Research paper

A techno-economic study for active

Ethernet FTTH deployments
Received (in revised form): 22nd January, 2008

Siamak Azodolmolky*
received his computer hardware (BEng) degree from Tehran University in Iran in 1994 and his rst masters degree (MEng) in computer
architecture from Azad University in 1998. During 19922001, he worked with Data Processing Iran (ex-IBM), as a Systems Engineer and
Senior R&D Engineer. In 2006, he received his second MSc degree with distinction from the Information Networking Institute of Carnegie
Mellon University. In August 2007, he joined Athens Information Technology as a researcher, while also pursuing a PhD. He is a
professional member of ACM and a student member of IEEE.

Ioannis Tomkos
is the Associate Dean of Athens Information Technology and has the rank of Full Professor. In December 2002, he also became an Adjunct
Faculty at the Information Networking Institute of Carnegie-Mellon University. At AIT, he founded and serves as the Head of the High Speed
Networks and Optical Communication (NOC) Research Group. He has co-authored about 50 peer-reviewed articles published in
international scientic journals/magazines/books (over 35 IEEE sponsored) and over 130 presentations at conferences/workshops and other
events. His research work focuses on technical issues related to optical networking and techno-economic studies related to broadband
networks.

*Athens Information Technology, 0.8Km Markopolou Ave., Peania 19002, Athens, Greece
Tel: +30 210 6682771; E-mail:sazo@ait.edu.gr

Abstract Fibre-to-the-home (FTTH) is recognised as the choice for true broadband access, and
major implementations of the technology are beginning to arrive. The main drivers of FTTH are
bandwidth-demanding applications. Among various architectures and technologies of FTTH, home
run active Ethernet FTTH is an interesting technology. The main design issue related to FTTH
deployments, however, is the high level of CAPEX. In order to justify FTTH deployments, service
providers and network planners require a tool to assist them in selecting an optimised deploy-
ment strategy and network design. The lack of modelling tools to perform high-level FTTH net-
work planning is the main motivation behind this paper. This work presents the result of a study
based on a congurable and customisable techno-economic model, which helps network planners
and decision makers to have a high-level picture of Ethernet FTTH deployment. The model cap-
tures both the technical and economic aspects of the Ethernet FTTH networks and provides key
business performance indicators. The results of a case study for an Ethernet FTTH deployment in
a capital city are presented.

KEYWORDS: FTTH, techno-economic model, access networks, network planning

INTRODUCTION streaming video content is considered the

Bandwidth-intensive contents and peer-to-peer
applications consume the great majority of
bandwidth in most broadband networks. New
broadband deployments, however, are
commonly justied mainly by current
applications rather than by anticipated
demands. In most broadband networks today,
ultimate bandwidth-hungry application.
Adding the required bandwidth for one high-
denition television (HDTV) stream and
Internet browsing, which is theoretically
available by ADSL2+ downstream, it may
sound as though a bandwidth of 20 Mbps
would be sucient in the long term. The

