Frontier Communications reports added 45,000 fiber broadband subscribers in 4Q-2021 – best in 5 years!

Frontier Communications added 45,000 fiber broadband subscribers in the fourth quarter, its best performance gains in five years, Frontier’s Scott Beasley said at the 2022 Citi Apps Economy Virtual Conference. The company hopes to expand by 1 million fiber locations this year as part of plan to reach 6 million by 2025.

Comment: That’s great progress for a company that filed for bankruptcy in April 2020 with a plan to cut more than $10 billion of its $17 billion debt load by handing ownership to bondholders. It was the biggest telecom filing since WorldCom in 2002, reflecting years of decline in its business of providing internet, TV and phone service in 29 states.

When combined with legacy DSL losses, Frontier added 9K net new broadband subscribers. Frontier is currently on an aggressive fiber build strategy that aims to add a total of 6 million locations by the end of 2025, resulting in 10 million locations reached in total. Beasley reports the company added 600K new fiber locations in 2021, with a goal of adding another million locations by the end of 2022. Beasley reports that the much discussed supply chain challenges facing the broadband industry have not had a significant impact at Frontier.

“We’ve managed through supply chain constraints and been able to perform very well in our fiber build and continue to ramp that up for 2022,” he said.

  • This marked the first time in more than five years that the Company has posted total broadband customer growth in a quarter.
  • The Company expects to continue growing the total broadband customer base as its fiber build accelerates.

Source: Frontier Communications Q3 2021 earnings presentation

Frontier has completed ‘wave 1’ of this fiber expansion.  The company is now beginning ‘wave 2,’ which will take them through 2025, getting them to 6 million new locations. Build costs in wave 2 are a bit higher at $900 to $1,000 per fiber location.

Frontier envisions a ‘wave 3’ coming, but that’s outside the scope of their current committed-to fiber build. Beasley says Frontier will look to leverage government funding programs and other partnerships to help fund wave 3 fiber builds.

“There could be scenarios where we accelerate the build of some locations in wave 3 into wave 2,’ he said in discussing Frontier broadband growth. “That will likely be a destination of significant government funding as the roughly $45 billion of infrastructure bill funding that goes to broadband will be targeted at locations like wave 3.”

Asked about potential competition from fixed wireless access (FWA) and satellite broadband services, Beasley said neither presents a material threat just yet. While FWA may gain traction in some ultra-dense urban locations and satellite in extremely rural areas, Beasley asserted neither technology will be able to stand up against Frontier’s gigabit fiber offerings. The company already offers 1 Gbps and is planning the rollout of a 2 Gbps plan in the first half of this year as well as a 10 Gbps tier somewhere down the line.  “It’s a technology we’re watching closely but don’t think it can compete with our core symmetrical speeds in fiber,” Beasley said of FWA.

“Against our core gigabit plus offers, 1 gig symmetrical speeds now, we’ve said we’re going to launch 2 gig in the first half of 2022, eventually we’ll move to 10 gig, the core network is 10 gig capable now, we’ve trialed 25 gig successfully in certain parts of the network,” he said. “I don’t think fixed wireless has the capacity to compete with that core infrastructure. It will be competitive in certain niches of the market…but I don’t think it can compete with our core symmetrical speeds and fiber,” he added.

References:

https://kvgo.com/citi-apps-economy-conference/frontier-jan-2022

https://seekingalpha.com/article/4478155-frontier-communications-stock-subscriber-growth-higher-profits

https://www.fiercetelecom.com/telecom/frontier-adds-45k-fiber-lines-posts-first-broadband-growth-5-years-q4

With 45K New Fiber Subscribers, Frontier Sees First Positive Broadband Growth in 5 Years

Cable One joint venture to expand fiber based internet access via FTTP

Cable One [1.] (aka Sparklight) has announced a joint venture (JV) with three private equity firms, seeking to speed its expansion of fiber based Internet access to underserved markets.

Note 1.  Cable One, Inc. is an American broadband communications provider. They are a former subsidiary of Graham Holdings Company. The company’s name and current focus date back to 1997; prior to that time the company was known as Post-Newsweek Cable. Cable One currently serves more than 1.1 million residential and business customers across 24 states with its family of brands.
The company now offers fiber based Internet access with up to 940 Mbps download and 50 Mbps upload speeds.
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The JV will support the accelerated growth of Clearwave Fiber LLC (“Clearwave Fiber”). Clearwave Fiber is a newly formed entity that holds Cable One’s subsidiary Clearwave Communications and certain fiber assets of Cable One’s subsidiary Hargray Communications.
Clearwave Fiber is a newly formed joint venture that holds Clearwave Communications and certain fiber assets of Hargray Communications. Cravath is representing Cable One in connection with the transaction. With the formation of the JV, Clearwave Fiber intends to invest heavily in bringing Fiber-to-the-Premise (“FTTP”) service to residential and business customers across its existing footprint and near-adjacent areas.
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As Cable One detailed in a preview of the deal in November 2021, its JV partners include GTCR, Stephens Capital Partners and the Pritzker Organization. Cable One has worked with all three before, acquiring assets from Stephens Capital in January 2019 and Pritzker in May 2021 and teaming with GTCR on Mega Broadband Investments.

The joint venture reflects a shared commitment from Cable One and the investors to provide fast and reliable connectivity via FTTP internet to underserved markets and will allow for more rapid expansion of fiber internet to homes and businesses in small cities and big towns. Cable One owns a majority of Clearwave Fiber and the private equity investors are committed to make substantial cash investments to support the acceleration of Clearwave Fiber’s expansion.

Clearwave Fiber will be led by Executive Chairman Michael Gottdenker and CEO David Armistead, both of whom were part of Hargray’s executive leadership team from 2007 until its 2021 sale to Cable One, providing continuity of proven leadership and a continued commitment to Cable One’s shared culture, purpose, and values.

