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NTT has partnered with SKY Perfect communications to create a new company called OptiCast (.pdf link) that will focus on delivering Video over the fiber NTT is rapidly installing throughout Japan. OptiCast will be a joint venture between NTT East/NTT West and SKY Perfect, a CATV company with about 4MM subscribers.

The public objective is to drive demand for FTTH deployment, though things are going so well there it isn’t clear why that needs a big catalyst. You read it here first that NTT FTTH subscriber additions were outstripping DSL additions. It’s also a good way for NTT to squeeze more revenue out of their existing infrastructure. Unlike Verizon or SBC who are building a parallel broadcast video infrastructure not radically different than the incumbent cable companies, NTT has partnered with a cable company. Our suspicion is that there is not overlap between SKY’s existing subscriber base and the NTT FTTH deployment, and this is a way for SKY to get access to some more subscriber infrastructure. NTT gets to offer 20th century broadcast cable service while full-blown IPTV takes shape. It would be a lot like Verizon partnering with Cablevision or Comcast in Time Warner’s turf.

We learned earlier that NTT was taking a different technical approach than Verizon for deploying Video. Like Verizon, NTT is using two separate wavelengths to carry video and data, except it plans to have two separate ONUs at the customer premises to handle the two services. We are not deeply familiar with Japanese telecom regulations, we assume this is because NTT is discouraged/prevented from offering video services- so they create an optical port for a third party to use. OptiCast provides the Video ONU and head end and NTT receives high margin incremental revenue and stays out of the video business. Best of all, NTT could theoretically partner with other cable companies and the consumer could select whose video ONU to use. The long term view at NTT is new services and content models including IPTV will eventually full up the broadband connection but this is a clever technical and regulatory hack to clear the ‘triple-play’ bar.

This is also creating a rather lucrative market for triplexers, optical receivers, etc as new Video ONU boxes get built.

We really like this approach- it is in-line with the ‘cheap is beautiful’ approach of GE-PON. It allows the per unit cost of data-only ONU’s to be cheaper and gives subscribers that want video flexibility. Triplexers, the most expensive component in an ONU, are only deployed where needed. It would not surprise us to see the same model deployed in other countries, particularly China.

Anyone know of a good source of regulatory information on Asian PTT’s? I’d like to learn more about how regulation will impact what these carriers can do.


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  1. Love the Blog Andrew, keep it rollin’. As far as Japanese telecom regulatory info, you might want to shoot an email to Meghan Fuller, senior news editor at Lightwave: She wrote a very informative article some time back that was reprinted in several online publications:
    She might be able to give you some guidance.

    Also, you seem to have not only a genuine interest but excellent depth of knowledge in terms of what is currently happening in FTTH today. Two questions. First, how do you see WDM PON technology fitting into the Japanese deployments since this “triplexerless” multimode fiber technology seems to be a possible option. Second, since you raised the possibility before in another post, do you see MRV’s Luminent division as having the potential to deploy their triplexer product into these Asian video deployments? They certainly seem to have more experience with the scale needed than anyone else currently out there as well as the means of production (assuming, of course, that the above architecture is eventually deployed). Thanks.

    Posted by Jack Jericho | January 4, 2006, 10:51 AM
  2. On the Luminent/MRV question, I don’t see them having an opportunity with their triplexer. The video is delivered to a separate unit called a V-ONU. From what I know, it has it own optical interface. I imagine an external filter would be used to split off the 1550 nm wavelength, eliminating the need to replace, or redesign the current data only ONU. Also, I have heard that this is a 10G signal.

    On WDM PON, I am not sure what NTT’s take on it. From what I have seen, WDM PON has the most potential as a metro or “2nd to last mile”. Currently, KT and LG are demonstrating a 100M system, but I think their goal is offer a 1G system. With 1G WDM PON system, they could service businesses, large apartment towers/complexes, and remote DSLAMs more cost effectively than traditional switched Ethernet.

    One other note, SBC is not following the same path as VZ. They are deploying an IP based video solution and have indicated that their service will be enhanced over what the MSO offer today.

    Posted by Brad K | January 4, 2006, 12:34 PM
  3. Thanks for the detailed response Brad. One more follow up question. Verizon has stated that they will, sometime in the future when they feel IPTV is truly ready for deployment, drop their RF overlay and deliver their broadcast video in an all IP format, similar to AT&T. Although they will surely have a great number of deployed triplexers and ONT’s in the field by that time, will delivering broadcast video along with VOD and voice over the data wavelength completely eliminate the need for the RF overlay/1550nm wavelength and thus future triplexers? Or will this still be an application where the triplexer can fit in? Or just a diplexer? Thanks.

    Posted by Jack Jericho | January 5, 2006, 11:55 PM
  4. Carriers may still want to use the 3rd wavelength even if they deploy IPTV. With the 3rd wavelength carriers could double the downstream bandwidth. In that setup, they could send their own IPTV data on the 1550nm wavelength and use the 1490nm exclusively for subscriber data.

    This would be similar to what NTT is doing, but in the US, the carrier would not need separate receivers for data and video.

    BTW – I have not heard any carrier plans to implement IPTV in this way. However, it is a option.

    Posted by Brad_K | January 10, 2006, 11:29 AM
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