The FTTH Prism

Vol. 6, No. 3 July 2009

Introduction: With Rural FTTH in Site, Let's Not Falter......................2

Tier Three Rural ILECs and FTTH.........................................................4

Michael Render, RVALLC

Reality Different from Perception in Rural Telco Fiber Deployments..7

Fiber To The Home in Rural Northern Minnesota..................................9

Brian Bissonette, Paul Bunyan Telephone

FTTH Deployment in South Central Kansas..........................................15

Shawna Marlow, SC Telcom

Fiber Optics in Data Centers....................................................................18

Jeanne Propst, Corning Cable Systems

Ultra-Bend-Insensitive Fibers Fit Challenging Applications....................26

John George, OFS

Fiber to the Library: Next Gen BB for Next Gen Libraries...................29

Don Means, Community Telestructure Initiative

Making Money.........................................................................................…32
Jim Farmer, Enablence Technologies

PON Component Food Chain Results...............................................................39

Let's Continue, Strengthen The March to Bring FTTH to Our Rural Communities
David Chaffee, Chaffee Fiber Optics

The broadband portion of the American Recovery and Reinvestment Act of 2009 (ARRA), the
so-called stimulus act, places a much welcome and much needed emphasis on the rural communities of
the United States and their at times desperate need for broadband. In fact, the Act mandates that 75
percent of grants/loans of one of the two broadband funding agents, the Rural Utilities Service, go
directly to rural communities.

Sen. Tom Harkin (D.-Ohio), chairman of the Senate Agriculture Committee, suggests that
without adequate resources for our rural communities, which are so much a part of a complete and
unified America, they will simply fall apart. The young people will move away and they will cease to
be.

Interestingly, our rural heartland is far from being completely unserved, one of those magical
words made so by the ARRA. In fact, as we explore in this issue, a number of rural carriers have been
delivering fiber optics, including fiber to the home, to fortunate rural communities for some time.

In fact, as the Fiber To The Home Council will be the first to tell you, rural telcos have been a
vital part of FTTH for many years.

In this issue, we chronicle the efforts of two of these progressive, forward-looking rural telcos:
Paul Bunyan Telephone (Minnesota) and SC Telcom (Kansas). Both decided to put their citizens first,
even if the cost was extra. Both recognized the importance of broadband to their communities and in
keeping said communities together.

While these efforts are laudatory, the ARRA is correct in suggesting that the problems are deep
and profound. At least 20 million Americans can't get broadband of any kind, according to good
estimates, and approximately 100 million Americans for one reason or another don't get broadband
even though many are offered.

RUS, through the wise use of the stimulus funds at its disposal, has the capability to start
turning this around. As SC Telcom's Shawna Marlow points out, the carrier can use stimulus money to
serve remote, rural areas in its district that even for SC Telcom it would be difficult to get fiber optics
to.

In researching this area, I personally have been disturbed by some of the attitudes exhibited
towards our rural communities by people that should know better. There was a prevailing attitude that
hopefully is coming to an end that rural communities don't want broadband. The fact of the matter is
that it is essential for rural communities to thrive, and a growing number of people in those
communities (especially those who understand what broadband is and how it can be used effectively)
understand that.

I also am upset by the argument that the job has been accomplished if these communities get
some sort of broadband, however weak. One of the major failures of the broadband portion of the
ARRA is that it defines broadband (768 Kbps downstream/200 Kbps upstream) that plays into this
weakness scenario.

2
 Do we really want our rural communities to have access to those bandwidths delivered by a
weak wireless or low-end DSL signal five to 10 years from now? In reality, they will have the same
problems accessing most applications that those stuck with dial-up currently do. In short, we will be
perpetuating a losing cycle where our rural communities once again will be lowest on the totem pole.

We find ourselves at a defining point in America's history. We can either strengthen the efforts
of our valiant rural carriers and bring high-end broadband to these areas—in effect raising them to the
level of the rest of us—or again doom them to “have not” status, only to be the subjects of yet another
stimulus effort in the future.

As my colleague Jim Baller is fond of asking, “What is the best America can do?” When it
comes to our rural communities, I think we all know the answer to that.

3
Tier 3 Rural ILECs and FTTH
Michael Render, RVA LLC

Other than Verizon, the most active group deploying FTTH at present is Tier 3 ILECs.

Tier Three ILECs are usually small incumbent telephone companies comprised of cooperatives
and private organizations usually serving a limited territory within a single state (or sometimes a
contiguous area straddling two states). Many have histories dating back one hundred years or more.

There are approximately 1,200 Tier Three ILECs serving nearly eight million customers in the
United States. Most of them have a customer base of less than 4,000, however, a few exceed 20,000.

Some Tier Three ILECs have extended outside their territory by serving as a competitive CLEC
in an adjacent rural area (usually an area that has been somewhat “forgotten” by another larger
incumbent).

Tier Threes have done an incredible amount of work deploying FTTH already – passing 1.1
million customers and serving .6 million customers. While some are only installing FTTH in new
developments, most are overbuilding or rebuilding their existing copper plant. Some have chosen to
completely retire their copper plant and serve even voice-only customers with fiber. Others with
overbuilding activity offer fiber drops only to those who want television or Intenet services. The take-
rate for such voluntary FTTH service has also been high – in part because there is less real competition
in the rural areas they serve.

FTTH activity will likely continue to grow for Tier Threes. Nearly one-half of all Tier Threes
already serve some customers with FTTH. Another 25 percent are quite likely to start serving FTTH
in the next three-to-five years (based on surveys by both RVA and associations of rural telcos).

Most of the motivation for all this Tier Three FTTH activity can generally be attributed to a
desire to remain technologically current, a general pride in being a pioneer, and a need to replace aging
copper lines (many of which are concurrently nearing the end of their useful life). In interview after
interview, Tier Three ILECs report that when reviewing a decision as to how to upgrade or retrofit their
outside plant, the advantage of moving to FTTH versus reinstalling copper was fairly obvious.

4
 There has also been a general move within telcos to expand offerings and begin to offer
television services. While IPTV over copper has been used where appropriate, a more robust platform,
such as fiber, is often needed to deliver a full offering to a wide audience. Just over 60 percent of Tier
3 ILECS with FTTH offer television service over fiber.

Programming sources are somewhat difficult to negotiate for small companies. Content
certainly costs more for them than for larger carriers… but it has been obtained. (Television service
has probably been one reason Tier Two ILECs, with territories spread out geographically, and thus
more difficulties developing television strategies, have been less likely to embrace FTTH overbuilds.)

Incentives such as universal service funding and rural loan programs have also come into play
in the ability of Tier Three ILECs to offer fiber.

Finally, part of the reason that Tier Three ILECs have moved rapidly to FTTH is that they are
reasonably nimble and generally less encumbered by various factors that go beyond purely logical
analysis. Huge carriers such as AT&T, Verizon, and Qwest face pressure from the intense scrutiny of
the financial community seeking short-term results. (Verizon took an unusually bold stance for a
public company in 2004, against the conventional wisdom of the financial community, when it was
willing to take criticism and a short-term financial hit in order to do what it felt it had to do to position
itself for the future.) MSO cable companies also feel a psychological need to position their technology
differently than telephone carriers.

Public municipal carriers face questions, and often even lawsuits, related to the question of
public involvement in the market, a very long project gestation period, and the challenges of raising
public capital.

Competitive local exchange carriers, or CLECs, are often weighted down with the difficulties of
raising capital. Facilities-based CLECs offering FTTH service have been quite successful, but
financing for expansion has been difficult to obtain, even before the recent financial crisis. Venture
capitalists want the possibility of more explosive returns, while many other loan sources want only very
large loans, or more assets to secure. Also, “fiber” and “CLEC” became tainted words to the financial
community because of the long-haul fiber and non facilities-based CLEC bust.

Tier Three ILECs have played an invaluable role in expanding the general deployment of fiber
in the United States – and specifically deployment to the rural areas. FTTH is strongest in suburban
areas because of Verizon, but it has found a place in rural zips - even in the nation’s lowest density zip
codes - largely because of Tier Three ILECs.

