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Chinese FTTH Silicon Moves Forward

My five part FTTH in China series discussed the players, technology, and opportunity of FTTH in the worlds fastest growing economy.  Teknovus, a private company I follow made an related announcement today. They’ve released the first GE-PON chip compliant with China Telecom’s (CHA) enhanced IEEE GE-PON 802.3ah standard.

Passave (now owned by PMC-Sierra (PMCS) ) rolled up virtually all of the Japanese market for FTTH semiconductors at the expense of Teknovus and Centillium (CTLM). But the massive broadband greenfield opportunity in China is a  breakpoint that should allow a second GE-PON silicon provider to secure share. Teknovus realizes that they need to capitalize on this opportunity.

The playing field in China is leveled because they are implementing an enhanced version of the IEEE 802.3ah spec. This activity has been totally overlooked in the mainstream media and investment community, and is something I discussed in The Future of FTTH in China – Part IV. Teknovus is the first company to announce a production device that meets the requirements laid out during this conference by China Telecom.

It’s been a source of frustration to me that Centillium (CTLM) continues to put its energy into penetrating Japan and ignoring the rollout of FTTH services in markets where no incumbent chipset and equipment supplier exists. I wrote about Centillium before, and was shocked that they didn’t bother to show up at the China Telecom sponsored working sessions. Commentary from the company in July and on subsequent conference calls indicated all effort continues to be focused in Japan.

I continue to believe that 10 years from now, the GE-PON will be the dominant FTTH standard based on my assumption it will dominate in Asia and be the next generation access standard for the 2.5 Billion people that live there. Teknovus appears to realize this and is focusing their energy on the big opportunity rather than divide their efforts chasing both GE-PON and the ITU standard G-PON opportunities.

Full Disclosure – I am long CTLM.

Discussion

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  1. In the news release Teknovus says that Suminet (Sumitomo) is using their silicon. I thought Sumitomo used Passave chipset. Have they changed or is this specific to Suminet and China?

    Posted by olsen | November 8, 2006, 4:31 PM
  2. China and the rest of Asia we certainly go FTTH, but it will be GPON. GE-PON is a nice proof of concept, but GPON is the only flavor that is really interoperable – Just look at the number of ODMs who are already on-board.

    Posted by synergysense | November 11, 2006, 2:41 PM
  3. Blah, blah, blah.

    Why is China Telecom putting all of their effort behind GE-PON? Also, China has a history of doing _the_opposite_ and _not_ adopting outside standards, instead they craft their own.

    The GPON guys are simply freaked out because outside Verizon, no one is lining up to buy a lot of their gear. Therefore, they try to convince everyone that the big emerging FTTH markets are turning their way.

    Not going to happen.

    Posted by Andrew Schmitt | November 11, 2006, 3:13 PM
  4. CT and CNC are already playing with GPON in their labs. CNC actually have GPON in field trail.

    GE-PON will give way to GPON, just check out all the worldwide RFP activity — Its not just limited to VZ.

    Posted by synergysense | November 13, 2006, 6:51 AM
  5. Andrew,
    I just stumbled upon your web site, I like most of what your saying, although I don’t agree with your China FTTH assessment.

    Without a doubt China is a big potential FTTX play the only question in my mind is why they would want to get stuck with a concept as outdated as a US suburban FTTP system, the European GPON might get Alcatel hot and sweaty, but frankly it is equally irreverent in China.

    Two things are happening in High tech China
    1) Anyone with any technical skills is getting snapped up as quickly as you can train them, especially in Shanghai.

    2) The middle class in China want the latest technology and have the money to pay for it, as well as the political pull to make sure it gets deployed.

    However, to actually get a system deployed, on a significant scale, you need to be able to take farm hands and train them, on the job, to deploy your system. Your labor schedule will look something like;

    Month One: Ditch digging
    Month Two: Fiber splicing
    Month Three: CPE installation
    Month Six: Replaced, they found a better job (unless they are incompetent)

    Sorry but in China this is the reality you need to deal with.

