GPON Pioneer Hitachi Still Angling to Reel in the Big One
Paula Bernier
 

When it comes to GPON, Verizon Communications Inc. and its suppliers Alcatel-Lucent, Motorola Inc. and Tellabs are getting much of the ink. But that work is just getting off the ground. Meanwhile, Hitachi Telecom (USA) Inc. has had standards-based, full-rate GPON in commercial deployment for more than a year.

It was in the late 2005/early 2006 time frame that Hitachi won a deal to provide its 2.5gbps GPON gear for a network in Bandon, Ore. The first commercial customers on the network, operated by ComSpan-Bandon Networks and Ledcore Technical Services, were turned up in June 2006. Now, the small network is getting slightly larger as it expands into adjacent cities, including Coquille and Myrtle Point, Ore.
 

“So that is kind of one of our claims to fame, which is, we’re the only vendor out there that has commercial revenue-generating deployments of GPON, and that was our first one,” says David Foote, CTO of Hitachi Telecom USA.

Teresa Mastrangelo, principal analyst at broadbandtrends.com, concurs that Hitachi is a GPON pioneer, but she adds that while the vendor may have been first with a full-rate commercially installed GPON system, it is no longer the only vendor in this space with such gear deployed. (For more on the other GPON players, see “Exploring the GPON Field.”)

“In looking at GPON, when the RBOC RFP first came out, they [Hitachi] were on the top of my list of vendors from a technology point of view,” Mastrangelo says, referring to the RBOC triumvirate of BellSouth Corp. and SBC Communications Inc. (both now part of AT&T Inc.) and Verizon Communications that issued a joint RFP on BPON (a precursor to GPON) in mid-2003. “Their product was most fleshed out of anybody’s and was actually available.”

Hitachi, which in addition to GPON also sells BPON and GEPON gear, bid on the joint BPON request, and later on, a GPON opportunity with Verizon, but won neither.

Beyond Bandon, Hitachi’s other two publicly announced GPON deals in North America are with Dumont Telephone Co., an independent telco in Iowa, and Falcon Broadband Inc., a cableco/CLEC in Colorado Springs, Colo. And Foote says Hitachi has several more GPON deals “in the wings.”

The company also has had success with PON abroad.

Hitachi in 2004 won a BPON deal with NTT Communications Corp., which between that time and 2006, deployed about 1 million lines of Hitachi gear. The buildup to the NTT win was around the time the RBOC group issued its BPON RFP. Hitachi initially bid on the Joint Procurement Consortium’s request with a product derived from the solution it supplied to NTT. Foote says the RBOCs liked the Hitachi BPON technology, but its ONT had to be significantly reworked to meet RBOC requirements, and the telcos — particularly Verizon — wanted Hitachi to move more quickly than it felt it could. So, he says, Hitachi pitched the idea of GPON.

“Even right after the RBOCs’ BPON RFP, or even during that RFP, we were pitching the RBOCs, saying ‘Hey, you don’t want to spend a lot of time deploying BPON because GPON technology is not that far away,’” Foote explains.

BPON is based on ATM, a now out-of-favor technology, and scales to only 622mbps. Meanwhile, GPON relies on the GEM protocol, a variant of Ethernet, to which many service providers now are hitching their wagons. More importantly, however, GPON can deliver up to 2.5gbps to support bandwidth-hungry applications like video and growing data and voice requirements. So why, Hitachi argued, would a carrier select a slower technology based on legacy data technology when it could go with something faster and newer?

At that point, Hitachi, already had developed the optics and chips for 1.2gig symmetrical EPON and had started looking at how to modify those chips to support GPON, says Foote. So Hitachi threw in some of that data and some test results in its RBOC BPON RFP response for good measure.

Because Hitachi wasn’t prepared to deliver a suitable BPON solution within the requested time frame, it didn’t get short-listed by the RBOCs on the first RFP. However, the vendor did get “a lot of detailed interest from the RBOCs on our progress, visits to Japan to see our R&D labs and visits to our facility in Atlanta to see some prototypes of” its GPON solution, says Foote.

As a result, Hitachi became confident it knew what the RBOCs were looking for. That, and the fact that Hitachi had its own optics and chips, so it didn’t have to rely on other suppliers to get product to market, led the vendor — along with many in the blogosphere — to believe that it had a good shot at winning some RBOC GPON business, Foote says.

As previously mentioned, Hitachi didn’t win the GPON business of Verizon, or the much smaller opportunity with AT&T. But Foote says there’s still at least a small amount of hope at Hitachi that it could get some GPON business from Verizon — the biggest opportunity in North America for this type of FTTH solution by far — at some point, even though the RBOC is now in first-office applications with GPON gear from Alcatel-Lucent and has announced Motorola and Tellabs as its other vendors in this realm.