294 Journal of Telecommunications Management Vol. 1, 3 294310 # Henry Stewart Publications 17541662 (2008)

emergence of HDTV, however, could
represent a signicant constraint. The prospect
of oering two HD channels simultaneously
clearly requires speeds greater than the
capabilities of ADSL2+. Other services, such
as point-to-point (P2P), enhanced instant
messaging, video blogs and online games that
are undergoing growth within the framework
of Web 2.0, could also aect upstream speeds.
Furthermore, overlapping usage, in which
several users of online services reside in the
same home, is another application trend to
justify the requirement for bre-to-the-home
(FTTH) architectures. The main market drivers
of FTTH can be categorised as follows: (a)
triple play (voice, data and video) oerings,
including multiple-streams and HDTV; (b)
business services, including but not limited to
application service providers (ASP), IT-
outsourcing and virtual business networks; (c)
personal services, such as e-health, care for
elderly people and e-medicine; (d) working and
learning, including but not limited to
teleworking, citizen journalism (eg FourDocs,
CNN iReport), e-learning, and communities;
and, nally, (e) entertainment, such as virtual
media (eg Second Life), and vlogs on TV (eg
Akimbo).1 An important feature of these new
applications is that all of them require
bandwidth to be reserved for the entire
duration of the application. Another factor to
consider is the increasing symmetric nature of
the trac pattern. With extraordinary increase
in bandwidth demand, service providers are
compelled to push bre deeper into the access
networks in order to be able to oer the
emerging services that customers are
requesting. Fibre-to-the-home technologies are
considered an ultimate solution for future
broadband access networks. Greeneld
deployments represent a growing segment of
FTTH networks being implemented today.2
One of the FTTH business models is an open
access model, where an open access network is
built by an infrastructure provider, and
wholesale access is provided on equal terms for
service providers. The second model is
vertically integrated operators. This model is a
# Henry Stewart Publications 17541662 (2008) Vol. 1, 3 294310
Active Ethernet FTTH deployments
competitive infrastructure, in which carriers are
competing for subscribers using their own
infrastructure. With few exceptions, Europe
lags well behind the US and Asian tiger
economies (ie Japan, South Korea and China)
in the availability of high-speed broadband
services. Within Europe, FTTH is recognised as
the choice for real broadband access, and major
implementation of the technology is beginning
to arrive.3
This paper presents a techno-economic
model for the home run architecture of FTTH,
and investigates Ethernet-based FTTH
technology as a solution for broadband access
provisioning. The rest of this paper is organised
as follows. Following this introduction, an
overview of FTTH architectures and related
technologies is presented. The techno-economic
model developed for home run FTTH is
presented next, followed by the results of a case
study for Athens using the model developed.
Finally, conclusions and a summary are
provided.
FTTH ARCHITECTURE AND
TECHNOLOGIES
Fibre-to-the-home networks can be categorised
into two main architectures: Home run
architecture, in which a dedicated bre
connects each home to the point of presence
(POP) and star architectures, where many
homes share one feeder bre. In a star
architecture, a remote node (RN) is deployed
between the POP and the subscribers premises.
In the so-called passive star architecture, the
RN does not include any active electronics. At
the RN, a passive splitter replicates the
downstream optical signal from the feeder bre
onto the individual distribution bres, and a
coupler combines the optical signals from the
individual homes back onto the feeder bre.
The star architecture is referred to as an Active
Star, when the RN contains active devices (eg
a switch).4
Several technologies have been proposed for
FTTH networks, such as Ethernet-based
FTTH, other variations of active optical
networks (AONs), and various avours of
Journal of Telecommunications Management 295
Azodolmolky and Tomkos
Figure 1: PON architecture
passive optical networks (PONs) (eg BPON,
GPON, EPON). 47 Passive optical network
architectures for FTTH deployments, as
generally presented in Figure 1, are
characterised by passive optical splitters to
distribute the bre to each customer, using
splitting ratios ranging up to 1:64 or even
1:128. Currently, there are three dierent
standards for PON, summarised in Table 1.
The indicated bandwidths are the aggregate bit
rates in upstream and downstream directions,
which will be shared by 16, 32, 64 or 128
customers, according to the deployment
scenario.
BPON can be considered a traditional
technology that has been superseded by the
other architectures. Whereas EPON has been
designed for lowest cost using Gigabit Ethernet
technology, GPON was designed for higher
downstream bit rates, lower overhead and
possible use of ATM and TDM. In most
implementations, however, GPON is used as
an Ethernet transport platform.
Table 1: PON standards
Factor BPON
Standard ITU-T G.983
Bandwidth Downstream Up to 622 Mbps
Upstream 155 Mbps
Wavelength Downstream 1,490 and 1,550 nm
Upstream 1,310 nm
Transmission ATM
296 Journal of Telecommunications Management
The remote terminal (RT) is equivalent to
passive splitter in PONs, and regenerator,
multiplexer or a switch in AONs. The
customer premises equipment (CPE) can be a
variety of optical network terminations (ONT)
or optical network units (ONU). An ONT is
usually dedicated to an individual end user. An
ONU is typically located in the basement or
even on a kerbside and shared by a limited
number of users. Data, voice and video (triple
play) services are distributed over appropriate
transmission media within the customer
premises from the ONU or ONT.
Most FTTH rollouts have focused on single
dwelling units (SDUs) (eg individual
residences, houses) but multiple dwelling units
(MDUs) (eg apartments) also represent a large
market segment. There are many ways in
which MDUs can be connected to the FTTH
network. Most deployments to date have used
an optical terminal in the building basement
and copper drops to each unit. The key
implementation choices to address MDUs, as
EPON GPON
IEEE 802.3ah ITU-T G.984
Up to 1.25 Gbps Up to 2,5
Up to 1.25 Gbps Up to 1.25 Gbps
1,550 nm 1,490 and 1,550 nm
1,310 nm 1,310 nm
Ethernet Ethernet, ATM, TDM
Vol. 1, 3 294310 # Henry Stewart Publications 17541662 (2008)