    Unfortunately most FFTP systems use SMF28 cable with optical power splitters and Biplexer / Triplexer ONT’s. It is difficult to quickly deploy this equipment even with a US trained Telco team. IMHO anyone involved with the deployment of an FTTP system, like this, in China will learn some of life’s bitter lesson, the hard way.

    Contrast this with the simplicity of a FTTC with 10/100baseT cat5 customer feeds. No specialty OLT’s and ONT’s, the optics is simple point to point GigE or OC48 style transceivers, system works even better if you can get it to run over MMF, look into some of the PAM work that Broadcom did for the 10GigE. Translate this into an asymmetric FTTX 1Gig channel over MMF and you have a system that really suits China. Here the intelligence is in the silicon, with MMF optics there is a lot more room for the sloppy assembly and the system has the smarts to correct for reflections and include concepts like FEC and laser pre-distortion.

    If anyone is interested than give me a call, and we can discuss specifics.

    Robert Talty
    xxxx@xxxx.com (Edited by Webmaster to save comment author from a tirade of email spam…. )

    Posted by Robert | November 13, 2006, 11:22 PM
  6. Robert:

    You make some excellent points. You hit the nail on the head about labor issues in China.

    A recurring point I like to make is that in the Western world, Things are cheap, and Labor is expensive. In China, Things are expensive, but Labor is cheap. Your point is skilled labor is not necessarily cheap. I agree.

    Everything in China is MDU. I think VDSL will be the technology of choice for retrofitting old buildings. New buildings are good targets for fiber to the prem.

    Also, it is a good idea to NEVER put your email in a comment unless you want massive spam…

    Posted by Andrew Schmitt | November 14, 2006, 10:17 AM
  7. Andrew,
    Why XDLS? There is no ATM requirement left anywhere else in a modern system! I know that ATM has lots of great features and is technically a much more robust protocol BUT that game is already over the customers have voted and all CPE equipment is Ethernet.

    VDSL is still exotic especially compared with 100baseT equipment and will never match the numbers for port deployments, it will never even get close, so there will always be a price advantage in anything Ethernet.

    I would encourage anyone with aspirations of building a complex system in China to first try to get a house built. Than live in the house for six months. You’re ready for large scale business in China, when you finally stop of saying to yourself “WTF is that” each time you figure out why something does not function properly. My favorite is the A/C unit that was put in upside down “the drip tray was at the top” or another good one was the front door that was upside down with the lock on the wrong side. Unfortunately to achieve these WIERD insulations they usually had to drill lots of extra holes, so to fix the problem you have to scrap the existing solution and redo the work from scratch. I sure hope the next guy knows what he is doing.

    Robert

    Posted by Robert | November 14, 2006, 8:01 PM
  8. Andrew,
    your previous posts tell me that you seem well orientated regarding the different providers of PON silicon, and the markets they dominate. Do you care to comment on my original post?

    Posted by olsen | November 15, 2006, 6:22 PM
  9. Olsen,

    Regarding your original post:

    Suminet uses Teknovus in China. In Japan Sumitomo uses both Teknovus and Passave (for different carriers).

    Glen

    Posted by Glen K. | November 16, 2006, 1:02 AM
  10. Glen K,
    Thanks.
    Do you know how well Suminet is positioned in China?

    Posted by olsen | November 16, 2006, 11:48 AM
  11. Start charging $20 a question Glen K. :)

    Posted by Andrew Schmitt | November 16, 2006, 12:09 PM
  12. Sure, why not.
    I’ve got $60 left on my “payment for answers” account :)

    Posted by olsen | November 17, 2006, 2:52 PM
  13. you are right. the China-telecom have decided to deploy the EPON not GPON for sure.

    Posted by Xiuyuan | April 14, 2007, 2:18 AM