Advancements in passive optical network (PON) technologies are paving the way for broadband networks that are scalable, cost effective and continuously adaptable to the fast evolving needs of customers. Today, XGS-PON (10 Gigabit symmetrical PON technology) is gaining significant momentum. In its recent whitepaper ‘Why XGS-PON’, Omdia takes a deep dive into the technology and why operators should invest in it.
The gigabit game plan
XGS-PON is slated to overtake other PON technologies, with OLT port shipments projected to grow rapidly from 2.3 million in 2022 to 13.4 million in 2028 (see figure 1).
Figure 1: Global PON OLT port shipments by technology, 2022-28
Competitive differentiation
According to Omdia, by 2027, 32% of global consumer broadband subscriptions will involve plans with speeds of 1 Gbps and above (see Figure 2). Between 2020 and 2022, the number of operators offering Gigabit services have grown from 323 to 451, while the number of operators offering 10 Gigabit increased from 36 to 55. Large bandwidth capacity of XGS-PON creates the essential differentiation against rival technologies such as cable and FWA. While XGS-PON repurposes existing fiber outside plants and access nodes, cable networks require extensive modifications and investments to achieve symmetrical multigigabit speeds. Likewise, FWA needs to overcome capacity constraints and fix in-building performance issues to achieve comparable maximum speeds and speed consistency.
Figure 2: Global consumer fixed broadband subscriptions by speed, 2020–27
Pushing the demand for more bandwidth
The surge in bandwidth consumption is mainly driven by video, and there is a clear trend that everything becomes video as it is a preferred format for sending information. Consumers download videos for watching movies or favorite series, gaming, social media, education, work, to explore holiday locations, to find a recipe of Thai food or instructions on how to install new furniture etc. Furthermore, as users per household increase and multiscreen usage becomes more prevalent, the number of concurrent video streams will continue to rise, creating more demand for bandwidth.
Remote workers are also driving the demand for XGS-PON. 10 Gbps upstream speeds enable fast and seamless access to cloud and other online applications. Operators can offer priority access that grants faster and high quality connection to these applications in exchange for a premium, creating a new lucrative segment for themselves.
The evolving trends in Internet content is another factor pushing the take-up of XGS-PON. According to the whitepaper, a typical webpage is now 4 times its size in 2010, which translates into new bandwidth requirements. Statistics show that users leave websites if it doesn’t load within a few seconds. With higher upload and download speeds, XGS-PON can ensure a seamless browsing experience across any web content.
Monetizing XGS-PON
There are multiple approaches to monetizing XGS-PON, depending on competition, market demand and business priorities. Some operators offer gigabit and multigigabit access at very attractive mass-market prices, in order to increase customer base or disrupt the market. Salt in Switzerland took this approach, alongside a number of UK altnets. The other approach is to offer gigabit and multigigabit services at a premium price. This has proven to increase ARPU, both from customers willing to pay more for a higher tier service and from the halo effect, where the subscriptions of the next-best service plans increase.
Expanding upsell opportunities
XGS-PON is key to enhancing long-term upselling opportunities as it enables operators to progressively increase broadband speeds and create higher service tiers – at no additional cost. Once XGS-PON is deployed, operators can gradually unleash more speeds. For example, they can start with a Gigabit service, and later upgrade subscribers to 2 Gigabit, 5 Gigabit, etc. without any changes in the OLT, ONT or outside plant. These upselling opportunities create pure margin for operators. In contrast, upgrading speeds on DOCSIS networks requires significant changes in the outside plant and equipment in the headend and customer premises.
Tapping into the enterprise market
When it comes to the enterprise segment, XGS-PON offers a more cost-efficient and greener alternative to point-to-point fiber. Leveraging XGS-PON’s multi-use capability, operators can easily multiply their revenues by shifting some of the available network capacity to enterprises, who are inherently high ARPU customers. With four times the bandwidth compared to the previous generation of PON, XGS-PON offers sufficient capacity to support both residential and enterprise customers on a single network. Merging both segments essentially breaks down the traditional silos between retail and business segments, unleashing new synergies and improving overall profitability.
Another segment that benefits the same way from XGS-PON is the mobile transport segment which includes public Wi-Fi traffic aggregation and wireless backhaul where a scalable and cost-effective transport network can contribute significantly.
Efficiency benefits
Using XGS-PON for multiple use cases enables substantial operational cost savings as network resources are better optimized. Delivering multiple services on a single network is more cost-efficient to deploy, operate, maintain and it is greener. Nokia estimates that converging residential and business services on a high capacity XGS-PON saves up to 40% energy consumption and reduces the payback time of fiber investments by 30%. XGS-PON enables operators to stretch their investment cycles with no upgrades required in the outside plants and infrastructure. Not only does XGS-PON run on the same GPON network, it can also be upgraded to 25G PON when needed. This seamlessness allows operators to upgrade subscribers from one service tier to another, based on demand.
In a nutshell, from being cost-effective and highly-adaptive to being scalable and future proof, XGS-PON has all the qualities needed to push operator monetization to the next level and to ensure a reliable and sustainable broadband experience for all.
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More insights including XGS-PON global deployment case studies and statistics are available in Nokia’s ‘Why XGS-PON’ whitepaper. Download now at nokia.ly/3KAtD8d.
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