Michael Render is a principal in RVA LLC, considered the leading provider of market research on the
North American FTTH market. RVA releases data and forecasts through the North American FTTH
Council (www.ftthcouncil.org) and through private reports released on www.RVALLC.com

5
6
Reality Different from Perception in Rural Telco Fiber Deployments
Staff

There is a very inaccurate and somewhat damaging public perception about rural telephone
carriers that they offer little more than dial-up or DSL service, their customers do not care about
broadband, and they are fat, dumb and happy living that existence. At least one legitimate research
institution, Pew Research, has promoted that idea.

In reality, nothing could be further from the truth. Some 44 percent of rural carriers say they
deliver either FTTH or FTTC, according to a 2008 survey by the National Telecommunications
Cooperative Association (NTCA).

And this is a rapid growth story. That number had increased by 12 percent from 2007.

Another image shattered by the report is one of a single, unresponsive rural telephone carrier.
Some 93 percent of respondents to the NTCA survey said they face competition in the provision of
advanced services from at least one other service provider. Competitors may include national Internet
service providers, satellite broadband providers, cable companies and wireless ISPs. We would also
like to point out that these are small carriers for the most part. Nearly 50 percent service between 1,000
lines and 5,000 lines, with population density in most member service areas in the one to five
customers per square mile range.

All carriers surveyed said they offer some sort of broadband service.

The report notes that “a vast majority,” 78 percent, are using fiber to at least extend DSL
service. As can be seen from the chart following, DSL was the only service more popular than FTTx.

Figure 1: Provided by NTCA

7
 Back to fiber, some 71 percent of those with a fiber optics deployment strategy said they plan to
offer fiber to the node to more than 75 percent of their customers by year-end 2009, while 74 percent—
nearly three-quarters—say they plan to offer FTTH to at least 25 percent of their customers over the
same timeframe.

“Deployment cost remains the most significant barrier to wide deployment of fiber, followed by
regulatory uncertainty, long loops, low customer demand, and obtaining cost-effective equipment,”
according to the NTCA report.

In fact, some 86 percent of survey respondents identified the cost of fiber deployment as a
significant barrier to widespread use. This was followed by regulatory uncertainty, which was a
deterrent to 56 percent; long loops was a barrier to 47 percent; low customer demand was an obstacle to
36 percent; and obtaining cost effective equipment stifled some 30 percent.

Interestingly, 80 percent of survey respondents see modest-to-significant benefits to fiber

deployment versus the current cost of deployment. That number expands to 95 percent three years from
now.

Figure 2 : Provided by NTCA

In conclusion, nearly half of rural telcos have adopted an FTTx strategy, with a significant
portion of those incorporating FTTH.

The reader need not be reminded that this is particularly impressive when one considers that
only one of the largest RBOCs has a near term FTTH strategy and none of the major MSOs do.

8
Fiber to the Home in Rural Northern Minnesota
Brian Bissonette, Paul Bunyan Telephone

Prior to the formation of a telephone cooperative in northern central Minnesota, many rural
residents didn’t even have the option to get telephone service. Those who could received it from their
township and they had to share the line with up to nine other customers. That was the reality of the
situation back in the 1940s. But the winds of change were in the air. In 1949, the United States
Congress enacted legislation to add a new program to improve rural telephone service in the United
States.

On February 28, 1950, the first public organizational meeting was held to explain the new
telephone program under the direction of the Rural Telephone Administration (RTA) through the
Rural Electric Administration (REA). This day marked the beginning of what would become Paul
Bunyan Telephone, the name chosen for the new business cooperative in June 1950. The name was
selected due to the popularity of local legends Paul Bunyan and Babe the Blue Ox and their
identification with the region. Their statues in Bemidji, which were constructed in 1939, remain one
of the most visited landmarks in the United States.

Today, Paul Bunyan Telephone covers over 4,500 square miles of service territory that includes many
rural areas, small towns, the Red Lake Indian Reservation, and a few small cities such as Bemidji,
Grand Rapids, Deer River, Cohasset, and Cass Lake.

Continue on page 11.

The FTTH Prism magazine is currently published on a quarterly basis. Back issues can be retrieved
at www.ftthprism.com. For advertising rates or to submit an article contact the publisher
at 410-988-2723 or cdcfiber@aol.com.

Editor and Publisher...................................................................David Chaffee

Director of IT..............................................................................Jason Scammell
Editorial Advisory Board:, Steve Kemp, Elizabeth Rogan, David Russell, Bernhard Deutsch, Jim
Farmer, John George, Larry Johnson, Diane Kruse, Richard Moran , Peter Westafer

9
10
Continued from page 9.

A map of Paul Bunyan Telephone's Expansion since 1999. Fiber to the Node was implemented from
1999-2003 in Bemidji and Cohasset locations. Fiber to the Home was used exclusively starting in
2004 and includes all of Lake George, Cass Lake, Grand Rapids, most of Cohasset, and portions of
Bemidji. Map does not show additional scattered ILEC areas also upgraded to fiber to the home
network.
The use of fiber optics as part of our cooperative’s telecommunication network infrastructure
started in 1988, when the first fiber optic lines were installed from our headquarters to one of the most
rural exchanges in our service territory over 60 miles away. The intent was to improve the main
network transport facilities and within four years all 12 exchanges served were connected and the fiber
optic backbone was in place.

11
 Crews work to install fiber optics in a marshy, rural area of Cass Lake, MN

While replacing old infrastructure and improved transport was the primary driver in our fiber
deployment initially, the amount of fiber optics deployed and its purpose changed in the late 1990s.
Instead of only being used for transport purposes, fiber was being integrated into the network design to
enable the cooperative to provide broadband services such as high-speed Internet and digital television
services to rural end-user locations.

Two significant developments in the early 1990s then set the stage for the eventual evolution
into fiber-to-the-home deployment. One was the passing of the Telecommunications Act of 1996. This
allowed our cooperative to enter into new, larger markets in our region. The second was the
development of high-speed Internet technology. In 1998, work was started to bring fiber optics to
within three miles of all existing network locations for the purpose of delivering high-speed Internet
services and network expansion was designed to bring fiber to within one mile of all locations.

In that same time period, the Broadband Loan Program was developed by the Rural Utilities
Service (RUS) within the United States Department of Agriculture (USDA). This program was
intended to provide low-interest loans to telecommunication providers to encourage deployment of
broadband services to rural areas. Since the inception of the program, we have applied for and received
funding that has enabled the deployment of fiber optics to both upgrade our existing network and
expand into new markets.

12
 Paul Bunyan Telephone construction crew installing all fiber optic network into Park Rapids, MN

In addition to funding, one of the biggest challenges we faced in transitioning to an all-fiber-to-

the- home network was the lack of middleware and end-user equipment that would reliably allow for
delivery of phone, Internet, and television services. Clearly that component was required before the
reality of fiber-to-the-home delivery of services could be realized.

Finally, in 2004, we felt comfortable with the equipment/network options available and their
reliability to begin the process of implementing a fiber-to-the-home network. The deployment started
with one expansion area to provide us a chance to evaluate the installation, equipment, and end-user
services. Since that time, all expansion areas constructed have used only fiber-to-the-home
networking. The result is that three entire telephone exchanges in our service territory are now served
by a fiber-to-the- home network.

As a result of fiber optics implementation, our telecommunications network, which

encompasses over 4,500 square miles, provides access to high-speed Internet and digital television
services to all locations, regardless of how rural.

Currently, over 4,000 locations are served with our fiber-to-the-home network, which represents
about 30 percent of our entire network. For these customers, thanks to the benefits of fiber optics, we
can deliver high-speed Internet services up to 40 Mb (both upload and download) and a host of
advanced television services including multiple streams of high-definition television, digital video
recording, and on-demand services.

13
 Along with expanding to new areas, we have also started to transition our existing network into
fiber- to-the-home, with the goal of having an all fiber-to-the-home network within the next seven to 10
years.

