The demand for bandwidth has intensified as information technology has been deployed widely to rationalize business processes and to deliver new consumer-oriented services. Businesses are craving bandwidth for uses such as supply chain management, data warehousing and e-commerce. In addition, consumer trends such as telecommuting, interactive entertainment and home networking are driving demand for more bandwidth.

These trends are causing telecom vendors to invest in broadband infrastructure to accommodate the growth in bandwidth-intensive applications. According to Vertical Systems Group, new connections to the Internet by bandwidth-hungry businesses will jump from 2.96 million establishments in 2000 to 4.48 million in 2003. Simultaneously, Forrester reports that residential broadband connections will skyrocket from 2.8 million households to 46.7 million in 2005. Worldwide, Dataquest forecasts that spending on access systems is expected to grow from $11.34 billion in 1999 to $21.69 billion in 2003

The data network as illustrated in the figure below is the infrastructure that comprises the Internet:

Local carriers have been trying to deliver cost-effective broadband to the local access market for years. However, there is a massive disconnect in the broadband access value chain. While the long-haul and metro-ring segments of the market have seen significant improvement in both bandwidth capacity and range of services, the edge of the network has been slow to follow. Technical and economic hurdles have inhibited the deployment of cost-effective broadband services in the local access market. In fact, according to Vertical Systems Group, 76% of all U.S. businesses in 1999 were located within a mile of an existing source of fiber, with no link set up to access it.

The disconnect, therefore, lies in the proverbial last mile. Current local access solutions for broadband include point-to-point technologies (Fiber/T1/T3), and two technologies that leverage existing telecommunications infrastructure, Digital Subscriber Line (DSL) and Broadband Cable. Each of these solutions have inherent problems that have limited wider deployment.


Click to Enlarge

The point-to-point technologies, including fractional T1 lines, are complex and costly to provision. Pricing starts on average at $1,000 per month which precludes most SOHO and residential users. As such, deployment has been limited almost entirely to the business sector, with just over 1 million lines in service.

DSL leverages existing telephony infrastructure, but distance limitations have limited the user base to those customers who live within 18,000 feet of a central office. DSL is also difficult to provision, often requiring the presence of an on-site technician to complete installation.

Finally, Broadband Cable leverages the infrastructure that was originally developed for broadcast television. According to Cahners In-Stat, cable lines were present in 110 million homes in 2000. Unfortunately, cable operators must undertake costly investments to add two-way communications abilities to the existing infrastructure. In addition, broadband cable suffers from topology considerations that hinder quality of service.

The most effective method for overcoming these barriers is the deployment of a Passive Optical Network (PON). Passive Optical Networks are ideal for delivering bandwidth to the masses across a broad geographical array. Most importantly, PONs deliver bandwidth cost-effectively allowing carriers to acquire customers with an attractive ROI.