“This strategic investment will help accelerate the deployment of fiber-based broadband services to a range of markets, including underserved areas of the country,” said Michael Gottdenker, Executive Chairman of Clearwave Fiber. “Our team is motivated by our shared core values of customer service and improving lives through connectivity and is excited to bring fast and reliable Clearwave Fiber broadband to homes and businesses across the country. We are thrilled to welcome GTCR, Stephens, and TPO to the Clearwave Fiber family and look forward to our continued partnership with Cable One.”

Julie Laulis, Cable One President and CEO said:

“We look forward to supporting and sharing in Clearwave Fiber’s growth over the coming years while remaining focused on our primary business, increasing penetration rates, integrating recently acquired companies and driving higher margins and greater free cash flow. We did not take lightly our choice of partners in this transaction and are excited to be working with like-minded individuals who share our core principles.”

“Five years ago, Gig speeds were virtually unheard of in non-urban markets across the U.S. We are proud to have been able to launch Gig service and level the playing field for rural markets where access to affordable, high-speed internet is just as vital as in more urban markets. A fast and reliable internet connection means rural residents can telecommute rather than having to move to find work. It means access to medical care via telehealth services; the ability to achieve a higher education online; and the cultivation of entrepreneurship and economic growth.”

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KeyBanc Capital Markets analysts indicated in a research note the deal is a positive for Cable One, noting it will allow the company to effectively offload heavy investment in fiber to the JV while maintaining majority ownership. They drew a comparison to WideOpenWest’s recently announced fiber expansion plan, writing that “in contrast to CABO, WOW will fund the expansion on-balance sheet, while CABO’s transactions move off-balance sheet, neither being wrong, in our view.”

“We believe this shows there is a lot of FTTP build opportunity within and around CABO’s footprint (likely more than one Company can handle),” Keybanc’s team conclude

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About Cable One:

Cable One, Inc. (NYSE:CABO) is a leading broadband communications provider committed to connecting customers and communities to what matters most. Through Sparklight® and the associated Cable One family of brands, the Company serves more than 1.1 million residential and business customers in 24 states. Over its fiber-optic infrastructure, the Cable One family of brands provide residential customers with a wide array of connectivity and entertainment services, including Gigabit speeds, advanced WiFi and video. For businesses ranging from small and mid-market up to enterprise, wholesale and carrier, the Company offers scalable, cost-effective solutions that enable businesses of all sizes to grow, compete and succeed.

References:

https://ir.cableone.net/news-events/investor-news/news-details/2022/Cable-One-Announces-Formation-of-Clearwave-Fiber-in-Partnership-with-GTCR-Stephens-Capital-Partners-and-The-Pritzker-Organization/default.aspx

https://www.fiercetelecom.com/telecom/cable-one-targets-rapid-fiber-expansion-jv-deal

https://www.cravath.com/news/cable-ones-formation-of-clearwave-fiber-in-partnership-with-gtcr-stephens-capital-partners-and-the-pritzker-organization.html

https://www.prnewswire.com/news-releases/cable-one-looks-to-the-next-evolution-of-high-speed-internet-301428503.html

Open Access Fiber Networks Explained; Underline’s Intelligent Community Network

In Open Access Fiber networks, the same physical network infrastructure is utilized by multiple providers delivering services to subscribers. The Open Access business model has been drawing attention globally as governments and municipalities find the concept of offering competition between providers and the freedom of choice for the subscriber is essential. It has also proved to be a feasible way to connect rural areas where service providers might have a hard time generating enough revenue to justify investing in their own network infrastructure.

Open access fiber networks can be the foundation for distributed healthcare, 5G, and resilient, modernized infrastructure—including responsible energy creation and secure community smart grids.

For subscribers to benefit from the freedom of choice and competition between providers that are delivering services using the same network infrastructure they will need a comprehensive way to browse the assortment of services offered.

Open Access network operators must keep track of:

  • Every single subscriber in the network, their physical address, their “technical address” (switch, switch port, etc.).
  • Which services they are buying from which provider/s.
  • The total number of customers and/or services bought if you’re operating in a three-layer model where you have to report back to the network owners how their network is utilized.

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Already common in Europe with Sweden as the best known example, open access networks are just beginning to gain market traction in the U.S.  While U.S. community-wide network operators like SiFi Networks and UTOPIA Fiber (Utah) have adopted a wholesale-like business model, newcomer Underline is taking a bit more of a direct approach.

“When people say open access in this country, they typically mean ISPs can come in and lease fiber and choose to build a given neighborhood that hasn’t been overbuilt yet. We mean something very different,” Underline CEO Robert Thompson told Fierce Telecom. “We are not a wholesale leaser of fiber. We are the fiber network literally to the doorbell.”

Underline isn’t just providing physical fiber-to-the-home infrastructure, but also a unified billing system and cybersecurity layer. The latter will allow the communities it serves to deploy smart city applications over an on-demand Layer 2 (Data Link layer) connection that will never touch the Layer 3 (Network layer) public internet, Thompson said.

“On the one hand, we directly face consumers and businesses, schools and so forth and we provide them network access connectivity and technology for a monthly connection fee. On the other hand, we look like a network infrastructure-as-a-service provider to the ISPs or content community,” Thompson said.

“We don’t provide IP,” he continued. “We’re going to move your traffic from your house ultrafast over fiber and we’re going to hand off you and your traffic to the internet service provider of your choosing. That ISP is then your IP, the routing of your traffic. They’re connecting you to that glorious world wide web,” he added.

