Fiber Access Network A Cable Operator

1
Fiber Access NetworkA Cable Operators
Perspective

• Mr. John A. Brouse, Jr.
• Director of Network Implementation
• Charter Communications, Inc.

2
Fiber Access NetworkA Cable Operators
Perspective

• Historical Perspective
• Current Decision Drivers
• HFC Model
• FTTH Model
• Comparative Cost Assessment
• Conclusions

3
Fiber Access NetworkA Cable Operators
Perspective

• Historical Perspective
• Current Decision Drivers
• HFC Model
• FTTH Model
• Comparative Cost Assessment
• Conclusions

4
Historical Perspective

• RF was the Technology of Choice
• Frequency Division Multiplexing easily allows
  simultaneous transmissions
• Ubiquitous service achieved through a Tree and
  Branch system of cascading RF amplifiers, coaxial
  cables, and directional couplers
• Cost to build and operate the network is
  independent of service penetration levels
• Network and Product Expansion
• More Homes and More Programming
• Expanding the network footprint increased the
  number of actives in cascade
• New product launches required additional RF
  bandwidth
• Higher frequencies required RF electronics change
  outs and re-spacing
• Result was more components, reduced signal
  quality and lower reliability

5
Historical Perspective

• 1988
• Realization that network bandwidth expansion and
  footprint expansion hit a technical wall
• Industry move quickly to adapt existing fiber
  optics technology to improve RF signal quality
  and reliability
• First generation RF broadband optics developed
  and deployed within 18 months
• First Generation Application
• RF cascade reductions
• Called Fiber Backbone
• focus was RF performance
• minimal fibers used
• minimal nodes deployed
• maximize number of homes served per node
• Lead to eventual evolution to todays HFC network
• node serving areas of 500 homes or less
• focus is efficient interactive bandwidth usage

6
Fiber Access NetworkA Cable Operators
Perspective

• Historical Perspective
• Current Decision Drivers
• HFC Model
• FTTH Model
• Comparative Cost Assessment
• Conclusions

7
Current Decision Drivers

• CASH FLOW
• OSP OM costs are escalating
• work force costs and benefits
• network power costs
• fleet operating costs
• liability insurance
• Costs to launch advanced products and services
  are increasing
• node splitting (internal, external or both)
• headend RF splitting/combining network
  reconfiguration
• network power reconfiguration
• increased time to launch delays revenues

8
Fiber Access NetworkA Cable Operators
Perspective

• Historical Perspective
• Current Decision Drivers
• HFC Model
• FTTH Model
• Comparative Cost Assessment
• Conclusions

9
HFC Model

• Typical Operating System Characteristics
• 54,000 households passed
• 33,500 customers
• 1410 miles of plant
• 199 fiber nodes
• 4380 RF actives
• 584 power supplies
• 1752 batteries
• 2.5 monthly service call rate
• 50 of the service calls result in a truck roll
  to resolve plant related problems
• 2 plant outages per month not related to
  cut/damaged cable
• 6.0 vehicle accidents per 1,000,000 VMD
• 5.8 OSHA recordable employee injuries per 200,000
  hours worked
• 8 Maintenance Technicians
• 23 Service Technicians
• 3 Technical Field Supervisors

10
HFC Model
Home
Headend
Voice Switch
RF
RF
Data Router/ IP Switch
RF MUX
RF
RF
RF
DFB
RF
Node
Video
RF
RF
Coax RG6
11
Fiber Access NetworkA Cable Operators
Perspective

• Historical Perspective
• Current Decision Drivers
• HFC Model
• FTTH Model
• Comparative Cost Assessment
• Conclusions

12
FTTH (RF PON) Model

• Modeled after same Operating System used for the
  HFC Model
• 54,000 households passed
• 33,500 customers
• 1410 miles of plant
• 0 fiber nodes
• 0 RF actives
• 0 power supplies
• 0 batteries
• 1.25 monthly service call rate
• 0 of the service calls result in a truck roll to
  resolve plant related problems
• 0 plant outages per month not related to
  cut/damaged cable
• 0 vehicle accidents per 1,000,000 VMD
• 0 OSHA recordable employee injuries per 200,000
  hours worked
• 0 Maintenance Technicians
• 12 Service Technicians
• 1 Technical Field Supervisors

