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Article écrit par :

Jean-Luc Lemmens

Directeur Market Intelligence & Expert Télécom

The purpose of this note is to discuss the ODN equipment innovation trends. ODN equipments are key for the FTTH networks development. How can innovation contribute to the speed up of FTTH networks? Who are the current most innovative ODN equipment manufacturers? What value can innovative ODN solutions create for the telecommunication industry?

What are the latest ODN innovation?

The FTTx architecture, and its FTTH variation, has been at the core of operators’ Next-Generation Access network strategies worldwide for the past ten years. Deployments are under way in almost all countries and fiber-based networks have been mentioned in many countries and organizations’ national digital strategies as a major economical and societal development tool.

The Optical Distribution Network (ODN) is a key segment of fiber-based networks, connecting the central office and terminal user. Its design, construction process and operational management features are strategic for operators: costs associated to the ODN represent about 70% of the total cost needed for connecting a household to an FTTx network, and the ODN needs to be easy to expand to cover new households in the long run.

Given the speed-up of FTTx deployment worldwide and the importance of last mile quality for the customer experience, the telecommunication equipment manufacturers have been strongly competing over the last years.

Focusing first on deployment efficiency, ODN solutions have been working first on reducing and then make useless the need for fiber splicing, making ODN deployment easier and hence requiring less technician time and expertise. This simplified installation allowed to reduce the total cost of deployment and accelerate the roll-out time.

A second step of innovation has been recently reached thanks to a more manageable network and easiest fault locating process. The most innovative ODN equipment providers such as Corning or Huawei have been focusing on how to best manage installed networks, increase the resource availability, allow a lower fault rate, and reduce significantly potential downtime.

A key example of this last wave innovation can be found with Huawei Digital ODN solution. Thanks to Image Recognition and Fiber Iris technology, a very precise level of resource management has been reached. It provides a real-time picture of the network deployment and capacity. Provisioning is made easier to a level of 100% success-rate. It also reduces by 40% unnecessary site visit for maintenance thanks to remote fault diagnosis system.

ODN Innovation matrix

Based on the current ODN manufacturers statement and communication, we may draw an ODN manufacturer innovation matrix.

Based on IDATE previous work, we observed some clear movements in this sector.

The first observation is the increased dichotomy of the market. Few players such as Huawei, Corning and CommScope are clearly leading the market with every strong innovation strategy, leading to the launch of new product and services that aims at speeding up deployment while reducing its cost.

On the other side of the spectrum, we observe several Asian-based players focusing on niche market. They provide a very mature technology. In between, we see more and more players that are trying to provide with the whole spectrum of equipment and services but seems to hardly cope with the competition imposed by the market leaders. This is particularly true when it comes to the service part with features such as default location by image recognition.

Going forward, we expect this market dichotomy to increase. The market will evolve towards a supply structured around two different group of players: a first group of highly innovative players that will focus on value creation thanks to innovation and a second group of niche players, focusing on large scale production and low price solutions. Since the pre-connection ODN can improve the efficiency and quality of the networks, one may expect the usage ratio will increase in the next 5 years giving a higher market share to the innovative players.

ODN manufacturers positioning analysis

How can ODN innovation contribute to telecom operators’ strategies?

Facing the competition from niche players, innovative ODN equipment manufacturers are focusing on key strategic value attributes. These value attributes are central to telecommunications operators’ strategies. Through theses innovative solutions, telecommunication operators can quicker reach their targets: financial, marketing or liaised to their corporate social responsibility efforts.

  1. Reaching telecom operators goals thanks to improved financial performance

Telecommunications operators are facing financial pressure in every market. High investment needs to face FTTx and 5G deployment is creating a financial wall. Innovative ODN solutions can contribute to cope with this challenge. Among the ODN equipment manufacturers, the solutions proposed by Huawei called “Quick ODN” and “Digital ODN” are the more obvious cases of this value attribute.

The Huawei “Quick ODN” solutions help to control CAPEX/OPEX when deploying FTTx network. Their ODN solutions are pre-connected. This means no splicing are required, reducing the manpower needed to deploy. The pre-connected box proposed also reduce by a factor of 10 the installation time. This smart solution allows a parallel deployment of the infrastructures as well, rather than a serial construction. This process speeds up the deployment lead time and increase the investment efficiency.

The Huawei “Digital ODN” address the OPEX part of the financial challenge. Thanks to their image recognition system, it allows a quick and efficient way to locate default. It also provides a 100% accurate and permanent vision of the resources. This innovative solution allows a drastic reduction of site visits. Bottomline, operational expenditures are significantly reduced and contributes to the telecommunication operators’ cash-flows increase.

Other innovative ODN equipment manufacturers proposed relatively similar services.

  1. Reaching telecom operators goals thanks to improved marketing performance

Quality of service is a key value attribute in the telecommunication industry. When considering the marketing performance of FTTH operators, the customer lifetime is one of the key metrics. Hence, churn is one of the most important dimensions to be considered. Innovative ODN solutions help to reduce churn by creating a better customer experience.

Innovative ODN solutions such as developed by Huawei and Corning are minimizing the risk of network downtime or speedup the recovery time in case of network issue.

At typical European telecom operators, churn reduction can have a massive impact on customer lifetime value. According to our estimates, a churn reduction of 10% can increase the customer lifetime value by 15%.

  1. Reaching telecom operators goals thanks to improve corporate social responsibility

Finally, innovative ODN solutions can contribute to corporate social responsibility goals defined by the telecommunication operators.

IDATE has recently calculated that the wise use of fibre optical networks can contribute to up to 1.6 giga tons of CO2 emissions savings in 2030.

Innovative ODN equipment manufacturers have developed a responsible approach at developing their products with world famous producer of raw materials guaranteeing eco friendly processes. They also developed equipment with longer lifetime (20+ years) reducing the environmental impact of more frequent replacement. Finally, the reduced technician time required for deployment and maintenance contribute as well to an improves telecommunication operator carbon footprint.