PBT Technician Ryan Maher working to install services over all fiber optic network to a residential location

Fiber to the home has already made an impact on the communities and customers we serve.
The additional bandwidth speed and capacity provide a multitude of benefits. Area physicians can
receive CT scans, X-Rays, and other large files quickly at home or work. Educational institutions can
provide more interactive and comprehensive distance-learning classes. Businesses can connect their
various locations securely and receive unprecedented data transmission to improve operations and
efficiency.

One specific example the fiber optic network capacity can have on a business is Northwood
DNA, Inc. This is a business operating in a very rural area, Becida, MN, that provides DNA
sequencing and genotyping services globally. The services they provide require receiving and sending
large data files electronically. Prior to the deployment of the fiber optic network, their business was
only able to report two to three test results per day. Today, with the benefits of the all fiber optic
network, they report over 50 test results per day.

14
 It can’t happen overnight, but over time we expect to connect every location we serve directly
to the fiber optics network! Not only does it provide a solution to existing technology challenges, but
we certainly feel it puts us in a better position to handle whatever new communication technologies are
developed in the future.

FTTH Deployment in South Central Kansas

Shawna Marlow, SC Telcom

South Central Telephone Association dba SCTelcom is located in South Central Kansas, 80 miles
southwest of Wichita on the Oklahoma border.

Preface

"If we only had dependable phone service." This statement was heard many times in the early
1950s by a lot of frustrated rural Americans. Until this time, small family-owned or stock magneto
companies deploying open-wire architecture were serving communities, with each subscriber often
having a share of stock. In many cases it was not the fault of the company that service had become
inadequate; the problems were obsolescence, no means of financing improvements, and increased
demand by customers.

The need for a modern system was realized by many,

but it seemed everyone was willing to let someone else do
whatever was necessary to get the job done. In 1949, The
Rural Electrification Act (REA) was amended to include
telephone companies. This enabled the companies to borrow
money from the government at a low interest rate to rebuild
and make the most modern telephone service available to
everyone, regardless of the geographical location.

Throughout these years, Govan Mills, a rancher in

the Lake City exchange, was determined to solve this
problem in some way or another. In his search for a solution,
he traveled many hundreds of miles, and spent what
appeared at the time to be an endless amount of time
working the problem. He first approached Southwestern Bell
Telephone Company and tried to get them to provide phone
service to ranchers in the Lake City area. After being turned
down, he was not discouraged to the point of giving up, but instead was even more determined. He
visited with others who were experiencing the same problems, and decided that perhaps several of
these small companies could be incorporated into one. He was fully aware of the amended REA Act
and proceeded to establish how many companies would be interested in such a venture. Again, he was
back on the road, and every spare moment of his time was spent meeting with small companies in the
South Central part of Kansas.

15
 In March 1953, the first organized meeting of South
Central Telephone Association (SCTA) was held in Sun City,
Kansas. On December 16, 1953 agreements for purchase of the
following exchanges were executed: Ranchman's Telephone
Company, Sharon Telephone Company, Turon Telephone, Iuka-
Byers Telephone Company, and Sun City Telephone Company.
During the following months, a number of town meetings were
held for the purpose of informing the people in each of the
respective towns about the company, and to sell memberships
in the association. In early 1963, the acquisition of the
following exchanges in Oklahoma was completed: Amorita
Telephone Exchange, Byron Mutual Telephone Company,
Citizens Telephone Company, and North Union Telephone
Company in Burlington.

Let's move ahead to February 1982. That was when

Govan Mills, who had the original dream of putting together a
group of small rural telephone companies so the most modern
and best telephone services could be brought to the rural areas
of Kansas, passed away. Mills had not only served on the
board, but was president from the original incorporation in July
of 1953 until his death. He had spent a lot of time and effort,
and was very proud of the accomplishments pertaining to
SCTA.

The year 1989 was a very exciting year for telephone activity in the area. SCTA joined with
about 30 other independent telephone companies of Kansas to form the Kansas Independent Networks
Inc., a corporation in the process of constructing cellular telephone service in the rural areas of Kansas.
Also, SCTA joined with the KanOkla Telephone Association of Anthony, KS, and the Pioneer
Telephone Association of Kingfisher, OK, to provide cellular telephone service in the Rural Service
Area #2 of Oklahoma.

Decision to Go With FTTH

SCTA made the pioneering decision to go with a Fiber to the Home (FTTH) architecture in
2000. SCTA felt the bandwidth from FTTH was greater than it was with other architectures, including
Fiber to the Curb (FTTC), Asymmetric Digital Subscriber Line (ADSL), and hybrid fiber/coax (HFC)
systems. In the early 2000s, we went with Optical Solutions (OSI) 400 series chassis [Ed. Note: The
company has since been purchased by Calix], which delivered Broadband-Passive Optical Network
(BPON) to customers with a possible dedicated bandwidth of 30-40 Mbps. It was more speed than
customers required, but positioned us for the future.

In some exchanges, the copper plant was in poor condition and we knew we would have to
spend vast construction dollars to replace or repair. SCTA took a long term view and decided to install
fiber.

16
 In 2002, Sharon, KS, was the first FTTH town. We started in the city limits, not covering the
entire exchange, because the distance between customers in the rural areas created a much more
expensive project. At this time BPON technology was limited to just over five miles. The decision was
made to construct the in-town areas in Sharon, Iuka, Turon, and Kiowa. By the time we were ready for
the next exchanges (Byron and Burlington, OK), OSI GPON was available, which made us more
capable to push more data to the subscribers.

Next, when we deployed FTTH to Lake City, Sun City and Hazelton (town areas), we installed
the Calix C7 shelf. We realized the future of access would become active Ethernet so we designed the
fiber to allow for future technology changes.

While constructing Sharon, we realized there was a conflict with dial-up modems and FTTH
deployment. Knowing this, we still moved forward with the next three exchanges. Working with
OSI/Calix, we determined that PCs using FTTH connecting to dial-up just didn’t work. We back-
pedaled by switching those customers to copper. The problem was eventually identified as a Digital-to-
Analog conversion that took place at the Optical Networking Terminal (ONT). In an effort to eliminate
dial-up, we created an introductory low-speed broadband package to help encourage customers to move
to fiber.

During the strategic planning session for 2007, SCTA decided to change from a telephone to a
broadband company. In doing so, the mindset of the service technicians needed to be changed. They
had a lot of experience with copper and we needed them geared towards fiber and data, and to
transition away from copper and POTS. We accomplished this by in-house training, fiber splicing, and
basic computer training.

FTTH back-up batteries don’t have a long lifespan. In fact, in a power-outage the service
reliability is not very long. In a major power loss like an ice storm, the batteries won’t last and
customers lose service until power is restored.

We strive to exceed the demands of our customers. When the customer asks for broadband only
without a dialtone, though, it is a deterrent even though we can provide the service. Abiding by tariffs
for broadband only but also having competitive pricing is a disincentive.

Successes

Early in our deployment, we were able to deliver six Mbps to customers. We also began to see
the real advantage of how many services we could sell our customers to utilize that connection. Today
we can say that our broadband take rate is around 55 percent and our customers are inquiring about
faster speeds.

Using FTTH vs. Copper, ADSL or ADSL2, the number of troubles reported dropped
significantly. This increase in reliability gave our users a more positive customer experience. As our
troubles decreased, the creation of our Network Operations Center (NOC) with our in-house Internet
Help Desk technicians, allowed us to directly service our customers’ data needs. This allowed us to
refocus our resources to data-related services and would not have been possible if we did not migrate to
a FTTH network.

As of year end 2008, we have we have successfully placed 340 miles of fiber.
17
 Where We Are Heading

We have seen a steady, albeit slow, migration away from dial-up to our FTTH data packages.
This transition also decreases the troubles that the NOC has to handle.

Upon completing FTTH to our nine ILEC exchange town areas, we began deploying Fiber to
the Node (FTTN) in seven of our rural areas as a stop-gap measure to be almost a 100 percent
broadband company in 2007. In 2008 we knew that we would provide 100 percent FTTH in the
Hazelton and Sharon exchanges. Eighty percent of our customers are served by FTTH today.

