WDM-PON: Can it save operators over €10bn in total cost of ownership?

Behind the numbers

Source: ADVA Optical Networking

“The focus of operators to squeeze the last dollar out of the system and optical component vendors is really nonsense.”

Klaus Grobe, ADVA Optical Networking.

Key findings

The total cost of ownership (TCO) of a widely deployed WDM-PON network is at least 20 percent cheaper than the broadband alternatives of VDSL and GPON. Given that the cost of deploying a wide-scale access network in a large western European country is €60bn, a 20 percent cost saving is huge, even if spread over 25 years.

What was modelled?

ADVA Optical Networking wanted to quantify the TCO of three access schemes: wavelength-division-multiplexing passive optical networking (WDM-PON), gigabit PON (GPON) - the PON scheme favoured by European incumbents, and copper-based VDSL (very high bit-rate digital subscriber line).   

The company modelled a deployment serving 1 million residences and 10,000 enterprises. “We took seriously the idea of broadband roll out especially when operators talk about it being a strategic goal,” says Klaus Grobe, principal engineer at ADVA Optical Networking. “We wanted a single number that says it all.”

Assumptions

ADVA Optical Networking splits the TCO into four categories:

• Duct cost
• Other operational expense (OpEx)
• Energy consumption
• Capital expenditure (CapEx)

For ducting, it is assumed that VDSL already has fibre to the cabinet and the copper linking the user, whereas for optical access - WDM-PON and GPON - the feeder fibre is present but distribution fibre must be added to connect each home and enterprise. “There is also a certain upgrade of the feeder fibre required but it is 5 percent of the distribution fibre costs,” says Grobe. Hence the ducting costs of GPON and WDM-PON are similar and higher than VDSL.

A 25-year lifetime was also used for the TCO analysis during which three generations of upgrades are envisaged.  For the end device like a PON optical network unit (ONU) the cost is the same for each generation, even if performance is significant improved each time.

The ‘other OpEx’ includes all the elements of OpEx except energy costs. The category includes planning and provisioning; operations, administration and maintenance (OA&M); and general overhead.

Planning and provisioning, as the name implies, covers the planning and provisioning of system links and bandwidth, says Grobe. Also the WDM-PON network serves both residential and enterprises whereas duplicate networks are required for GPON and VDSL, adding cost.

The ‘general overheads’ category includes an operator’s sales department. Grobe admits there is huge variation here depending on the operator and thus a common figure for all three cases was used.

Energy consumption is clearly important here. Three annual energy cost increase (AECI) rates were explored – 2, 5 and 10 percent (shown in the chart is the 5% case), with a cost of 80 €/MWh assumed for the first year.

The energy cost savings for WDM-PON come not from the individual equipment but from the reduced number of sites deploying the access technology allows. The power consumed of a WDM-PON ONU is 1W, greater than VDSL, says Grobe, but a lot more local exchanges and cabinets are used for VDSL than for WDM-PON.

And this is where the biggest savings arise:  the difference in OA&M due to there being fewer sites for WDM-PON than for GPON and VDSL. That’s because WDM-PON has a larger, up to 100km, reach from the central office to the end user. And, as mentioned, a WDM-PON network caters for enterprise and residential users whereas GPON and VDSL require two distinct networks. This explains the large differences between VDSL, GPON and WDM-PON in the ‘other OpEX’ category.

Grobe says it is difficult to estimate the site reduction deploying WDM-PON will deliver. Operators are less forthcoming with such figures. However, the model and assumptions have been presented to operators and no objections were raised. Equally, the model is robust – varying wildly any one parameter does not change the main findings of the model.

Lastly, for CapEx, WDM-PON equipment is, as expected, the most expensive. CapEx for all three cases, however, is by far the smallest contributor to TCO. 

Mass roll outs on the way?

So will operators now deploy WDM-PON on a huge scale? Sadly no, says Grobe. Up-front costs are paramount in operators’ thinking despite the vast cost saving if the lifetime of the network is considered.

But the analysis highlights something else for Grobe that will resonate with the optical community. “The focus of operators to squeeze the last dollar out of system and optical component vendors is really nonsense,” he says.

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Comments

[Patryk Urban]

Very interesting article. Thanks a lot for it! Regards.
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