Thompson said Underline will charge users directly on a monthly basis for connectivity, with their chosen ISP getting a portion of that cost. So, for instance, in the case where a subscriber takes a $65 per month symmetric gigabit plan, the ISP will get a $15 cut. Underline also plans to charge licensing and per subscriber fees for use of its technology stack.

Underline is now initiating construction in its first market: Colorado Springs, CO. The company will offer residential speeds up to 10 Gbps and enterprise service up to 100 Gbps, with qualifying households eligible to receive a discounted rate on Underline’s bottom tier symmetrical 500 Mbps plan.

The project will be completed in several stages, with a Phase I build set to connect 24,000 homes and 4,000 businesses with 225 route miles of fiber plant. Initial customers will include the the National Cybersecurity Center, the new Space Information Sharing and Analysis Center and Altia Software.

Thompson says that Phase II will cover roughly the same amount of ground and Underline also has a build agreement with an unnamed city “immediately surrounding” Colorado Springs. Taken together, construction in both phases and the second city will amount to “an exercise of approximately $125 million in total capital.”

“We are after this with a vengeance, and we are very thankfully supported by very strong capital,” Thompson said, noting a “drumbeat of steady announcements of drills in the dirt in new communities” is on the way.

Thompson said Underline is targeting communities with populations between 20,000 and 750,000. He noted that such communities have “historically been basically ignored by the incumbents (large telcos) and which by and large will not qualify” for federal support for broadband deployments.

Beyond that, he said Underline’s market assessments include factors like demand point density per fiber route mile, a population productivity ratio, a competition index and a social equity analysis. The latter is a key priority for Underline and “part of our social purpose,” Thompson explained.

“We want to understand and we actually want to target communities that have a significant portion of their demand points that have no internet at all or very poor internet at home because of socio economic status.  This country’s got to have internet that’s fast, affordable and fair,” he concluded.

References:

https://www.fiercetelecom.com/operators/underline-has-a-different-vision-for-open-access-fiber-u-s

https://underline.com/

https://www.cossystems.com/about/open-access/

https://www.foresitegroup.net/what-you-need-to-know-about-open-access-networks-2/

Orange España: commercial deployment of 10 Gbps fiber in 5 cities

At its Orange Network Fashion Week 2021 event, Orange España announced the commercial deployment of 10 Gbps fiber broadband service in five cities in Spain.  The new service uses XGS-PON technology, provides symmetric rates (for both upstream and downstream) and will be available to both residential users and businesses in Madrid, Barcelona, Seville, Valencia and Zaragoza.  The telco forecasts that 10Gbps XGS-PON will reach all of Spain, but no timeframe has been set for that.
Orange has that with this fiber speed, and by combining its technology with WiFi 6, it will be possible to increase the performance of the internal equipment of the home both for teleworking and for playing online or watching 4K content on television.
To access this new network customers will need to change the router, which is one of the main impediments for the deployment to be more massive or faster.

Orange’s new 10Gbps fiber access will be at Love Total Plus and Love Total Plus 4 rates for residential customers, and at Love Empresa 3 and 5 rates for freelancers and small businesses. Adopting this speed will mean an increase of 10 euros /month on the price of the same.

In the 10Gbps offered by Digi, only 8Gbps was obtained, and it is expected that in the case of Orange it might be similar.  It remains to be seen, what actual performance it offers.

References:

Orange launches 10Gbps symmetric fiber for individuals and companies, first in five major cities

AT&T CEO John Stankey: 30M or more locations could be passed by AT&T fiber

AT&T CEO John Stankey was interviewed by Brett Feldman, Goldman’s U.S. telecom and cable analyst.  AT&T is both a telecom and media company.  We focus on the former for the IEEE Techblog. Here are selected telecom related comments Stankey made (BOLD font emphasis added):

We’re pulling (market) share back from our two largest competitors (Verizon and T-Mobile).  I feel good about how we’re doing that. There’s more to be done as we invest in fiber, and we can compliment our wireless business with fiber. There’s opportunities for us to take communications further than what we’ve traditionally done at AT&T. And I think that business should be recognized for being a leading global communications business, like it is, very uniquely positioned with more fiber than any other communications company on the face of the planet, with a great wireless asset domestically in the U.S. and in Mexico, an opportunity to bring those things together, and run it incredibly effectively as a focused business. I think we’ve got a great story there.

I think AT&T is in a great position moving forward. I think the industry frankly is in a great position. I think there’s tremendous promise right now in what ubiquitous high capacity bandwidth with the kind of capabilities that 5G brings in terms of the density that it can afford, the number of devices, the ability to use technology to do things like network slice (requires 5G SA core network which Microsoft is building for AT&T) and begin to differentiate the network. I think this is going to be great for society. I think this is going to be great for the U.S. economy as a whole. If I had to bet, we don’t have the numbers for 2021, certainly can’t project 2022, but I have a sense of where this industry is going. (This author totally disagrees, largely because real, standards based 5G has yet to be deployed as there is only a standard for the RAN which doesn’t meet URLLC performance requirements.  No standard for 5G SA core network.).

We’re probably going to see record infrastructure investment coming out of this industry in this period of time. And I think it’s going to equip the United States and our economy and our infrastructure in a way that we’ve never seen. I think that’s going to be incredibly powerful. And I think it’s not only going to be good for AT&T, because I think we have the right kind of wherewithal and the right kind of capability to be right alongside others that are investing at a high clip to bring that infrastructure forward. I think we’ll do just fine with where we are there. I believe when unleashed we have some of the best network minds in the country. I believe that dense fiber footprint that we have that’s denser than anybody else in the United States when engineered properly on top of a great spectrum assets and a great wireless business, it’s going to make our combined product offer and our business even better and more capable to deal with what customers need to do. So, I feel really comfortable about that. And I can do nothing more than not ask you to look at my prognostications, but look at how we’re performing in the market today.