The last 20 percent will be very expensive. Our Lake City and Sun City areas are so rural and so
geographically diverse and distance challenged that we deployed 700 MHz broadband wireless as a
stop-gap, knowing that FTTN was not feasible at the time. Now, with the American Recovery and
Reinvestment Act of 2009, we will apply for a broadband grant for 110 miles of fiber for these
exchanges. Our intent is to provide all of our facilities-based customers with FTTH.

We continually evaluate FTTH technologies and are always looking for the next innovation. We
currently offer broadband packages for businesses that require faster speeds. In addition to our ILEC
FTTH deployment, we have successfully rolled out a phased approach to overbuild our primary CLEC
areas. Furthermore, we are investigating the possibility of entering new markets for our CLEC. We feel
that FTTH provides us the competitive advantage over any other service provider in those areas.

Fiber Optics in Data Centers

Jeanne Propst, Networks Marketing Manager, Corning Cable Systems

Data centers centralize and consolidate IT resources, house network operations, facilitate e-
business and provide uninterrupted service to mission-critical data processing operations. Cabling of
the data center requires a marriage of two key components: the physical topology and the solution used
to implement the topology. It is the combination of these two components that provides a system that is
reliable, manageable, flexible and scalable. Factors that affect the cabling solution decisions
include changing technologies, increasing data rates and bandwidth demands, and the ever-
changing environment in the data center. Criteria including fiber type, performance and physical
connectivity methods directly impact the ability of the infrastructure to meet present requirements as
well as future needs.

The data center environment is subject to dynamic logical and physical architecture changes
that drive the need for modular cabling infrastructure solutions. With technology and system equipment
upgrades on the horizon, the infrastructure deployed today must be flexible to easily adopt and
accommodate the changes that will be required. While the infrastructure is designed and installed in a
way that easily accommodates change, it must also be easy to manage. When moves, adds or changes
are required, it is essential to be able to make these adjustments with minimal downtime.
18
 Deploying Optical Fiber in the Data Center

Optical fiber connectivity maximizes the overall efficiency of the data center by providing
optimized transmission performance, best utilization of pathways and spaces, reduction in network and
cooling power consumption, lower electronic costs, and the highest 10G electronic and patch panel
densities.

Pathway and Space Utilization

High-fiber-count density, combined with the small diameter of optical cable, maximizes the
raised floor pathway and space efficiencies for routing and cooling, and offers superior pathway usage
when routed in aerial cable trays. The larger diameter of CAT 6A cable significantly compromises
efficient utilization of pathways and spaces such as wire baskets, trays, conduits and racks. Because of
the larger diameter and abundance of copper cable, there is a substantially greater amount of jacketing
and insulating materials that cause additional fuel load in the pathways. Copper cable congestion in
pathways increases the potential for damage to electronics through overheating by restricting the much-
needed air flow to regulate temperature. In addition, air cooling damming effects can interfere with the
ability of ventilation systems to remove dust and dirt. Two CAT 6A UTP cables consume the same area
equivalent of a single 216-fiber ribbon cable. Figure 1 illustrates how 48 CAT 6A cables are required to
serve the same number of ports as one 0.58 inch optical cable.

Figure 1 - Optical Cable vs. Copper Cable Size Comparison

Port Density

19
 Optical fiber provides a higher 10G port density per electronic line card and patch panel when
compared to copper. Many manufacturers’ 10G UTP copper patch panel densities are reduced by up to
50 percent to mitigate cross-talk impairments by increased spacing between connector ports. 10G
copper chassis switch port density is expected to be approximately eight ports per card due to huge
power requirements. For 10G optical systems, current transceivers can support 24 to 32 ports per line
card, and emerging transceivers will be able to support up to 48 ports per line card. In addition, fiber
patch panels can support up to 1,728 fibers in one 4U housing (assume use of 12-fiber MPO connector;
the value doubles if a 24-fiber MPO connector is utilized.) A 10G copper system will also require more
switches and line cards to match the capability of a 10G optical system. One optical 48 port line card
equals eight six-port copper line cards (Figure 2).

Figure 2 – Line Card Port Density

10G Optical System (left) vs. Copper System (right)

Power and Cooling

Data Centers have come under increased scrutiny over the past few year since the United States
Environmental Protection Agency (EPA) reported that the energy use of U.S. data centers doubled from
2000 to 2006, with the 2006 level accounting for 1.5 percent of the country’s electricity consumption.
The EPA report suggests that data center energy usage could again double by 2011. 10G optical switch
electronics and server adapter cards require less power to operate compared to 10G copper. For 10G
optical systems, SFP+ optical transceivers are able to support up to 48 ports per line card with only a
maximum power dissipation of one watt per port. Typical power dissipation is 0.5 watts per port. 10G
copper electronics have significant power requirements of eight to 10 watts per port. In high-density
applications, this power usage is significant, not only in consumption, but also in the generation of heat,
which requires cooling to protect transmission equipment from rising temperatures.

EPA guidelines state that for every kilowatt of power, an equal thermal unit of cooling is
required. More power consumption requires greater cooling and humidity control, which increases
operational costs of un-interruptible power supply (UPS) systems and backup power supplies. Industry

20
experts have stated that every one cent increase in energy cost per kilowatt/hour can amount to $3
million per year in energy and cooling costs in a large data center. Also, for every dollar spent on
powering servers and equipment in a data center, firms should expect to spend another dollar to as
much as $2 to $3 to cool the hardware.

Figure 3 represents cumulative energy savings as a function of 10G optical and copper chassis
switch electronics and cooling energy consumptions. Another way to look at the energy consumption of
10G optical versus 10G copper connectivity is to view the financial impact. A regional average $0.147
kW-hr rate was used in the calculation. Annual savings range from 76 percent to 86 percent depending
on port count which translates to a $93,000 savings for one 288-port optical switch vs. a
copper switch (also in Figure 3).

Source: Corning Cable Systems

Figure 3 – Energy Savings Comparison
(Table includes network and cooling electronics power usage)

Optical connectivity provides the reduction in power consumption, higher port density and
optimized pathway space utilization that today’s data centers require for operational efficiency.

Designing the Cabling Infrastructure

A structured cabling system is important in the data center to maximize the efficiency and life
cycle of the cabling infrastructure. TIA-942, Telecommunications Infrastructure Standard for Data
Centers, provides structured cabling guidance that optimizes the cabling plant’s flexibility to meet
current and future networking requirements by facilitating moves, adds and changes (MACs).

21
 In a structured cabling design, the Main Distribution Area (MDA) serves as the crossconnect for
the first level backbone cables, entrance cables and equipment cables. It also includes the main cross-
connect (MC), which is the central point of distribution for the data center structured cabling system.
Backbone cabling is star-networked from the MC throughout the data center and, in particular, to
Horizontal Distribution Areas (HDAs), which serve as the optical cross-connect. Likewise, horizontal
cabling is installed in a star topology from the horizontal cross-connect in the HDA to each Zone
Distribution Area (ZDA) or Equipment Distribution Area (EDA). The presence of a horizontal cross-
connect is not mandatory and can be collapsed back into the MDA. When the horizontal cross-connects
are not used, cabling is simply extended from the MDA directly to the ZDA or EDA. For example, data
centers utilizing optical fiber may implement data networks with centralized electronics rather then
distributed electronics.
Centralized optical fiber cabling is designed as an alternative to the optical crossconnect located
in the HDA in the support of centralized electronics. Implementing a centralized optical infrastructure
may increase link distances and add connector mated pairs within the channel that increase the overall
channel insertion loss. These factors should be considered for meeting the requirements of future data
rates with regard to channel distance and insertion loss.

An additional component of the structured cabling topology defined in TIA-942, known as the
ZDA, enables a design architecture, commonly referred to as zone distribution (Figure 4). The ZDA
acts as a consolidation point for high-fiber-count cabling from the MDA or HDA to regional areas or
zones within the data center. The zone architecture allows for a one-time installation of the backbone
cabling and provides flexibility to accommodate frequent I/O electronic interconnect moves, adds and
changes. The ZDA is typically located within a patch panel, under a raised floor or suspended
overhead, and is common in many data centers operating today.

