Reinventing the Network
“One Gigabit or Bust” Roundtable
November 5, 2003
Tim McCallion President - Pacific Region
Verizon Inc.
Over the Next 10 to 15 years
“Verizon plans to roll out fiber-optic
connections to every home and business in
its 29-state territory over the next 10 to 15
years… It will cost $20 billion to $40
billion, depending on how fast equipment
prices fall, and allow the lightning-fast
transmission of everything from regular old
phone service to high-definition TV”
“Verizon's Gutsy Bet” Business Week Online, 8/4/03
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Technological Advances
Have Changed The World
• Consumers Have Many Choices for
Telecommunications Providers and Services
– Wireless Explosion
– Broadband (DSL & Cable Modem)
– Instant Messaging & E-Mail
• Wireline Minutes and Lines are Declining
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Wireless Explosion
150M
Over 50% of US Population
Now Have Wireless Phones
17x Growth !!
8M
S:Cell
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D186 2002
Traditional Telephone Traffic
Declining
200.0
180.0
160.0
140.0
120.0
Growing 100.0
80.0
60.0
40.0
Shrinking
20.0
0.0
2002 2003 2004 2005 2006 2007
Wireless 49.0 53.6 61.3 67.4 73.1 78.4
Other Non Regulated 8.1 8.0 8.5 8.6 8.7 8.7
Internet Access (DSL, 16.7 19.2 21.5 24.0 26.4 29.1
Cable, dial)
Access Charges 11.8 11.5 11.1 10.8 10.5 10.2
Long Distance 27.8 26.8 26.0 25.3 24.5 5
23.8
D190
Local Service 36.8 36.0 35.3 34.6 33.9 32.9
Why FTTP? Why Now?
Technology & Cost
• Superior Full Service Network
Improvements • Standards Based
• Reduced Costs (Actives & Passives)
Data Services • Continued Increasing Bandwidth Demand
Requirements • DSL Unlikely to Meet Longer Term Needs
Competition • CATV (Data & Voice)
• UNEs (Synthetic Competition)
• Unbundling Relief
Regulatory
• Clarity & Certainty Required
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7
FTTP Architecture &
Services Overview
• Architecture
– FTTP integrates FTTH & FTTB
– ITU-T G.983, FSAN Standard
• Single fiber, 3λ Passive Optical Network (PON)
• 622 Mbps x 155 Mbps ATM (Gbps future) for voice & data
• 870 MHz RF for broadcast video
• Target Market
– Predominantly residential neighborhoods
• Serves all consumer & small/medium business services
• Common PON; different ONTs/CPE
– Services
• Residence: 2 to 4 POTS; 10/100 Base-T; 870 MHz RF video
(>500 analog & digital channels; HDTV; VoD)
• Business: 10/100 Base-T; DS1; POTS; Video, Specials
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Different Solutions for
Different Applications
• Full Build
– FTTP built to serve all homes and businesses
– Used for Greenfield
• Overlay
– Used in established neighborhoods for broadband service
demand and plant modernization (relief and rehab)
– Overlay FTTP alongside existing access network
– Customers transitioned to FTTP over time
– Feeder & distribution fiber placed initially passed all premises
• Electronics added as customers transition
• Splitter hub interfaces feeder & distribution; Similar to x-box
• Makes costs more ”subscriber driven”
• Broadband services available to all premises passed
– Rate of transition driven by broadband service demand & repair
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FTTP Full Build & Overlay
Architectures
Office Parks
Small Businesses
Residential
Copper
Distribution
FTTP Overlay
Small Businesses FTTP Full Build
SAI ONT
Splitter Splitter
|X| Hub Hub ONT
Copper ONT
Circuit Feeder
Switch ONT
ONT
ONT
ONT
New
Development
OLT
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FTTP Full Build & Overlay
Architectures
Office Parks
Small Businesses
ONT
ONT
Residential
Copper
ONT Distribution
ONT
FTTP Overlay
Small Businesses FTTP Full Build
SAI ONT
Splitter Splitter
|X| Hub Hub ONT
Copper ONT
Circuit Feeder
Switch ONT
ONT
ONT
ONT
New
Development
OLT
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FTTP Deployment
• Actual Rate Contingent on:
– Regulatory Treatment
– Take Rate & Revenues
– Actual Cost to Build & Operate
– RFPs Issued in Sufficient Quantity to Make
Economic
• 4Q03: Lab Testing; OSS Interoperability
• 2004: Greenfield & Overlay
• 2005: Accelerating Deployments
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Conclusion
• Fiber To The Premises Will be an Engine of
Economic Growth and Job Creation
• Outdated Telephone Regulations Which Stifle
Investment Must Change
– Unbundling Requirements
– Price Regulation
– Construction Impediments
• Ending Outdated Regulation Will Unleash a Wave
of Innovations That Will Benefit Consumers
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Reinventing the Network
“One Gigabit or Bust” Roundtable
November 5, 2003
Tim McCallion President - Pacific Region
Verizon Inc.
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