We’ve now started doing some things quietly behind the scenes. We have another muscle to build here, which is how do we begin to work on software to differentiate our products and services in a way that makes our product better than what our competitors can do, because we do have a different asset base, and we are able to serve every corner of the market from the largest of enterprises to the smallest apartment somewhere in the United States. And I don’t think we’ve done as much as we can do in that vein, to actually make that real for our customers and the right products and the right services and the right offers. And so, rebuilding that product engine that we can do that and begin to differentiate allows us to do things that won’t necessarily just hinge on, can I get an attractive handset?

Brett Feldman: I believe your fiber network passes something around 15 million customer locations right now, you’re targeting to ultimately get to 30 million by 2025, that would still only be about half roughly half of the customer locations in the AT&T wireline footprint. Question we’ve gotten is how did you decide what the right target was? Why is it 30? And what really dictates the pace at which you build out fiber?

Stankey replied: Getting this kind of an engine (fiber optic build-out) ramped up to go from building 3 million to 4 million to 5 million homes (locations) past, working through the supply chain, all the logistics that are necessary to build network, it’s not a real simple undertaking. And as I’ve said, my goal is I feel very comfortable, we have places we can go to build 30 million homes (he really means residential and business locations combined) right now on an owned and operated basis, that have very attractive returns in the mid to upper teens. We’re demonstrating every day with our existing base, that we can operate that more effectively, we’ve now crossed over places where we have scale where we’re taking cost out of the business based on fiber replacement, the old infrastructure, we’re seeing that flow through in lower call rates, lower repair rates, better churn, all those things are going to continue to give us goodness moving forward.

Do I think there’s a magic number of 30? No, I don’t. I think there’s a combination of things. One is unlike the investment base, to recognize the good work we’ve been doing. And then in fact, we are building and adding value back to our shareholders. And when they start to recognize that in the form of the equity in the stock, do I believe my credibility and the team’s credibility goes up? Yes, do I believe there’s going to be other opportunities for us to come out, as we hit those scaling metrics that we have in place, the supply chain metrics that we might be able to go in and say, there’s more that we could possibly attack, I’d love to be in that position to do that. And I’ve kind of put that out as a challenge to the management team to say the only thing that stands in the way between you doing 30 million and doing more is your execution and performance.

Brett Feldman: Speaking of execution, execution really has two pieces. It’s deploying the network, and then it’s driving penetration of that network. I believe you had about 5.4 million fiber subscribers as of your most recent quarters, that’s about 35% penetration [1.]. What do you think is the right target for your fiber penetration and how are you going to get there?

Note 1. Fiber-based broadband has clearly established itself as a growth engine for AT&T, which added another 246,000 fiber subscribers in Q2 2021, ending the period with 5.43 million. With about 80% of new fiber subscriber additions new to AT&T, overall broadband revenue growth at the company has finally surpassed declines in its legacy, non-fiber-to-the-premises (FTTP) broadband business.

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Stankey replied: If I look what’s happening right now, and kind of where we are in our maturity scale, one of the things I’m most excited about is our new net adds to fiber right now good, almost 80% of them are new to AT&T. So, we’ve now gotten to this place where we’ve been managing the base. And we’re now shifting over where got a lot of new customers coming in. And in fact, as you saw last quarter, we’re starting to get ourselves to a point where that consumer business is a growth business today, despite the legacy drag on historic telecom products, parts and the like of legacy data products, that the fiber growth is beginning to outstrip that where we have real growth in that business. And we’re now starting to turn that corner real EBITDA growth in that business. And so, I would tell you as I step back from that, we’re going to see consistent growth. But I’m not going to be happy until we have a 50:50 share split in places where there’s two capable broadband providers. And I think there’s no reason with the product is capable as what we have out there and how fiber performs and what we’re able to do and the differentials we see in our customer satisfaction to our most significant competitor often cable in those markets, we were looking at 10, 15 points of difference in satisfaction levels, between other players in the market and ourselves, that we shouldn’t be able to achieve that over time.

Brett Feldman: You had earlier made a slight adjustment to your fiber deployment for this year, you were hoping to do 3 million homes, it’s going to be closer to two and half million and you noted some of the well reported supply chain issues as being a factor. Any update there, is there any further disruption in your supply chains and your ability to secure labor?

Stankey replied:  

And we’re talking about what’s probably effectively about a 90 day delay for us to hit those numbers, and really primarily in this case, got to fiber assemblies. The way fibers built in the distribution network is we engineer it, we provide detailed engineering to our manufacturer, the manufacturer in the manufacturing facility, pre-splices and pre-assembles some of that fiber before we receive it. So, when it goes in, we’re doing less field splicing. And we’re able to basically put it up in the air or bring it through infrastructure in a way that lowers labor costs coming in. And we’re having some supply issues in the factory partly labor driven because of COVID, individuals getting sick not being able to run enough shifts, and carry through and partly some raw material issues. But those have been worked through right now our deliveries over the last 30 days have tracked to what our expectations are.

So, we feel like we’re through that dynamic right now. We should be fine with it. But look the supply chain is fragile at all levels. It’s fragile on everything. Last week, it was the number of generators, we’re deploying for power backup on cell sites, there’s, we’re going to miss a target on some of those by a couple 100 because there’s a resin base connector in the harness and we can’t get the resin. And that resin base connector, it’s a $15,000 generator that’s been held up on something that’s $0.25 part, you see these things popping up, left and right, every corner of the business. So, I don’t know what next week brings, we’re aggressively managing it. We’ve got a great supply chain organization. We’re a scaled provider, with all of our vendors. So, we lean into that, we were able to work through the fiber dynamics because we are the largest consumer of fiber in the United States. We use that ability and that expertise to make sure we get what we need to move through. So, I feel we’re managing through it, okay. I don’t think there’s anything around the challenges we’re dealing with, it gives me concern on guidance where we stand right now, but it’s going to be choppy and a little bumpy moving forward on some of these things as we move through the years.

