Three years ago, if you wanted Gigabit passive optical networking equipment, there were a couple names to call. Today, the GPON market is teeming with suppliers (some say too many), having seen a particular jump in their numbers just last month. This crowded and competitive atmosphere brings obvious benefits to carriers as well as the hope this growing raft of vendors can help carriers solve some of the toughest obstacles facing GPON's future.

A slew of equipment vendors introduced new GPON gear at the NXTcomm trade show in June, including Alloptic, Calix, Wave7 Optics, Zhone Technologies and ZTE. (Calix had already been, through its 2005 acquisition of Optical Solutions, the leader in the GPON market, but the GPON gear it had been shipping before now was half the speed offered by rivals like Alcatel-Lucent and Hitachi Telecom USA.)

That GPON is drawing interest from vendors this summer is not mysterious. Verizon is now deploying its second commercial GPON market, kicking off the transition of its fiber-to-the-premises (FTTP) network from Broadband passive optical networking to the much faster GPON. And the more GPON equipment Verizon deploys, the more the economics of scale drive down GPON component prices, which lowers vendors' cost structure.

Still, the market for GPON in North America is small relative to the number of vendors now in the game. That group includes as many as a dozen vendors chasing a market that, in North America, will be worth only about $375 million next year, according to Infonetics Research. By 2010, it will approach $1.4 billion, Infonetics forecasts. Most of the booty belongs to the four vendors supplying the nation's two biggest carriers: Alcatel-Lucent, Ericsson, Motorola and Tellabs.

“We're pretty saturated with [GPON] vendors in North America at this point,” said Jeff Heynen, an analyst for Infonetics Research.

Telecom equipment markets of any sort typically sustain roughly half a dozen vendors, with only two or three taking the lion's share of revenue, said David Foote, chief technology officer for Hitachi Telecom USA. But GPON will be in demand for perhaps the next 15 years or so here, he said, and there is ample opportunity outside the twin giants.

“We're working on one customer deployment that could be close to 200,000 homes,” Foote said. “There's a bid out for another Tier 2 [carrier] that's about 150,000.”

AT&T and Verizon will probably start dominating GPON equipment spending next year, so vendors who aren't supplying them today will likely want to stay in touch with the two heavyweights. (Though Ericsson was picked by AT&T and not Verizon, Carl-Henric Svanberg, the vendor's CEO, said last month, “We would continue to fight hard to see what we can do for [Verizon].”) But in the meantime, vendors will look to independent telcos, CLECs and municipalities — in particular circling around three big Tier 2 carriers, which haven't yet fixed on major fiber access initiatives: CenturyTel, Embarq and Windstream.

“The big question for everybody [selling GPON gear] is: Can they sustain their product lines with minimal revenue until 2009 or 2010, which is when GPON deployments will really start to kick in, in volume?” Heynen said.

One of the promises of a crowded GPON market is a more multivendor environment in which carriers can mix and match one vendor's central office gear — optical line terminals (OLTs) — with another vendor's customer premises gear — optical network terminals (ONTs). This will give carriers a wider array of ONTs to choose from to meet the many customer premises scenarios in their networks.

“There's a huge variance in the kinds of ONTs customers want,” Foote said. “One [request for proposal] we got had almost 20 different flavors of ONTs the customer was asking for. Probably not any one vendor's going to build that many.”

GPON vendors have participated in a handful of interoperability demonstrations and plugfests thus far — there was another one at NXTcomm — but they still have a great deal of work to do before their products are truly interchangeable. Vendors have made headway on some rudimentary requirements of interoperability, finding commonality on some physical-layer aspects of the technology and in some of the basic management messages sent from the OLT to the ONT.

But to get to true interoperability, vendors will likely need more implementation agreements (IAs) from standards bodies to help iron out the unique aspects of their interpretation of GPON standards. For example, IAs are needed to establish uniformity in service provisioning from the carrier's operations support system, to the OLT, to the home. IAs are also needed to find commonality in the way T-CONTs (the “traffic containers” that map FTTP services into GPON frames) are used with VLANs — the most common way to transport IP services — and how quality of service is maintained between the two.

In the long term, vendors envision GPON interoperability evolving as DSL did to the point where consumers can buy their own ONTs in retail stores and install them themselves. For that to happen, however, ONTs will need to become much simpler than they are today, using different technologies to support voice over IP, different technologies for in-home wiring and different technologies to deliver broadcast video. And for customers to be able to self-provision service, they can't be required to go out onto their front lawns and splice their own fiber.

“You can ship a cable modem and install it yourself,” said Krish Prabhu, CEO of Tellabs. “We're not there today because there's a fiber tail coming from the ONT, but once you get the ONT indoors, I think you can get there very quickly.”

Vendors have been talking about indoor ONTs for awhile, and Amedia Networks has promised to introduce an indoor device this year that combines ONT functions with that of a broadband home router. Texas-based TXP, which acquired Siemens' ONT business, unveiled an indoor ONT last month but said demand for it hasn't materialized yet among North American carriers. Indoor ONTs could make maintenance tougher (forcing customers to be home to let in technicians), and they could require more wiring expertise among installers (forcing them to deal more intimately with idiosyncrasies in home construction). And it poses some new challenges in terms of bringing power to the device. But carriers have dealt with these issues elsewhere, and the cable industry has made similar moves.

“There's a big push around the world, other than in North America, to bring the ONT indoors to reduce costs,” said Paul Forzisi, vice president of marketing for TXP. “Here in North America, they're just starting to warm to the idea. They need more time to get comfortable with it.”

Component vendors are working on the issue, too. “You're starting to see more component vendors' residential gateway reference designs integrate optics with typical gateways,” Heynen said. It's hard, however, for component vendors to cash in on economies of scale when equipment requirements differ so much from carrier to carrier. Verizon has been exploring indoor ONTs for some time, but it has a preference for traditional radio frequency video and multimedia over coaxial cable, whereas AT&T favors IP video and home phone lines.

Though the technological obstacles are well acknowledged, carriers will ultimately be compelled to move ONTs indoors if the GPON sector's newly turgid community of equipment vendors can find ways to make it a cost-saving move.

“The number-one problem carriers have today [with FTTP] is labor: How long does it take to get a home on [the network]?” Prabhu said. “If there's a substantial amount of labor cost that can be eliminated by moving the ONT inside, I think it'll happen sooner than you think.”