22
 Figure 4 – TIA-942 Data Center Structured Cabling Architecture

To implement a zone distribution architecture, one should identify zones, or PODs, throughout
the data center and locate points of distribution within these zones. A common implementation of zone
distribution includes the connectivity between the main distribution area and the server rows in the data
center (Figure 5).

Figure 5 – Data Center Zone Architecture

High-fiber-count cabling is installed from the MDA to each ZDA within the server rows, and
low-fiber-count cabling is then distributed from the ZDA to the server racks or cabinets in the EDAs
within the zone (Figure 6). Zone distribution can also be implemented within data center topologies
with HDAs. When an HDA is used, high fiber-count cabling is deployed from the HDA (rather than the
MDA) to each ZDA.

23
 Figure 6 – Data Center Zone Architecture

When incorporated into a structured cabling design, zone distribution reduces pathway
congestion and limits data center disruption between the MDA and end equipment cabinets, eases
implementation of moves, adds and changes and enables a modular solution for a “pay-as-you-grow”
approach to cabling the data center.

In all scenarios, the cabling infrastructure should be as modular as possible and planned in order
to reduce ongoing network cabling maintenance and relocation. It should also be flexible to
accommodate system equipment churn, service changes and scaling.

Solutions for Structured Cabling

Data center structured cabling products must be selected for the ability to provide for today’s
needs as well as the high-data-rate applications of the future, such as 100 Gigabit Ethernet, Fibre
Channel and InfiniBand. Fiber type and performance, insertion loss and physical connectivity methods
are all important considerations when choosing structured cabling solutions.

For optical fiber connectivity, users can choose between multimode and single-mode fiber
products. One parameter that corresponds to the performance of optical fiber is bandwidth. Bandwidth
is defined as the information-carrying capacity of the fiber and is an essential element to fiber
performance. Single-mode fiber has very high bandwidth that can be transmitted long distances, but the
optoelectronics required to do so are quite a bit more expensive than multimode and can be as much as
300 percent more.

There are two types of multimode fiber: 62.5 μm (OM1) and 50 μm (OM2 and OM3), each
named for the core sizes and various performance grades. OM3 is optimized for low-cost 850 nm
transmission with a minimum 2000 MHz·km effective modal bandwidth.

Minimum calculated effective modal bandwidth (minEMBc) is a measurement of system

bandwidth for OM3 fiber that provides the most reliable and precise EMB measurement compared to
the differential modal delay (DMD) mask technique. With minEMBc, a truly scalable bandwidth value
is calculated that can reliably predict performance for different data rates and link lengths.

24
 To meet distance and bandwidth requirements of today and the future, 50 μm multimode OM3
fiber is the ideal choice for data centers. Additionally, OM3 is the only multimode fiber now included
in the 40 Gigabit Ethernet and 100 Gigabit Ethernet standard and provides a 100 m extended reach
often required for structured cabling installations in the data center.

Insertion loss is also a critical performance parameter for data center cabling deployments. Total
connector loss within a channel impacts the ability of a system to operate over the maximum
supportable distance for a given data rate. As total connector loss increases, the supportable distance at
that data rate decreases. Thus, the insertion loss specifications of connectivity components should be
evaluated when designing data center cabling infrastructures. With low-loss connectivity components,
maximum system flexibility can be achieved with the ability to introduce multiple connector matings
into the connectivity link.

In addition to the performance requirements discussed, the choice in physical connectivity

methods is also important. Factory-terminated MPO solutions (Figure 7) allow connectivity to be
achieved through a simple plug-and-play system. To meet the needs of today’s serial duplex fiber
Ethernet and Fibre Channel applications, MPOterminated cabling is simply installed into preterminated
modules, or cassettes. These modules provide a means for transitioning the MPO connector on the
backbone cable to single-fiber connectors such as the LC duplex. Connectivity into the data center
electronics is completed through a standard LC duplex patch cord from the module. Utilizing MPO-
based connectivity also provides the ability to migrate to future parallel optics technology. This future
technology will require data transmission across multiple fibers simultaneously, so a multi-fiber, or
array, connector would be required for this application.

When the time comes to migrate to 40 Gigabit or 100 Gigabit Ethernet, the module and LC
duplex patch cords are simply removed and replaced with MPO adapter panels and MPO patch cords
for installation into parallel optic interfaces. Modules can also used at the MDA to facilitate cross-
connects.

Preparing for the Future

When designing and choosing cabling solutions for a data center, it is best to consider both the
physical topology and the solutions used to implement the topology for a cabling infrastructure that is
flexible enough to meet today’s requirements as well as future requirements. Implementing a TIA-942
structured cabling design utilizing multimode OM3 fiber with MPO connectivity solutions is the key to
maximizing the efficiency and life cycle of the cabling infrastructure.

25
Figure 7 – 12-Fiber MPO-terminated Cable

26
Solid Ultra-Bend Insensitive Fibers Fit Challenging Applications
John George, Director Systems and Applications Engineering, OFS

Fiber-to-the-Home (FTTH) service providers are faced with greater competition, increasing
labor costs, and the need to conceal installations in small spaces. As a result, they desire lower labor
costs and lower skill installations of optical cables in smaller spaces resulting in tighter fiber bends.

Compounding this challenge is increasing use of longer, more bend sensitive wavelengths for
current and next-generation applications. FTTH applications such as GPON use bend sensitive long
wavelengths, potentially reducing reach and/or service reliability with power budget constrained PON
applications. And the challenge will intensify as new, higher speed applications are run over fiber
networks installed today: Emerging PON systems such as 10GPON, 10GE-PON, and RFOG will use
even longer wavelengths, with two-to-four times the bending loss of today’s applications. The rapid
deployment of FTTH and running deep into the network has exposed the bending limitations of
traditional standard single-mode fiber (SMF). Most recently the need to route fiber drop cables inside
buildings and homes has posed a new challenge to service providers. Bend Optimized Fibers have been
developed to address these challenges by enabling faster, easier installations in smaller spaces while
supporting current and emerging high-speed applications.

Bend-optimized fiber is bend insensitive fiber with features optimized to benefit the application.
Bend- insensitive fiber (BIF) in various grades has been available for over 20 years. The first versions
were developed by AT&T for use in outside plant cables and to help reduce the size of apparatus for
many applications, including FTTH and multiple dwelling units (MDU). This “depressed cladding”
BIF was improved to provide Full Spectrum Zero Water Peak performance in 2006, and is still the
optimum fiber for most bend challenged applications. The fast emerging need to run optical drop
cables to indoor Optical Networking Units (ONUs) for FTTH requires a new class of fiber and cable
that supports tight five mm fiber bend radii to enable easy, copper-like optical drop cable installations.
At five mm bend radii with one turn at 1550 nm, traditional G.652D SMF can exhibit bending loss of
50 dB or greater, and even fibers meeting the new ITU G.657A and G.657B specifications show
unacceptable levels of two to 10 dB of bending loss under this condition. The recent fiber push into
MDUs and even homes drove development of new Ultra Bend Insensitive Fiber (U-BIF) targeting the

27
MDU drop cable application. U-BIF Cables of 4.8 mm and 3.0 mm diameter can be installed with low
skill, copper-cable-like procedures and provide a net savings of up to 50 percent for installed drop
cables, and faster customer connections.

The UBIF for MDU and In-home wiring (IHW) drop applications should have < 0.1 dB of
macrobending loss at 1550 nm with a single five mm radius turn to prevent excessive loss with the tight
fiber bends caused by stapling and routing around corners. There have been fibers available meeting
the above 0.1 dB requirement, but until recently all such fiber targeting MDU and in-home applications
achieved this performance using various configurations of holes arrayed around the light carrying core
of the fiber. Holes in the end of the fiber can cause complications in splicing, and in the critical
connector end-face polishing process required for factory and some field terminations.