Typical fiber optic deployment to multiple homes via underground and aerial cable

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Stankey wouldn’t say how the proposed U.S. infrastructure bill might also alter AT&T’s outlook in a way that encourages the company to explore a buildout that goes beyond 30 million locations.

“There’s a degree of uncertainty there,” he said of the bill. “But in its current form [and if] it does actually make its way into law, that’s going to change the landscape of the broadband business in this country … It will also change my posture and point of view on where we should be playing as a company.”

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References:

https://seekingalpha.com/article/4456360-t-inc-t-ceo-john-stankey-presents-goldman-sachs-30th-annual-communacopia-conference

https://www.lightreading.com/opticalip/atandts-fiber-expansion-could-reach-beyond-30-million-locations/d/d-id/772225?

https://techblog.comsoc.org/2021/08/12/atts-fiber-buildout-reduced-due-to-supply-constraints/

AT&T’s fiber buildout reduced due to supply constraints

AT&T has experienced recent disruptions in the supply of fiber optic cable, which has caused the company to trim back its planned fiber-to-the-premises (FTTP) buildout for 2021, according to senior EVP and CFO Pascal Desroches.

AT&T had previously said it would build out its fiber network to an additional 3 million homes passed this year. But that’s now been reduced by 1/2 million.

“Since the start of the third quarter, we are seeing dislocation across the board, including in fiber supply. We’re probably going to come in a little bit light of 3 million homes passed, probably around 2.5 million,” Desroches said Tuesday at the Oppenheimer Technology, Internet & Communications Conference, according to this transcript.

 An AT&T technician working on a fiber project

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Specifically, this is what Pascal said:

But since the start of the third quarter, we are seeing dislocation across the board, including in fiber supply. And as a result of those dislocations, we had previously provided guidance of 3 million homes past this year (unedited- very bad grammar). We’re probably going to come in a little bit in light of that, probably around 2.5 million. We don’t think it’s going to impact us long term. But I think it’s really important context because if we’re feeling the pain of this, I can only imagine what others in the industry are experiencing.

John Stankey (AT&T CEO) has always been a believer in fiber. I think when he took over he identified that as a priority area because he understood from a technology standpoint, there is no better technology for connectivity. And therefore, in a world where the demands for symmetrical speed are increasing significantly, this is the technology to bet heavily on. And so we have a great position, and we are leaning into adding to that position. So it’s really a function of when you — and I think others are now recognizing it as a result of what you’ve seen in the last year in the pandemic, the need to do what we’re doing now, 2-way communication can only happen with symmetrical speed. So I think everyone has had an aha moment, like we need to deploy fiber. And so we’ve long believed that. John has long believed that, and this is just really leading into that opportunity.

As we deploy fiber, our goal is to get at least 40% penetration on homes passed. And we think in certain markets, we’ll have an opportunity to do better than that. And the other thing that is great about is when you lay fiber, you lay fiber to a community where there is both homes and businesses. So it also helps boost returns in your enterprise business. And so that’s why it is so critical that we roll this out because the ability to grow both your enterprise and your consumer business is attractive. And we think these investments will provide us with mid-teen returns over time.

I know we’re largest fiber purchaser in the country. And we have prices that are at the best and most competitive among the industry. So we feel really good about the ability to secure inventory, fiber inventory and at attractive price points and the ability to execute and the build-out at scale, something that many others don’t have.

Oppenheimer moderator question: “Can you talk a little bit about where your supply comes from, I guess, both the fiber and the optical components or any other key suppliers? Is that U.S. sourced? Or is it a lot of it outsourced internationally?”

Pascal’s answer: “It is a U.S. company which has locations both domestically and outside the U.S.”  [We suspect that it’s Corning].

AT&T typically has had no problem getting fiber at a low cost, Desroches said. “We’re the largest fiber purchaser in the country and we have prices that are the best and most competitive in the industry,” he said. “We feel really good about the ability to secure fiber inventory at attractive price points and the ability to execute the buildout at scale, something that many others don’t have.”

AT&T expects to catch up to its original fiber-construction estimates in the years after 2021, largely because of what Desroches called its “preferred place in the supply chain” and “committed pricing.” As AT&T said in a news release yesterday, AT&T is “working closely with the broader fiber ecosystem to address this near-term dislocation” and “is confident it will achieve the company’s target of 30 million customer locations passed by the end of 2025.”

AT&T added another 246,000 fiber broadband subs in Q2 2021, extending its total to 5.43 million, and said last month it was on pace to add about 1 million net fiber subscribers for all of 2021.

AT&T has estimated that nearly 80% of new fiber subscribers are also new AT&T customers, reversing a previous trend that saw a sizable portion of its FTTP customer net adds coming from upgrades of existing AT&T high-speed Internet customers on older VDSL and DSL platforms (which have been largely discontinued).

Speaking on AT&T’s 2Q-2021 earnings call last month, Desroches stated that the company’s consumer wireline business had reached a “major inflection point” as broadband revenues continue to surpass legacy declines. Meanwhile, AT&T’s broadband average revenue per user (ARPU) reached $54.76 in Q2 2021, improving from $51.61 in the year-ago period.

References:

https://investors.att.com/~/media/Files/A/ATT-IR-V2/events-and-presentations/final-oppenheimer-transcript-8-10-21.pdf

https://www.lightreading.com/opticalip/supply-chain-constraints-cut-into-atandts-fiber-buildout-plan/d/d-id/771438?

https://arstechnica.com/information-technology/2021/08/att-delays-500000-fiber-to-the-home-builds-due-to-severe-fiber-shortage/

Will AT&T’s huge fiber build-out win broadband market share from cablecos/MSOs?

