XGS-PON - Making the case for Fibre in Emerging Markets

XGS-PON - Making the case for Fibre in Emerging Markets

While the cost of deploying fibre has long been a sticking point for operators prioritising fast deployment and affordability, Nokia’s Ana Pesovic explained to us how the long-term value proposition of passive optical networking (PON) is already clear – both in rural and urban areas.

We spoke to her to discover more about the technology’s evolution as XGS-PON begins to replace GPON as the most viable option in emerging markets.

One of the major considerations around fibre is the cost – but what advantages does it offer to make this investment worthwhile?

Fibre is a fantastic technology that provides a great opportunity in today’s market to connect consumers, businesses, IND 4.0, smart cities etc. You also need fibre for 5G – it complements deployments and helps with efficient transport. Compared to copper, LTE, DOCSIS and 5G, fibre is by far the fastest, capable of achieving 25Gbps today and 100Gbps in labs. It’s also the greenest – 6 to 8 times better than any other access technology in terms of energy efficiency, allowing operators to reduce their carbon footprint while saving energy. It’s also long-lasting – 75+ years – resistant to environmental impact, and unlike copper infrastructure it has no resale value, meaning it won’t be stolen.

Nokia fibre graphic 1

Is fibre prohibitively expensive in rural areas?

Fibre has been widely deployed in urban areas, but there are questions around rural deployments and emerging markets where demand is not so high – there are many countries in Africa where device affordability means that penetration is low. However, bringing fibre to rural areas makes a lot of sense – nobody can deny the value of broadband, and one can argue it’s more important to these regions than in urban areas as rural areas are very reliant on connectivity, whether for remote working, entertainment, or maintaining contact with customers/suppliers. The ratio of fibre deployment cost versus revenues is often very favourable in emerging markets. For example, operators in Philippines, South Africa and Indonesia reports the cost-ARPU ratio between 2-8, compared to ~15 typical for West European operators.  There are many positive examples of fibre deployments in rural and emerging markets. For example, Safaricom, a fibre operator in Kenya, has around 60% take rate on their fibre [source: Omdia, 2022], which is something many large operators in US and Europe still cannot claim. Obviously the investment is expensive, and this means that it’s only worth investing in a technology that will last a long time. Copper could be used with DSL for 5-10Mbps, but increasing this rate required reworks and installing new nodes every five to ten years. Comparatively, fibre is a one-off investment that lasts much longer.

There are a lot of government initiatives to help build fibre networks in rural areas as the business case is often not there for operators – they want to focus on urban areas as they can receive a faster return on their investment.  This has led to governments, local providers and utilities investing in rural fibre deployments. The advantages include a lack of competition – if you’re the first to deploy the technology and gain customers, you’ll likely deter rivals from risking investment. The question now is whether to use GPON of XGS-PON. Technology-wise, the latter is only slightly more expensive; the majority of the cost is in deploying the fibre, which is required either way. This is typically around 70% of the entire cost, and this is an even higher proportion in rural areas, so once that’s done the difference between XGS-PON and GPON is very small, meaning there’s little reason not to choose the more advanced technology. GPON is now around 15 years old, while XGS-PON provides 10Gbps connectivity and it’s slightly more expansive, so if you’re deploying fibre now it’s a big step up for not much more investment.

How easy is it to upgrade GPON to XGS-PON? What does the newer technology offer?

XGS-PON provides 10Gbps connectivity – X being the Roman numeral for 10, while the ‘S’ stands for ‘symmetrical’. While GPON is still used in many residential deployments, the technology is now  showing its age, especially if you want to offer gigabit services – this is still possible currently, but it’s questionable whether GPON will be enough in five years.

The good news is that upgrading from GPON to XGS-PON is very smooth and cost-efficient. First of all, the fibre plant (fibre cables laid in the field) doesn’t require any upgrades or replacement. This is important because  it is the most expensive part of the network, so not having to touch it is a must for fibre evolution. The only changes required are in the active part of the network - these include OLTs (Optical Line Termination), which are access nodes typically located in central offices, and ONTs (Optical Network Termination), which are fibre modems at customers’ homes.

There are solutions currently available that can offer GPON and XGS-PON on the same access node and the same port. This eliminates the need to make changes in the OLT during upgrades. You can start with GPON for example, and when needed just switch users to XGS-PON remotely with no need to visit the central office. 

Nokia PON graphic 1

How will we see these technologies evolve in the future?

Gigabit PON (GPON) is still the most widely deployed fibre technology, but it is expected that XGS-PON will overtake it this or next year in terms of shipments. XGS-PON is a game-changer in many markets, encouraging large operators, new players, alternative operators, smaller regional service providers etc, giving them a competitive edge and more revenues.  XGS-PON offers a bigger pipe, enabling more monetisation options– either by offering higher bandwidth services at a higher price point, or by using the additional capacity to provide enterprise services, 5G transport, wholesale etc.

In terms of consumer bandwidth demand, GPON is running out of steam, especially in markets with Gigabit service offers. PON runs one fibre from the OLT which is then run through a splitter to reach individual homes – typically around 30, with the bandwidth shared between them. If you want to offer gigabit services, your customers need to be able to access gigabit speeds at any time, which requires around 1 gigabit of headroom. This in turn leaves around 1.5G for all the subscribers connected to a particular PON – and based on projected usage, this means that the capacity of GPON is likely to be insufficient by 2025, so it’s not long before XGS-PON will be required to continue offering gigabit speeds, making it the more future-proof option.

25 GPON is the most efficient next step beyond XGS-PON, with>20 operators worldwide trailing or deploying it. 25 GPON strengthens the value proposition for XGS-PON, as it can be delivered via the same hardware when the increased capacity becomes necessary in the future. Fibre is a huge investment for operators, so they need to monetise it as much as possible with high-bandwidth consumer services, and they also want to be able to use it for as long as possible. 25 GPON enables this, as providers are able to use the same fibre assets for decades.

With 50 GPON and 100G on the horizon, the future of fiber broadband seems unstoppable. While 25G PON is a straightforward evolution based on the existing components but running faster, 50G and 100G are more of technology leap, requiring a new generation of components that still need to mature.

Nokia fibre graphic 2

These different flavours of PON technologies help operators to make the best choice for their evolution – based on cost, service focus, competition, business priorities, timing, or usually a combination of these. Different flavours enable operators to use the right “toolkit” and compete better in their own markets. And most importantly – they enable the service evolution on the same fibre infrastructure, so it can be monetised for decades to come.

Check out the Nokia Fiber Techzone, the knowledge hub for all things about fiber broadband: from technology, deployments, operations to monetization.

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