A New Solid Bend Insensitive Fiber and In-Home Drop Technology

A new U-BIF, known as Resonance Assisted Fiber (RAF), offers up to 500 times lower bending
loss than conventional single-mode fibers, yet is a fully solid fiber that can use standard splicing and
connector mounting procedures. Additionally, a fusion splice-on connector or mechanically spliced
connector can be reliably field mounted on the U-BIF drop cable to eliminate slack management and
splicing protection boxes. A 4.8 mm diameter cable containing the RAF is designed to withstand
aggressive stapling and tight bending around corners, and resists bending to a fiber radius of less than
five mm to support long-term reliability. A 3.0 mm version of the cable also can be bent to a fiber
radius of five mm, and is recommended for use behind moldings individually or in bundles without
bend radius management. The cables can be factory terminated SC-APC connectors on one or both
ends.

Figure 2 – Preferred Characteristics of Ultra Bend Insensitive Fiber

An installation of the RAF 4.8 mm cable using the splice on connector is shown in Figure 3. By
avoiding the need for conduits and slack management boxes, this installation significantly reduces the
material and labor cost compared to a conventional bend improved or bend tolerant fiber in conduit
approach.

28
 Figure 3 – RAF 4.8 mm cable with Splice on Connector Installation Example.

Another application benefiting from the RAF 4.8 mm cable is buildings which have no space
for routing cables indoors. One such example is shown in Figure 4. Here we have six of these 4.8 mm
cables bundled and routed up the side of a building housing six units. The cables take a sharp bend
through a hole in the brick, and then are fanned out in the attic and stapled to the rafters in their way to
the ONU in each apartment. This is the type of cable routing and installation process used for copper
cables.
Figure 4– RAF Indoor/Outdoor Cable Installation

29
 Conclusion
Bend-optimized fiber provides features optimized to benefit the application. There are two basic
categories of bend-optimized fiber. For most bend challenged applications in Central Offices, Splitter
Cabinets, Data Centers, and premises backbone cables, a G.657A fiber provides the optimum balance of
performance, cost, and reliability. For the growing MDU and In-home optical drop cable application, a
new Resonance Assisted Fiber in the proper cable package offers near zero bending loss to enable low
skill, fast “copper like” installation for a variety of indoor and outdoor/indoor drop applications. Bend
optimized fibers using a solid construction help make connector terminations and fusion splicing easy,
using existing standard procedures and equipment.

Fiber to the Library: Next-Gen Broadband for Next Gen Libraries

Don Means, Director, Community TeleStructure Initiative

Libraries have a pivotal role in support of economic recovery.

Connect the nation's 16,548 public libraries with fiber-speed Internet and you will have the
quickest, least expensive, most equitable way to deliver near universal access to America's
communities.

Librarians can help users find online information about job or contracting opportunities and
work requirements. They can help anyone navigate the confusing array of proliferating online
government services from national, state and local government agencies. Library facilities, from urban
to rural, can serve as key anchor nodes for infrastructure deployment projects such as broadband and
smart electricity grids.

Libraries are unique among all public institutions in that they are open to anyone and nearly all
library resources are free and readily accessible. From books in Ben Franklin's day to first-generation
broadband in the mid 1990s, public libraries have played an historic role as early adopters of freely
shared information technology.

As importantly, librarians have long served as personal guides to information seekers and
knowledge explorers of all ages. What could be more valuable for life-long learning in the digital age?
Estimated at an average of $20,000 per facility, there may be no bigger bang for the buck than to
quickly and equitably provide high-performance broadband to the nation's public libraries.

Public libraries with high-performance Internet connections can provide essential access to
health information and remote education services. Neighborhood libraries are natural as demonstration
and testing sites to help communities develop their own local infrastructure strategies and plans.

There’s one very good way to find out what next-generation broadband can do while also
learning who would care. Allow everyone to try it out by delivering it to all of the nation’s 16,500
public libraries first!

Such a project would extend the physical infrastructure to within a “mile” of everyone. And
since libraries are open and free, anyone would be able to “road test” next-generation broadband
applications such as high-definition video streaming for tele-work/medicine/education, and all the other
applications we’ve been inching toward for over 15 years.

30
 Graphs contributed to by IMLS Institute of Museum and Library Services

A national network of next-generation broadband-connected libraries would provide a tech-

enabled civic space for public participation in policy deliberations on issues from local to global.

It's better to quickly prototype and test next-generation broadband than to just build out
something by only imagining and hoping what people will do with it. If the country is trying to
determine “how fast and how soon” for a new national broadband infrastructure plan, certainly we can
profitably test those metrics on these 16,500 universally distributed facilities.

What could possibly be a more cost effective way to accelerate deployment and stimulate
demand than to create an open national testbed network for next-generation applications to be
experienced by the greatest number of people in the shortest time? If people can’t “feel” such
performance personally, how can they be expected to value it?

This spearhead project for the country would also serve to exercise a whole range of necessary
technology, business model and jurisdictional issues, but at a far more manageable scale than building
out to every premise.

In short, fiber to the library is an idea whose time has come.

31
32
Making Money
Jim Farmer, Enablence Technologies

Can you imagine? Here we have all this neat new technology we call fiber-to-the-home, and
there are people who want to make money from it! Why, in my short life I can remember a time in the
1990s when you would never think of such a thing. Folks got rich off nice-sounding URLs, and the
mantra was that if you had a great web site, it would drive value, so you didn’t need profits. Well,
some folks did get rich with that kind of thinking. For a short time. But then reality set in, and the
people who put up real money started wanting it back, with a little something extra. A lot of people
who had put up those fancy web sites did not, in fact, have any real money to give to the people who
wanted it back. We call that the Internet bust. Those ex-rich young entrepreneurs discovered
McDonalds, and I don’t mean just the food. I felt better, because I had never understood the logic of
the web site for the sake of the web site. I also felt better because I missed investing in those new-math
schemes.

Anyway, fast-forward to today, and people are still trying to make money off their web sites and
other properties. We heard it at the most recent FTTH Council quarterly meeting, we heard it in April
at the big Cable TV confab in Washington, D.C., and we’ve seen it in print. Having spent much of my
short life (well, OK, nearly 40 years of my short life) in video technology, it has been interesting to
watch the money flow in that business. That is, you can watch it if you are quick – the landscape keeps
changing.

Time was when video meant local TV stations who got most of their programming from one of
the three national networks. In the beginning, a TV station might even be affiliated with more than one
network, and chose which programs it broadcast. The networks paid the local stations an affiliate
compensation fee for the programs they broadcast, getting their revenue from advertising. Affiliate
compensation wasn’t much money, but it kept the lights on and the transmitter powered, so the station
could make money from local news (all 15 minutes of it at 5:30 and 30 minutes at 11:00), the local kids
programs (remember Roger Miller’s song about being a Kansas City Star?), and the westerns they
showed on Saturday morning.

It was just two short years ago that I developed a couple of slides for a paper at the FTTH
Conference that illustrated how money flowed between broadcast networks, broadcast affiliates, cable
networks, and cable (and FTTH and satellite) systems. I stood back and looked at the two charts, and
thought “this is way too complicated to ever explain.” I was probably right. So I undertook to update
the charts for this article. I just thought they were complicated before. I’ve probably left a bunch of
things off, and I could barely get it all on one figure for each of the classes, broadcast and cable
programming. The bottom line is that there is a whale of a lot of money flowing for video, but nobody
admits to making much on it. Video is a high-revenue, relatively low-margin business, but it covers a
lot of expenses, and no one much has the nerve to build a new system today without having a video
play.

33
 Figure 1

Figure 1 is the simpler of the two figures as I’ve drawn them today. I’ve probably left a bunch of
things off, though. At the top we have the traditional broadcast networks which distribute
programming to local affiliates. The local affiliates then feed them to their transmitters for the 15
percent or so of folks who still get their TV service directly off the air. The affiliates also feed local
cable TV (and telco) systems, which are also Internet Service Providers (ISPs). I’m lumping in FTTH
systems here, since they serve the same function, and nobody does it better. I am also including the
satellite providers, though their rules and business arrangements may be a bit different. And of course,
by-and-large, they are not ISPs.

