NG-PON2 Tunable Optics Prices Too High for Nokia

NG-PON2 tunable optical component pricing has not dropped enough for the next-gen network technology to become a viable market, and time may be running out, according to a top Nokia fixed-access executive.

Combined, tunable optical components alone represent 10x or even 20x -- close to $1,000, Stefaan Vanhastel, who heads global marketing for Nokia Fixed Networks, told Broadband World News at Fiber Broadband Association's Fiber Connect event in Orlando this week. And while the technology itself has promise, cost makes it price-prohibitive for practically all service providers, he said.

"The use cases are very interesting. If the cost comes down, it has a market," said Vanhastel. "It's a chicken or the egg situation."

It could be more of an "if versus when" for NG-PON2 for some operators, depending on their willingness to pay for tunable optics, he said. That's because fixed access competitors are aligning themselves behind a competing new direction to follow after XGS-PON or NG-PON2, Vanhastel added.

In March, Heavy Reading Contributing Analyst Dan Grossman noted that early production tunable ONT transceivers reputedly sold for about $150, compared with $7 for GPON, and cost much more to manufacture. Most of the world's operators -- including China Telecom, China Mobile and China Unicom -- are testing or deploying 10G EPON or 10G PON, said Julie Kunstler, principal analyst, Service Providers, at Ovum in a call with BBWN.

"Consequently, the forecast for 10G PON equipment -- both OLTs and ONTs/ONUs -- is much larger than it is for the NG-PON2 equipment market," Kunstler said. "In access, volumes drive down costs. While costs will drop for both NG-PON2 and 10G PON, it will be difficult for NG-PON2 prices to drop to the same levels as we are forecasting for 10G PON."

Several operators, most notably Verizon and CityFibre, are testing or deploying NG-PON2, working with partners Calix and ADTRAN. In January 2018, Verizon announced it had begun commercial deployment of an NG-PON2 network in Tampa, Fla., based on Calix solutions. "Calix has done a great job at winning NG-PON2 deployments at Verizon," said Ovum's Kunstler. "This is a major Tier 1 win for Calix."

NG-PON2 will be a less mainstream selection for the next few years, a 2018 Dell'Oro Group report suggested. While the researcher predicts XGS-PON will reach $1.034 billion in sales by 2022 versus 2017 sales of $16 million, NG-PON2 is expected to hit only $204 million compared with $5.9 million in 2017. (See Next-Gen PON: $7B Market by 2022.)

Related posts:

• How Verizon & Calix Unlocked NGPON2
• Verizon Makes Its NG-PON2 Case
• DZS 10G ONTs Designed to Bridge NG-PON2 Price Gap

— Alison Diana, Editor, Broadband World News. Follow us on Twitter or @alisoncdiana.