“We still believe there’s opportunity for Hitachi,” says Foote. “Verizon has not publicly said we are part of their plans. So it’s up to us to find solutions that give them something they aren’t getting from one of the other three vendors, or to add new functionality to GPON that the other vendors don’t have.”

Foote didn’t mention it during his interview with xchange, but rumor as of press time in early October was that Verizon still had a GPON RFP in circulation. Verizon spokesman Mark Marchand wouldn’t comment on that, but did say the company’s GPON plans and suppliers as originally stated remain on track. (For more details on Verizon’s GPON activities, see “The Big Enchilada.”)

Whether or not Verizon opens the door to additional GPON suppliers and Hitachi is able to win some of its business, however, Foote says there is plenty more opportunity in the 10,000-home to 40,000-home range, where it already has won some business, and even some opportunity in the 100,000-home to 150,000-home range, with smaller organizations including independent telcos, municipalities, real estate developers and even MSOs, some of which now are testing PON.

“This is a growth market for at least 10 years,” he says.


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Exploring the GPON Field

There are nearly a dozen suppliers competing for PON business in the North American marketplace. But should the Verizon Communications Inc. GPON window reopen for another vendor, conventional wisdom says Entrisphere Inc./Ericsson and Hitachi Telecom (USA) Inc. are the likeliest candidates to get a piece of the pie — with Ericsson having a clear edge.

That’s because Entrisphere/Ericsson also has been tapped to supply GPON for AT&T Inc., giving this vendor a vote of confidence by another prominent RBOC. As mentioned in xchange’s August cover story, AT&T’s selection of Ericsson as the second GPON vendor (in addition to Alcatel-Lucent) had the industry buzzing this summer.

Jeff Heynen, directing analyst of broadband and IPTV at Infonetics Research, says Ericsson/Entrisphere has its GPON gear in AT&T’s labs and also has some field deployments with EMBARQ, “but it’s very limited and controlled.”

Like Entrisphere/Ericsson, Hitachi has a proven product and the resources to service a company of Verizon’s size, but the Japan-based supplier might have a hard time overcoming the fact that it lacks a strong presence in North America, says Teresa Mastrangelo, principal analyst at broadbandtrends.com.

“They have won some business in the non-RBOC space and certainly they have some nice accounts, but nothing that to date has produced a significant amount of business,” adds Mastrangelo. “I think there’s a large potential going forward with what they’ve got, especially if they’ve got developer markets or if they’ve got commitments from operators to go from just greenfield to an overbuild scenario where there’s large amounts of opportunity.”

Beyond these two suppliers, of course, are Verizon’s named GPON vendors Alcatel-Lucent, Motorola Inc. and Tellabs. Heynen of Infonetics says Alcatel-Lucent now is shipping GPON to France Telecom, in addition to being in first-office applications with Verizon. He didn’t have GPON information on Motorola, but said Tellabs has not shipped any GPON gear outside of anything it might have delivered to Verizon.

Others touting GPON solutions include Calix, FlexLight Networks Inc., Pannaway Technologies Inc., Terawave Communications, Wave7 Optics and Zhone Technologies Inc.

It’s very early for this space, but at this point, Calix is the No. 1 GPON supplier in North America. The company in September told xchange it had shipped more than 200,000 GPON ONTs, with more than 100,000 of those having been sent out in the last 12 months. “We think that’s somewhat indicative of a tipping point,” said Kevin Walsh, Calix vice president of corporate marketing.

Calix, a provider of multiservice access solutions, got into the GPON space through its 2006 acquisition of Optical Solutions (OSI).

“They’re seeing very very good traction with [the C7 GPON] not only in new customer acquisition, but also some transition of the OSI customers to 2.5gigabits,” says Mastrangelo of broadbandtrends.com, referring to the fact that the company had earlier announced a 1.2gig GPON solution. Relative to Verizon, however, Calix is much too small to cater to a company of that size, she continues.

Another supplier targeting smaller accounts, Pannaway also bought itself into the GPON game. Pannaway in August announced its acquisition of TelStrat International Inc. “TelStrat had a GPON, and they made a big deal about ‘we shipped 10,000 in this one quarter,’” says Mastrangelo, adding that TelStrat launched full-rate GPON a year ago last month. “Personally, I believe that was pent-up demand and that that was a one-time spike and that their demand for the product is probably a lot more flat at this point.”

As the vendors in the GPON space multiply, there will be more focus on ringing the costs out of optical network terminals (ONTs) to make them more affordable for telcos to deliver services based on PON and make it more profitable for vendors to make a buck on the gear, says Heynen. He adds that an optical line terminal (OLT), the network-end side of GPON solutions, supporting up to 64 splits would, in North America, sell for between $1,800 and $1,900. A single-family ONT, meanwhile, sells for between $200 to 250. The goal, he continues, is to reduce the cost of the ONT by a third by the end of 2008/beginning of 2009.


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