It used to be that the networks sold ads during network programs, then paid affiliate
compensation to local stations. That is no longer the case. Now the networks pay nothing to the
affiliates, but they leave a few advertising slots (availabilities, or avails in industry-speak) for the local
stations to sell. The locals also sell ads between programs, and of course, within programs they
produce, such as news. The networks have been looking at the cable model, which we’ll get to
eventually, in which local cable systems pay the cable networks a per-subscriber fee, and they are
wondering if they can extract such fees from their local affiliates. Personally, I’m skeptical that this
dog will hunt, but I hear the idea does get tossed about. I’m told that the networks are not making
money these days, but that they are surviving on the affiliated stations that they own (so-called O and
Os, for Owned and Operated) in certain major cities.

34
 When local stations provide signals to cable or FTTH systems, they have an FCC-given choice
of business arrangements. Under the right conditions, they can demand must-carry, meaning the cable
system must carry the station, but the station cannot collect money from the cable system. Or they can
demand retransmission consent, in which they negotiate with the cable system for money. If they opt
for retrans, as it is called, the local cable system can refuse to carry them if it wishes. If you’re a must-
have network station, you will likely go for retrans, because you want moolah, and the cable system
pretty much has to have you if they are going to sell subscriptions. On the other hand, if you are a
small station, you may opt for must-carry because you really, really want to get on the cable system,
where you can pick up a bunch of viewers, you hope.

For a long time the networks have sold older shows through syndication to both independent
TV stations and to cable networks.

OK, so far we’ve talked about the old stuff. The newer stuff is in rectangles with rounded
corners (there must be a better name for this shape, but when I Googled it, I got “rectangles with
rounded corners.”) The networks would like to make more money from the shows they paid good
money to produce or to buy. They have had some success with boxing up shows and selling the
season’s worth of shows on DVD. The Office is a show that comes to mind as one that has brought in a
good bit of money this way. The only way I know is that my brother-in-law gave the DVDs to us for
Christmas, and raved about what a great show it was. My boss lady and I don’t watch much TV and
had never heard of the show at the time, but we sat down to watch a few episodes because Jack said
how good it was. We gave up on it after a couple of episodes, though, chalking Jack’s enthusiasm up to
his being a lawyer and not knowing any better. But based on what I’ve read about the show since then,
looks as if he’s in the majority and we are in the minority. That is not the first time.

Oh yeah, there have been shows that bombed on the network but went over big on DVD. I am
not sure anyone can predict things like that – is there a Latin phrase for “the public is fickle?” I
remember when I was in college back in the 1960s, I bought a record album of my favorite group, the
New Christy Minstrels. The lead song on the A side was called Ramblin’, also the name of the album.
Obviously the record company expected Ramblin’ to be the big hit, so they used it to sell the album.
Tucked away on the B side was a song called Green Green. Well, by the time my copy of the album
was shipped, Green Green had hit numero uno on the charts, and Ramblin’, a decent song, had gone
nowhere. Someone had fixed this little promotional problem with the album by affixing a seal to the
outside of the shrink wrap, that said, “Featuring Green, Green!”

The new thing the networks are doing is putting a lot of shows out for viewing on the Internet,
after they have aired on the network. This is part of what we call over-the-top video (OTT), meaning
that you, as the ISP, are delivering the show to your subscribers, but not as part of your video offering.
And you aren't making a dime for your trouble. It may well be costing you, though, since you are
paying for your Internet connection by its capacity.

The networks have to be careful to not put programs on the Internet in such a way that they
make their local affiliates mad, though, because still much more of the money comes from broadcasting
than from the Internet. That is also true for the folks to whom they are going to later syndicate the
show: don’t bite the hand that’s feeding you. The nets make their Internet money, such as it is, by
streaming an advertisement to you before you watch the show. At least, they always do when I try to
watch something. From what we hear, nobody is making money so far, but they have to stream video
in order to keep up with the other people who are not making money by streaming video.
35
 Most people today who download shows from the Internet watch them on their computer, but
watching streaming video on TV is starting to pick up steam. You can get boxes such as the Apple TV
box and a few others that let you watch Internet video on your TV. If you have more money than
brains, you can buy computers called media computers (or servers, or centers, all of which are
synonyms for “expensive”) which can put the Internet shows on your TV. If you have a lot of time, and
tolerance for frustration, you can modify any computer by adding high-end audio and video cards, and
connecting it to your TV. Having neither brains nor money, yours truly went the latter route, which is
how I know about the time and frustration part. I finally got it to work in standard definition. I have to
say, though, that the quality, when I put it on the big theater screen, left something to be desired. Not
that I’m criticizing, though. In order to deliver a video experience to all users today, the networks have
to put out the program at a data rate of around 1 Mbps. Even with MPEG-4 compression, that is not
really good enough. As higher speed connections, such as the ones you can get with FTTH, get
deployed, this will change, and the video will get better.

Local network affiliates get in the money game with their web sites. ( Note that I didn’t say
they are in the money, I said they are in the money game.) So far we’ve seen limited streaming video
from the locals, but there is some and will doubtless be more in the future. We have seen some local
station video on YouTube, presumably looked at as advertising for the station. We have seen lots and
lots of printed news stories, weather (some with live radar, done very well), and sports on the local
station web sites, supported by all the in-line advertising you can imagine. After all, local stations
either sell their own broadcast advertising, or they contract with someone else to sell it for them, so
why not stick a few ads on the web site, too?

So how do you, the FTTH operator/ISP, make money from this OTT stuff? Well, there might be
an issue or two here. You are carrying all this OTT video, which is loading down your network and
your Internet access. Video by most accounts is the biggest user of Internet bits now. Some ISPs are
offering tiered services: six Mbps for $42.50 a month. (Though they actually give me more speed, this
is what I pay my cable provider since none of you FTTH guys have had the decency to fiber up my
area yet. I promise a real friendly subscriber to the first guy to fiber my area. Real friendly.) Then
maybe 10 Mbps for $62.50 a month. In order to get ahead of FTTH, the cable guys are now going to
much higher download speeds, up to the 101 Mbps. Cablevision is now offering using DOCSIS 3.0.
Of course there are some funny numbers flying around; if you look at bulk speeds, DOCSIS 3.0 is still
an order of magnitude worse than FTTH in the downstream direction, and fares even worse in the
upstream direction. But the cable operators are masters of understanding how statistics let them over-
subscribe their networks, and they do it very well. As we are putting the ribbons on this piece, FiOS
has announced faster upload speeds, an area where cable is going to have a tough time. That is a
digression, but it is also a word to the wise.

Anyway, to editorialize for a moment (as if I didn’t do that anyway), I have no problem with an
ISP of any ilk charging for different speed tiers. Contrary to what some people feel, I have no problem
with people charging a premium for heavy usage so long as the tipping point is reasonable and
subscribers have a chance to know when they are approaching an extra charge. Nor do I have a
problem with prioritizing traffic so long as it is done for valid technical reasons, and those reasons do
exist regardless of what some people in Washington have said. Personally (and this opinion does not
necessarily agree with that of this Publication, the FTTH Council, my employer, or any of my wife’s
cats), I do have a problem with the proposal that started the so-called network neutrality debate a few
years back, when certain ISPs talked about charging web sites for improving their performance on the
ISP’s network, or even damaging a web site’s performance if it didn’t pay. But let’s not go there – the
last thing I want to do is to re-ignite that debate, which started silly and went down from there.
36
 But that editorial comment does bring me to a very controversial idea I’ve heard recently for
making money at the local ISP level, and that is selling subscribers’ IP addresses to advertisers. What
you do is to sell subscriber’s IP addresses and maybe some demographic info about them, to someone
who wants to send advertisements to your subscribers. Said advertiser then monitors traffic on your
network. You know how you download many pages from the Internet and advertisements appear?
What happens is that the guy who downloaded the original web page included instructions to your
browser to open certain windows and then to request advertisements from the web page owner or
someone with whom he works. But then the guy to whom you sold your IP addresses sees the request
for the ad coming upstream, and he finds a suitable ad in his inventory of ads that he would like to send
to your subscriber, so he substitutes his ad for the one the web page owner wanted you to go get.
Obviously there are a lot of problems here. What about the anonymity of the web surfer? Who owns
the window for the ad? I would have thought it was owned by the guy who downloaded the web page I
wanted, and that’s how he’s paying for his web site. But if someone else inserts the ad, then the
original owner will not get paid (usually web advertisers pay x cents when their ad is displayed, and y
cents if the subscriber clicks through to the advertiser’s web site). Is there a copyright violation? What
if the guy to whom you sell IP addresses downloads some sort of malware to the subscriber’s
computer? And so on ad nauseum.

