Japan FTTx vendors should look for US partners

OvumJapan’s FTTx equipment vendors need a new market, and the US cable operators may be a great match.
US MSOs have EPON trials under way with a focus on business services. CableLabs is developing standards for DPOE (DOCSIS provisioning of EPON). The MSOs are looking for expertise in EPON, CMTS, and routing. While the Japanese FTTx vendors are missing CMTS expertise, that can be gained through partnerships with the likes of Cisco and Arris.
FTTx household penetration in Japan exceeds 42%, equating to almost 22 million subscribers. FTTx equipment shipments – both OLT ports and subscriber-side ONUs/ONTs – continue apace but the volume is not growing year over year given the maturity of network deployments.
Bottom line: Japan’s FTTx networks are taken as status quo today. Japan’s FTTx equipment vendors must look to other markets to attain revenue growth.
The major US cable operators are working with CableLabs for the development of DOCSIS provisioning of EPON (DPOE). DPOE maintains DOCSIS, the widely used cable service provisioning system, as cable operators begin to deploy FTTx networks.
The initial focus of the US MSOs is on business services, which offer a higher revenue opportunity than residential services.
But the higher ARPU from businesses comes with a price – or several prices. First, businesses demand higher QoS (quality of service) and more stringent SLAs (service-level agreements) than residential subscribers. In addition, most business customers would prefer 10G symmetrical EPON versus 10G/1G or 1G/1G. While 10G symmetrical solutions may not be available today, the MSOs will be expected to provide seamless upgrades in the near future.
The cable operators need vendors with expertise in three areas: EPON, CMTS and routing.
The leading CMTS vendors, Cisco and Arris, are not leading vendors of EPON solutions. The leading EPON vendors, such as Huawei, ZTE, Mitsubishi, and Sumitomo, are not well versed in CMTS. Basically, no vendor is a perfect fit.
In addition, the Japanese EPON FTTx vendors have the roadmap under control. They are quite far along with 10G/1G EPON solutions and will develop 10G symmetrical as components become available.
Partnerships between the leading CMTS vendors and the leading Japanese EPON vendors may provide the best chance for winning market share.
If a Sumitomo or Mitsubishi were to combine forces with an Arris or Cisco, the result could fulfill the requirements of DPOE while providing confidence to the MSO industry that the solution would maintain their huge investments in DOCSIS.
And let’s face it, a partnership between Huawei and Cisco is very unlikely. The Japanese are probably the only EPON vendors that could approach the CMTS vendors and be greeted with an open door. An open door does not guarantee a working partnership, but it is a positive first step.