13
FTTH (RF PON) Model
Home
Headend
Voice Switch
RF
RF
Optical Network Terminal
Data Router/ IP Switch
RF MUX
RF
RF
EDFA
RF
Video
RF
RF
Coax RG6
14
Fiber Access NetworkA Cable Operators
Perspective

• Historical Perspective
• Current Decision Drivers
• HFC Model
• FTTH Model
• Comparative Cost Assessment
• Conclusions

15
Comparative Cost AssessmentHFC OM Expenses per
Mile of Plant
Technical Supervision 42.03
Service Trouble Truck Rolls (for plant problems) 226.15
Plant Maintenance Truck Rolls 235.50
Material Inventory 49.64
Electricity Consumption 446.81
Power Supply Battery Replacement 43.49
Power Supply Equipment Repair 1.77
RF Line Equipment Repair 35.46
Vehicle Accident Loss 8.80
Employee Injury Loss 5.01
Emergency Cable Repair 8.51
Total annual OM expense per mile of OSP plant 1,103.17
16
Comparative Cost AssessmentFTTH (RF PON) OM
Expenses per Mile of Plant
Technical Supervision 0.00
Service Trouble Truck Rolls (for plant problems) 0.00
Plant Maintenance Truck Rolls 0.00
Material Inventory 0.00
Electricity Consumption 0.00
Power Supply Battery Replacement 0.00
Power Supply Equipment Repair 0.00
RF Line Equipment Repair 0.00
Vehicle Accident Loss 0.00
Employee Injury Loss 0.00
Emergency Cable Repair 85.11
Total annual OM expense per mile of OSP plant 85.11
17
Comparative Cost AssessmentHFC Deployment Costs
per Mile of Plant
Outside Plant Deployment
Materials 12,273.93
Labor 16,408.61
Total OSP Deployment Cost per Mile 28,682.54

Headend Equipment Deployment
Materials 736.51
Labor 83.50
Total Headend Equipment Deployment Cost per OSP Mile 820.02

Total Cost to Deploy HFC (excluding drops CPE) 29,503.08

Drop Installation (Materials Labor) per Customer 125.00
18
Comparative Cost AssessmentFTTH Deployment Costs
per Mile of Plant
Outside Plant Deployment
Materials 16,505.22
Labor 9,578.79
Total OSP Deployment Cost per Mile 26,084.01

Headend Equipment Deployment
Materials 15,910.00
Labor 208.76
Total Headend Equipment Deployment Cost per OSP Mile 16,118.77

Total Cost to Deploy HFC (excluding drops CPE) 42,202.78

Drop Installation (Materials Labor) per Customer (ONT incl) 748.00
19
Comparative Cost AssessmentLife Cycle Cost
ComparisonHFC and FTTH (RF PON)
20
Fiber Access NetworkA Cable Operators
Perspective

• Historical Perspective
• Current Decision Drivers
• HFC Model
• FTTH Model
• Comparative Cost Assessment
• Conclusions

21
Conclusions

• FTTH (RF PON) best addresses the business
  decision drivers.
• Current FTTH equipment costs place it at a
  significant disadvantage.
• Construction costs for the OSP portion of the PON
  are 9 lower than HFC OSP deployment however,
  the headend costs are over 16 times more
  favorable to an HFC approach.
• Best areas to seek cost improvements are in the
  headend and CPE.
• Under current price points, the Life Cycle break
  even point occurs during year 12.

22
Conclusions

• Only part of the economic equation has been
  investigated.
• Future looking cost modeling and comparative
  analysis need to be undertaken in order to
  develop the full scope of costs.
• Transition from RF format to Ethernet for Voice
  and Data.
• Transition from RF to IP Video.
• Future looking business model comparative
  analysis needs to be undertaken to determine cash
  flow impact of FTTH vs HFC.
• Changes in penetration levels.
• Transition from Cable Modems to Ethernet to the
  Home.
• Transition from RF video to IP Video.
• Transition to an all IP world.

23
Conclusions

• For the near term, cable operators will continue
  to refine the HFC platform with efforts to design
  out much of the current OM costs by driving
  fiber closer to the curb but not to the home.