So where do you, the local ISP, sit in all of this, and how do you make money from all this new
stuff? Well, as an FTTH guy, you like things that demand lots of data, because your pipe is bigger than
anyone else’s pipe. But of course, your pipe does have to connect to the Internet, and you could
encounter a bit of cost there, that cost being a function of how many bits you handle, and how fast
those bits cross over. So, as I said above, I would not feel too badly if you told me, your disloyal
subscriber (almost all subscribers are disloyal and will jump ship for a better deal), that you want more
money if I download faster or if I download too many bits per month. Just make sure you offer a better
deal than does the other guy. For instance, some of the MSOs are thinking of charging more if a
customer downloads so much that he would have to be downloading movies maybe 20 hours a day
most days of the month. Apparently there are people who use that many bits. Send me an email
message when it looks as if I’ll go over the limit this month, so I can make a decision to cut back on my
bit habit or not, then I don’t have cause to gripe if you hit me up for some extra money. But remember,
you’re the guy with the fat pipe, and you need to make full use of that competitive weapon.

37
 OK, now that we’ve gotten the easy stuff out of the way, let’s start on the complicated stuff. We
can divide the cable networks into two types: basic, ad-supported networks, and premium networks
who derive their basic sustenance from subscriber fees. You might want to subdivide the premium nets
into subscription premium and pay-per-view or video-on-demand nets, but that line is getting too
blurred to see it clearly, so we’ll just use one category. Your basic cable networks derive their first
money two ways: selling advertising, and getting a per-subscriber fee from the local operator (you). In
return for extracting a per-subscriber-per-month fee from you who distributes their programs, they give
you something like four minutes of avails per hour, which is advertising time you sell (and keep the
money). The local advertising is kicked off by a signal from the network that is delivered over the
same satellite channel used for delivering video. This is the model that the broadcast networks are
looking at, trying to extract a fee from their local affiliates. But this is the broadcast model we think is
doomed to follow the Edsel. (Who among us will admit to being old enough to know what the Edsel
was? OK, I’ll tell you. In the 50s, Ford came out with this car called the Edsel. It was billed as setting
the record for the most luxurious car ever. Trouble is, the reliability turned out to set a record in the
other direction, and it was soon dropped from the line. A friend’s mother had a used Edsel with a
rusted-out floorboard. When we kids rode in the back seat, we had to hold our feet up to keep them
from dragging them on the ground or touching the hot exhaust pipe.)

38
 Of course, there are some other ways the local operator/ISP can make money. We haven’t
talked about telephone service – not sexy but very profitable since you have several revenue streams to
take care of capital and operating costs. Other services are being developed all the time. Caller ID on
the television is old hat for the cable guys – a server monitors traffic to and from his soft switch and
sends caller ID info to the set top over the set top data carrier. And the cable folks are now in the
advanced stages of a standard for targeting advertising to individual customers (using the broadcast TV
model). We were involved in some early trials of such a service way back when, and at that time the
added revenue didn’t cover the costs. But it looks as though smart people may have figured it out now.
(There has just been announced a delay in the first service, apparently due to issues with the advertising
servers being used in cable headends. But we still expect to see some form of interactivity in
advertising soon.) Of course, it is neat that you can take advantage of all of this standards work if you
have a broadcast overlay, plus your FTTH network has all sorts of advantages over the HFC network
that Cable Guy uses.

Both your basic cable nets and their premium cousins sell DVD sets of shows to increase
revenue. According to information we have picked up, basic cable nets may deem it appropriate to put
their old shows on the Internet, or they may not, depending on how they plan to use them in the future
– the cable nets usually run the same show many more times than do the broadcast nets, and the name
of the game is maximizing revenue. We hear that the premium networks don’t feel any motivation to
put their produced programs on the Internet – better to keep them fresh for DVD sales or re-runs for
extra premium dollars. Sometimes they do sell old shows to other networks, both cable and broadcast.
Two shows that come to mind are HBO’s Desperate Housewives and Sex and the City, both of which
are in syndication to other networks (we hear that the steamier scenes are usually cut, though). Some
shows get adapted to movies, too.

We’ve seen partner programs between programmers and ISPs, where the programmer provides
additional content, available only on the partner ISP’s network. ESPN360 is the one getting the
attention today, and a lot of folks will be looking at it to see how well it does. So far the financial
model is to charge the ISP so much per month per subscriber, similar to how basic cable TV programs
get sold. The advantage to the ISP is that the ISP has a competitive advantage over the ISP's rivals.
This service is in its infancy, so we shall see how the revenue model morphs.

We’re seeing some ISPs developing web material for their subscribers only. Comcast’s
fancast.com is an example. So far such experiments seem to be aimed at affinity – keeping subscribers
loyal, or at least as loyal as can be expected. Whether or not they make money as stand-alone entities
remains to be seen.

Some networks are experimenting with wireless distribution of shows. This is distribution to
cell phones using the advanced networks that cell phone operators are putting in. We heard an
interesting talk from someone at Turner Networks recently about their continuing experiments with
wireless distribution. He admitted that they didn’t have a model for making money yet, but they had to
be in the up-and-coming wireless space. Turner was operating under the precept that in order to drive
value you have to have a wireless presence, but they don’t have a plan to make it profitable yet.
Hummm, isn’t this about where we started this article?

39
PON Components Food Chain Results
Based on a suggestion from one of our Board members, we have attempted to compile a list of
suppliers of optical components to global PON systems.
Following is a chart based on information provided by the vendors who responded.

Vendor GPON/ ONT/ Corporate Components Headquarters/ Customers

EPON OLTs Advantage key offices
BroadLight GPON Both First in the market with GPON SoC Israel All vendors
GPON SoC, most silicon devices, with the
integrated solutions, 90 nm chip exception of
integrated network technology Alcatel-
processor with GPON, Lucent
more than 70 percent
market share

Enablence GPON, Both Perhaps the most highly PLC-based Ottawa, Alcatel-
EPON vertically integrated products are Canada w/ Lucent,
and components company in built on a facilities in Ericsson,
WDM- the PON market, selling proprietary hyb U.S. Nokia-
PON everything from bare-chip rid silica-on- (multiple) Siemens,
photodetectors customized silicon wafer and Huwei,
for FTTH applications, technology. Switzerlan Fujitsu,
through to splitters, d Sumitomo,
athermal-AWGs, Optical Osaki, ZTE
Sub-Assemblies
and Transceivers.
PMC- Both Both The only silicon supplier GEPON OLT Santa Mitsubishi
Sierra with both EPON/GPON SOC, GEPON Clara, CA, Electric,
products, holds the major- ONU SOC, facilities Fujitsu
ity share of the 1G EPON Evaluation near Networks,
market, with shipments design kit Vancouver, Huawei,
exceeding 7 million ONU based on ONT B.C. Dasan, ZTE
devices. Focus is on device, Eval-
extending xPON technol- uation design
ogies, im-proving device kit based on
performance, and lever- ONU device,
aging its semiconductor 10 GEPON
process expertise to evaluation kit,
achieve greater chip fiber access
integration to lower the residential
cost of high-performance, gateway,
next-generation devices. GPON ONT
Mixed signal team can SOC, GPON

40
 meet the challenges of OLT SOC
enabling the SERDES and
optics in future PON tech-
nologies. Was the first
company to demonstrate
Asymmetric 10G EPON
and Symmetric 10G EPON
technologies.
Teknovus EPON Both Highly integrated chips for ASICS, SOC Petaluma, Huawei,
FTTx with superb traffic CA, ZTE,
management capabilities facilities in Fiberhome,
and low power Beijing, Alcatel
Shanghai,T Shanghai
okyo, Bell,
Seoul, Mitsubishi,
Boston, Furukawa,Fu
San Jose jitsu, NEC,
Sumitomo,
Hitachi,
Ubiquess,
Dongwon

41