Telefonica España to activate XGS-PON network in 2022; DELTA Fiber to follow in Netherlands

Telefonica España will begin the commercial deployment of a 10 Gbps fiber broadband network using XGS-PON technology in Spain in the first half of 2022, reports website bandaancha.eu.

The gradual rollout is part of Telefonica’s ‘Banda Ancha Abierta(Open Broadband) project to install an efficient, open, scalable and virtualized network model that will facilitate fixed-mobile convergence (fixed access with mobile backhaul), Multi-access Edge Computing capabilities ( MEC), and the deployment of third-party applications.

Telefónica’s FTTH network in Spain passes 26.1 million homes as of June 2021, for which 4,726,700 clients are served through the Movistar and O2 brands.  In addition, there are 2,801,700 clients of other operators served through indirect fiber optics.

The introduction of XGS-PON will introduce two new lambdas or wavelengths on the existing GPON fiber infrastructure. The same fiber cable will carry wavelengths corresponding to GPON and in parallel new colors of the laser for XGS-PON so that the two technologies do not interfere with each other.

XGS-PON raises the available throughput for an entire fiber branch to 10 Gbps downstream and 10 Gbps upstream for up to 64 client endpoints. That will permit Telefonica to commercialize speeds of up to 2.5 Gbps symmetric and, in the medium term, up to 10 Gbps.

XGS-PON requires new customer premises equipment. Telefónica customers have been waiting for years for the new XHGU router that the operator announced in 2018 and that is compatible with XG-PON, in addition to bringing high-penetration WiFi 6.

With the arrival of XGS-PON, Movistar will begin to distribute this new router or temporarily provide an ONT XGS-PON.

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In a related story, DELTA Fiber has attracted 2 billion euros to back a planned roll-out of XGS-PON technology throughout the Netherlands. The 10G PON deployment will expand DELTA Fiber’s network to 2 million fiber connections in 2025. It currently expects to reach 1 million connections by the end of this year.

The company expects to begin rolling out XGS-PON this September.  It will use the technology exclusively in its future builds with an eye toward making gigabit broadband widely available.

DELTA Fiber also said it plans to deploy 25G PON in the future. Along these lines, the company recently announced a partnership with Proximus of Belgium to deploy fiber to the home networks in Flanders. Proximus has already adopted 25G PON technology.

References:

https://bandaancha.eu/articulos/movistar-actualizara-velocidad-red-fibra-9973

https://www.telecompaper.com/news/telefonica-spain-to-activate-10-gbps-xgs-pon-network-next-year–1392309

https://www.lightwaveonline.com/fttx/ftth-b/article/14207846/delta-fiber-plans-xgspon-deployment-in-the-netherlands

FTTH Council Europe: FTTH/B reaches nearly 183 million (>50% of all homes)

Europe has passed over half of homes able to receive fiber broadband. According to the latest figures compiled by Idate for the FTTH Council Europe, 52.5% of homes will be covered by FTTH/B at the end of September 2020.  That’s up from 49.9% a year earlier.

FTTH Council Europe revealed the following:

• Number of homes passed by fiber (FTTH/B) reaches nearly 183 million homes in EU39.

• Europe’s fiber footprint (number of homes passed) expanded the most in the past year in France (+4.6M homes passed), Italy (+2.8M), Germany (+2.7M) and the UK (+1.7M).

• Three countries are accounting for almost 60% of homes left to be passed with fiber in the EU27+UK region.

• FTTH/B Coverage in Europe surpasses more than half of total homes.

• 16.6% growth in the number of fiber subscribers.

Iceland leads the European FTTH/B league table second year in a row.  70.7% of its households having fiber connections. Belarus (70.4%) and Spain (62.6%) came in second and third.

• Belgium, Israel, Malta and Cyprus enter the FTTH/B ranking for the first time.

The above figures cover 39 countries across Europe, where nearly 183 million homes have fibre access. For the EU and UK alone, penetration reached 43.8 percent in September, up from 39.4 percent a year earlier.

The report also shows fiber take-up is accelerating, with a subscriber penetration of 44.9 percent of lines in the 39 countries, compared to 43 percent in September 2019. In total there were 81.9 million FTTH/B subscribers in September 2020, up 16.6 percent from a year earlier. Annual growth was again strongest in France, with nearly 2.8 million subscribers added in the 12 months, followed by Russia with 1.7 million and Spain with 1.4 million.

The FTTH Council noted a shift in several countries in the past year where legacy infrastructure previously dominated. They are now moving faster towards fiber and even starting to look at shutting down copper networks. Nevertheless, three historically copper-strong countries – the UK, Germany and Italy – account for almost 60 percent of homes left to be passed with fiber in the EU27+UK region.

The countries with the highest fiber penetration across Europe are Iceland and Belarus, with over 70 percent of households using fiber broadband. Spain and Sweden are at over 60 percent, and Norway, Lithuania and Portugal over 50 percent.

“The telecoms sector can play a critical role in Europe’s ability to meet its sustainability commitments
by reshaping how Europeans work, live and do business. As the most sustainable telecommunication
infrastructure technology, full fibre is a prerequisite to achieve the European Green Deal and make the
European Union’s economy more sustainable. Competitive investments in this technology should,
therefore, remain a high political priority and we look forward to working with the EU institutions,
national governments and NRAs towards removing barriers in a way to full-fibre Europe” said Vincent
Garnier, Director General of the FTTH Council Europe.

About the FTTH Council Europe:

The FTTH Council Europe is an industry organization with a mission to advance ubiquitous full fibre based connectivity to the whole of Europe. Our vision is that fiber connectivity will transform and
enhance the way we live, do business and interact, connecting everyone and everything,
everywhere.

