is not economically viable
-- Cost declines: one vendors view

Dropping costs of FTTP deployment


(includes labor, construction and electronics)

$8,500
$9,000
$7,500 Large Scale
$8,000
Deployments
$7,000
Cost in Dollars

$6,000
$5,000 $3,600

$4,000
$2,300 $2,100 $2,000 $1,800
$3,000
$1,400 $1,200
$2,000
$1,000
$0
Late Mid- 1999 2000 2001 2002 2003 2004 2005
80's 90's Era

11 Convergence India 2004


Corning Optical Fiber
Myth: FTTH is not economically viable
-- Substantial OPEX savings
• FTTH construction costs are only
one piece to the puzzle
• The cost of maintaining a fiber
based network is far less than
copper networks…perhaps as
much as four to eight times less
• FTTH will provide a competitive
advantage to those carriers that
deploy
–– Continual
Continual upgrades
upgrades are
are required
required
for
for today’s
today’s copper
copper solutions
solutions in
in
order
order to
to provide
provide the
the services
services
customer
customer demand
demand Source: WaveOptics7

12 Convergence India 2004


Corning Optical Fiber
FTTH Myths
• There are no applications that need FTTH
• FTTH is not economically viable
• FTTH is years away…“not in my lifetime”

13 Convergence India 2004


Corning Optical Fiber
Broadband In Asia
-- Japan: e-Japan strategy
FTTH Subscribers in Japan

Total Monthly Adds

1,200,000 100,000

90,000 Today’s Telecom Market (FEB ‘04)


1,000,000
80,000
– 51M fixed line subscribers
Total FTTH Lines

70,000
800,000

Monthly Adds
60,000

600,000 50,000
– 76M wireless subscribers
400,000
40,000
30,000
– 14.1 broadband subscribers
200,000
20,000
– 10.6M DSL
10,000

0 0 – 2.5M Cable Modem


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em st

em st
e er

D em r
M ry

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Se Au ly

Se Au ly
Ap h

ch
ril

M l
y er

nu r
ay
ay

N cto r

N cto r
ne

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e
ri

Ja be
O be

O be

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Fe 200
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pt gu
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Ja Dec mb

ec b
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– 0.96M FTTH
(

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y
ar
nu
Ja

Month

•• e-Japan
e-Japan project
project initiated
initiated in
in 2001
2001 with
with the
the following
following goals:
goals:
–– Japan
Japan will
will be
be the
the most
most advanced
advanced ITIT nation
nation within
within 55 years
years
–– 30M
30M high
high speed
speed subs
subs (10
(10 Mb/s),
Mb/s), 10M
10M ultrahigh
ultrahigh speed
speed subs
subs (100
(100 Mb/s-FTTH)
Mb/s-FTTH)
•• e-Japan
e-Japan II:
II: focuses
focuses on
on content
content and
and harnessing
harnessing capacity
capacity of
of new
new services
services
Source: Ministry of Public Management--Information and Communications in Japan
14 Convergence India 2004
Corning Optical Fiber
Myth: FTTH is years away…“not in my lifetime”
-- List of ‘US Optical Fiber Communities’*
Kansas Montana Virginia
Almena Baxter Meadows Ashburn
Hill City Ironwood Brambleton
Braemar-Bristow
Luka Oklahoma
Bristol
Norton Hinton
Independence
Osborne Oregon Leesburg
Quinter Woodburn Purcellville
Sharon Pennsylvania Washington
Turon Kutztown Chelan County
Wakeeney South Carolina Clallam County
Douglas County
Wamego Daniel Island
Grant County
Louisiana Sandy Point Issaquah Highlands
Squire Creek Homes Texas Mason County
Maine Burleson Wisconsin
Alabama Cambridge Norway Canyon Gate Brazos Berkseth-Baldwin
Sylacauga Colorado Guthrie Center Massachusetts Crystal Falls Prairie View
Union Springs Buckhorn Valley Huxley Pine Hils Grand Lake Estates Reedsburg
California Chatfield Corner Slater Tauton Lake Ridge South
Amerige Heights Colorado City Idaho Michigan Lakes on Eldridge
Canyon Hills
Eagle Ranch Bear Creek Cobblestone Laredo
Kenwood
Lincoln Crossing Rye Illinois Minnesota Northpointe New in 2003
Palo Alto Florida Paxton Alberta Rock Creek
Parc Metropolitan LPGA Community Salem Chokio Victory Lakes
Poppy Measdoss Magnolia Lake Indiana East Ottertail Utah
Mission Bay Source: Render, Vanderslice & Associates
Roseville Georgia Bay Creek Evermoor Deer Mountain
Sacramento Dunwoody Gateway Crossing Morris Kamas
Talavera Dalton Rochester Nebraska Provo
Iowa Blair
15 Convergence India 2004
Corning Optical Fiber
FTTH Myths
• There are no applications that need FTTH
• FTTH is not economically viable
• FTTH is years away…“not in my lifetime”
• Last-mile fiber is a monopoly

16 Convergence India 2004


Corning Optical Fiber
Myth: Last-mile fiber is a monopoly
-- Downtown Tokyo --- Competition!

TEPCO (Fiber)

Cable TV

TEPCO (CATV)

Usen (music) Usen (Fiber)

NTT Fiber

NTT
Telephones

Multiple fibers passing the same homes!


17 Source: Fujikura Convergence India 2004
Corning Optical Fiber
FTTH Myths versus Realities
-- Lessons Learned Applied to India
•• FTTH
FTTH deployment
deployment is
is aa reality
reality today
today
–– Long-term
Long-term solution
solution for
for broadband
broadband networks
networks
–– Growing
Growing steadily
steadily but
but still
still hampered
hampered by
by myths
myths
–– New
New applications
applications are
are driving
driving traffic
traffic growth
growth
•• Why
Why FTTH?
FTTH? Why
Why Today?
Today? Why
Why India?
India?
–– National
National broadband
broadband policies
policies
•• Convergence
Convergence called
called out
out in 10thth Five
in 10 Five Year
Year Plan
Plan Objectives
Objectives
–– “building…infrastructure
“building…infrastructure to
to meet
meet convergence
convergence of
of telecom,
telecom, IT
IT and
and media”
media”
–– Carrier
Carrier increased
increased competition
competition
•• Carriers
Carriers grow
grow by
by offering
offering new
new services
services via
via advanced
advanced networks
networks
–– Fiber
Fiber provides
provides an
an OPEX
OPEX advantage
advantage over
over copper
copper
•• Access
Access technology
technology is
is aa viable,
viable, economic
economic reality
reality today
today
•• The
The dawn
dawn of
of FTTH
FTTH in
in India
India is
is here!
here!
18 Convergence India 2004
Corning Optical Fiber