Fiber is the future-proof, climate-friendly infrastructure which is a crucial prerequisite for
safeguarding Europe’s global competitiveness while playing a leading global role in sustainability.
The FTTH Council Europe consists of more than 150 member companies.

Contacts:

Eric Joyce, Chair, Market Intelligence Committee
[email protected]

Sergejs Mikaeljans. Communications and Public Affairs Officer
[email protected] Tel: +32 474 81 04 54

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Separately, BT has increased its its total FTTP network build target from 20 million to 25 million premises by December 2026, with Openreach working to connect up to 4 million premises a year.

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References:

https://www.ftthcouncil.eu/

https://www.ftthcouncil.eu/home/latest-news/new-fibre-market-panorama-2021-revealed?news_id=3872&back=/resources/resources

https://www.ftthcouncil.eu/documents/Fibre_Market_Panorama_2021_PR_final.pdf

https://register.gotowebinar.com/register/2424555495368131344 (webinar registration)

https://www.telecompaper.com/news/ftth-roll-out-accelerates-in-western-europe-in-past-year-led-by-france-italy–1382919

 

PON’s Vulnerability to Denial of Service (DoS) Attacks

by Shrihari Pandit

Introduction:

The dominant architecture used in fiber optic deployment -Passive Optical Networks (PONs) may be vulnerable to attack. It is important to bring attention to this under-appreciated weakness and discuss what steps are possible to protect fiber infrastructure.

As various PON technologies are long standing and widely deployed, this is a matter of no small concern. PONs are widely deployed by Verizon FiOS, AT&T U-verse and many others.

The PON architecture is a hodgepodge of old and new technologies, hardware and strategy, limited budget and often is not overseen by a single team.

In this article we describe how fiber optic infrastructure based on PONs may be open to potential denial of service (DoS) attacks via optical signal injections. Security experts warn that this is a growing issue, which could take down entire sectors of PON segments.

Considering the ever increasing state-sponsored and non-state-actor cyber attacks, these types of vulnerabilities that allow for massive disruption for large groups of people are very attractive targets.

PON Overview:

The cost advantages of PON architecture make it the overwhelming choice for FTTH deployments. PON allows wireline network providers to deliver service to businesses and homes without having to install costly active electronics on roads, curb-side or even within buildings themselves.

Active electronics, on the other hand, add cost and create operational complexity as deployments scale. The conveniences and differentiators of PONs are precisely what opens up the floodgates to serious vulnerabilities.

PONs are fundamentally susceptible due to the architecture from the passive optical splitter (POS) to the optical network unit (ONU) within the overall network infrastructure. The POS component of the network functions like a bridge, allowing any and all communications to transverse without the ability to filter, limit or restrict flow.

The fiber optic market currently boasts 585.9 million subscribers worldwide, with that number set to grow to 897.8 million subscribers by 2021.

The industry has moved to upgrade 1st generation GPONs and EPONs to next-generation PONs, like NG-PON2 (the favorite), XG-PON1 and XGS-PON.  For example, Verizon uses the Calix AXOS E9-2 Intelligent Edge System for large-scale NG-PON2 deployments that began in the first quarter of 2018.

However, with subscriber density significantly increasing per PON segment, the risks increase as more subscribers are affected by a cyber attack on a single fiber.

Sidebar:  NG-PON2

NG-PON2 combines multiple signals onto a single optical fiber by using the different wavelengths of laser light (wave division multiplexing), and then splits transmission into time slots (time division multiplexing), in order to further increase capacity. NG-PON2 is illustrated in the figure below.

Legend: 

 OLT =Optical Line Termination                                                         ONT =Optical Network Termination

NGPON2 has three key advantages for operators:

1. Cost

Firstly, it can co-exist with existing GPON and NGPON1 systems and is able to use existing PON-capable outside plant. Since the cost of PON FTTH roll out is 70 per cent accounted for by the optical distribution network (ODN), this is significant. Operators have a clear upgrade path from where they are now, until well into the future.

2. Speed

Initially NGPON2 will provide a minimum of 40 Gb/s downstream capacity, produced by four 10 Gb/s signals on different wavelengths in the O-band multiplexed together in the central office with a 10 Gb/s total upstream capacity. This capability can be doubled to provide 80 Gb/s downstream and 20 Gb/s upstream in the “extended” NGPON2.

3. Symmetrical upstream/downstream capacity

Both the basic and extended implementations are designed to appeal to domestic consumers where gigabit downstream speeds may be needed but more modest upstream needs prevail. For business users with data mirroring and similar requirements, a symmetric implementation will be provided giving 40/40 and 80/80 Gb/s capacity respectively.

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The Essence of a PON Cyber Attack:

Given the flashpoints around the globe, it doesn’t take much imagination to envision how state and non-state actors might want to cause such a chaotic and widespread disruption.

If a “cyber criminal” gains access to the underlying fiber, they could inject a wideband optical signal to disrupt communications for all subscribers attached to the PON segment.

Alternatively, at your home the adversary could manipulate the ONU’s optical subsystem to transmit abnormal PON signals and impact service to all subs on that segment. Communications including internet, voice and even analog TV signals that operate on nearby wavelengths would be susceptible to these serious DoS attacks.

Possible Solutions, Preventive Methods and Procedures:

So, what can be done with current equipment without a massive and costly fiber optic network overhaul? The unfortunate answer is that an overarching vulnerability will always exist as long as the passive components are in place.  A reactionary process is the best and only option.

The current primary solution for operators is to reduce the number of subscribers per PON segment as a way to manage risks. If an attack was detected, the network operator would be able to localize the source and identify and disconnect the bad actor from the network. But it’s easier said than done.

This sort of manual process is not ideal. Extensive PON outages means spending the time and money to send personnel to optical line terminals to check each individual port until the attacker is found. The installation of active electronics on each PON segment or near PON subscribers is unrealistic and impractical. That undertaking would actually be more costly in terms of time, money and location.

The best ongoing solution is that operators should consider installing passive tap points per PON segment. Each can be independently routed back and managed at a provider’s operations center and allow operators to effectively analyze segments and detect unusual optical light levels that may signal an attack.

At that point the operator could physically dispatch techs on-site to continue the localization and resolution process while ensuring other non-threatening users remain unaffected. This solution is to effectively take a reactionary restriction and make it as automatic and proactive as currently possible.

Conclusions:

P2MP (point to multi-point) architecture has become the most popular solution for FTTH and FTTP.  Yet there needs to be a severe increase in awareness to potential PON vulnerability into the next generation.

If we can catalyze the telecom industry to develop methods and measures to protect infrastructure, such crippling network security issues will be stopped before widespread exploits occur.

The industry needs to address these concerns sooner rather than later or else be left without effective countermeasures against these very real threats.

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References:

https://www.paloaltonetworks.com/cyberpedia/what-is-a-denial-of-service-attack-dos

https://s2.ist.psu.edu/paper/ddos-chap-gu-june-07.pdf

https://www.youtube.com/watch?v=G93I_v2pa24

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About Shrihari Pandit:

Shrihari Pandit is the President and CEO of Stealth Communications, the NYC-based ISP he co-founded in 1995. Stealth, having built its own fiber-optic network throughout the city, provides high-bandwidth connectivity services to a broad roster of customers in business, education and government.

Prior to Stealth, Mr. Pandit was a network-security consultant to various software and telecom companies, including MCI, Sprint and Sun Microsystems. He also served as an independent consultant to several U.S. agencies, including NASA and the National Infrastructure Protection Center (NIPC), now part of the Department of Homeland Security.

Swisscom achieves 50 Gbps on a fixed PON connection – a world first!

Swisscom has achieved transmission speeds of 50 Gbps  in a real PON (Passive Optical Network) environment test – a world first, according to the company.  Swisscom has upgraded existing OLT (Optical Line Termination) hardware with a 50 Gbps PON Line Card prototype to reach a download speed of 50 Gbps and an upload speed of 25 Gbps on a fixed network.

The PON technology can be ready to market and deployed in around two years, according to Swisscom. It can be an option for business customers initially. Progressive network virtualization will enable companies to use the bandwidth they need on a flexible basis in line with their requirements.

The 10 Gbps service is expected to be sufficient for the residential mass market for several years yet, the company said. The 50 Gbps option allows for flexible deployment using existing fibre-optic infrastructure.

Markus Reber, Head of Swisscom Networks, said: “There is no question that the bandwidth need will continue to increase over the coming years. That’s why, here at Swisscom, we are already considering how our technology needs to develop to ensure that Switzerland continues to be ready to take advantage of the latest digital services with the best possible experience in the future. The results of testing based on PON technology and architecture clearly demonstrate that we have some powerful options available.”

“In my opinion, PON with 50 Gbit/s will be an option for the business customer market initially. Progressive network virtualisation will enable companies to use the bandwidth they need on a flexible basis in line with their requirements, for instance. In contrast, the 10 Gbit/s already available in the residential mass market should be more than enough for several years to come. However, the 50 Gbit/s option offers even more opportunities, as it allows the existing fibre optic infrastructure to be deployed in a more versatile way. As an example, the technology will soon facilitate access to mobile communication masts, particularly for 5G, as the same network can be used as the one already built to connect households. With a transmission speed of 50 Gbit/s, there is ample bandwidth available.”

The technology also will support fiber optic access to mobile communication masts, particularly for 5G, since the same network can be used as the one already built to connect households.

Swisscom says that “over the coming years, the development of digital applications will result in a similar growth in bandwidth need as seen in recent years, when it increased more than tenfold within a decade. Swisscom is therefore investing in network expansion on an ongoing basis, deploying the latest innovative technologies to do so and safeguarding Switzerland’s high degree of digital competitiveness.”

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In April 2020, market research powerhouse Omdia (owned by Informa) forecast that In the 2018-2025 timeframe, the PON market will see a compound annual growth rate (CAGR) of 4.3% to be worth $8.4 billion by 2025. “This market remains in an upswing as operators continue to expand and upgrade their fiber-based access networks for both residential and non-residential subscribers and applications,” states the Omdia team in their report (published prior to the global impact of COVID-19, it should be noted).

PON and xDSL/Gfast equipment market by major segment, 2017-2025.

Omdia: PON and xDSL/Gfast equipment market by major segment, 2017–2025

Growth in the PON market will be driven by increasing demand for next-generation PON equipment, including 10G GPON, 10G EPON, NG-PON2 and 25G/50G PON, according to Omdia: By 2021, most GPON OLT (optical line terminal) shipments are expected to be 10G.

Omdia expects demand for NG-PON2 equipment (which is expensive because it includes tunable lasers) is expected to be limited, with significant deployments anticipated only by one major operator, Verizon.

In Western Europe, PON investments are only just starting: That market is set for a CAGR of 16.5% to be worth $1.6 billion in 2025.

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References:

https://www.swisscom.ch/en/about/news/2020/10/08-weltpremiere.html

https://www.swisscom.ch/content/dam/swisscom/en/about/news/2020/10/08-weltpremiere/08-weltpremiere-en.pdf.res/08-weltpremiere-en.pdf

https://www.telecompaper.com/news/swisscom-reaches-50-gbps-in-real-network-environment–1357116

http://www.broadbandworldnews.com/document.asp?doc_id=758638