Figure 2: Delivering FTTH to MDU tenants
shown in Figure 2, can be grouped as PON (eg
GPON, EPON, etc) with copper drops and
P2P Ethernet. In the former model, a GPON
can be used to serve MDUs. The ONT
terminates the distribution bre and connects
each unit with copper interfaces. Ethernet-
based VDSL2 is a common access scheme. Fast
or gigabit Ethernet interfaces over copper can
also be used where existing wiring is available
or can be easily installed. In the case of P2P
Ethernet topology, separate bres are used to
connect each MDU building to an Ethernet
switch in the POP. The bre is terminated in
the building, using an Ethernet switch with
copper interfaces.
Every deployment scheme for FTTH has its
own pros and cons. For example, bre saving
between the optical splitter and the POP
location is the most important aspect of PON
FTTH deployments. If a service provider has
existing spare bres available between the POP
and a street cabinet, this may prevent new
digging and cabling. It must be mentioned,
however, that if the available ducts deployed in
the eld (eg the case of ILECs) have limited
space, PON technologies, which require less
bre per duct, apparently have advantages over
P2P technologies. The PON technologies are
also suitable for competitors (eg utility
# Henry Stewart Publications 17541662 (2008) Vol. 1, 3 294310
Active Ethernet FTTH deployments
companies) who have already developed a
network (eg gas pipes) but with limited
capacity. In this case, they can benet from the
shared feeder cable. In PON architecture, the
number of optical line terminators (OLTs) is
lower than OLT ports in active Ethernet,
because one OLT card can be shared among
32, 64 or even 128 subscribers. Thus, PON
technologies are considered as port saving in
the aggregation POP. The lower number of
ports in the aggregation level translates to easy
cable management in each POP. In addition to
the benet for easier cable management, the
POP size in a PON deployment could be
smaller than P2P active Ethernet. A lower
number of ports can be translated to less POP
space and eventually lower cost. Passive optical
network architecture is inherently a broadcast
medium; it is possible to use this capability for
video distribution. Another feature of PON
deployment is that, instead of using powered
electronics in the outside plant, it uses passive
splitters and couplers to divide up the
bandwidth among the subscribers.
There are, however, some issues related to
PON deployment. The bandwidth of the PON
bre is shared among many customers. The
shared bandwidth does not seem to full the
long-term bandwidth demand. As every PON
Journal of Telecommunications Management 297
Azodolmolky and Tomkos
constitutes a shared medium, encryption is
needed on all data streams. Encryption requires
some overhead with each packet, which can
considerably reduce the eective bit rate of a
PON connection. Passive optical splitters
cannot transmit any failure indication to the
network operation centre. Thus, any problem
in the bre between the splitter and the
customer ONT is very dicult to locate. This
makes maintenance and troubleshooting very
complex in PON architecture and leads to
increased operation cost. From a regulatory
point of view, PON networks do not support
local loop unbundling (LLU) requirements,
because there is only a single bre connecting a
number of customers that cannot be
distinguished on a physical level but only on a
logical level. Local loop unbundling is a very
important requirement in the European Union.
Ethernet FTTH, however, requires
considerably more bre and equipment at the
OLTs compared with the other shared
infrastructure, which directly translates to
considerably higher trenching and cabling
costs. In the case of a possible cable break in the
feeder part, the outage is longer, as a lot of
cables should be spliced. The management of a
large number of bres and ports in the
aggregation level (in each POP) appears to be
very dicult without an eective cable
management strategy (eg optical distribution
frames). Given the issues of Ethernet FTTH,
however, it enables a service provider to
guarantee bandwidth for each subscriber. The
POP size in active Ethernet deployments is not
a big issue. In a study for a typical
metropolitan city with a deployment area of
225 km2, 32 POPs with an average of 12.5 m2
area were required. In terms of infrastructure
cost, most of the infrastructure cost (about 40
80 per cent) in FTTH deployments is trenching
cost (excluding the materials), which should be
considered in both active Ethernet and PON.
In case of Ethernet FTTH topology, the
dedicated bre is the most secure medium
today. Ethernet switches can provide physical
port level and logical customer trac
separation capabilities with many robust
298 Journal of Telecommunications Management
security features.
Ethernet still dominates European FTTx
deployments instead of PON as far as the
technical architecture is concerned. Indeed, a
player such as Lliad/Free announced a
deployment based on Ethernet of four million
homes to be passed in 2012. Major European
incumbents, however, including Deutsche
telekom (Germany), Belgacom (Belgium),
Ericom (Ireland), KPN (Netherlands), TDC
(Denmark) or Swisscom (Switzerland)
conrmed their choices of FTTN+VDSL
architectures. Furthermore, signicant new
deployments such as EnergiMidt and
SEASNVE in Denmark (BPON), the
Government of Asturias in Spain (GPON) are
using PON technologies. The Parisian trial of
France Telecom carried out in mid-2006 with
GPON architecture was conrmed by the
launch of a pre-commercial FTTH oer in late
2006.3
Every FTTH deployment has its own merits.
One of the options for FTTH deployment is
home run architecture and Ethernet-based
FTTH technology, which is considered further
in this analysis. The home run architecture in a
typical Ethernet FTTH (P2P Ethernet)
topology is shown in Figure 3. It provides
dedicated bres from every endpoint to the
POP, where they are terminated on a switch.
Endpoints can be SDUs (ie single family
residence) or MDUs (ie apartments), where a
switch in the basement fans out to the
apartments using any appropriate transmission
technology.
Before deploying the Ethernet FTTH, it is
important to evaluate the key performance
metric of the project from both the technical
and economical points of view. Therefore,
services providers require a tool which, given
the desired technology, will assist them to
evaluate their return on investments and to
make educated decisions for deployments. In
the case of Ethernet FTTH technology, the
optimised number of POPs can be determined
based on the customer demographic data and
technical specication of each POP, along with
its associated costs.
Vol. 1, 3 294310 # Henry Stewart Publications 17541662 (2008)

Figure 3: Home run architecture with P2P Ethernet topology
FTTH TECHNO-ECONOMIC MODEL
This section presents a techno-economic model
specically developed for congurable and
customisable Ethernet-based FTTH
deployments. A model framework of
demographic data, costs, parameters,
connections, housings and equipment is
considered for this study.7,8. The technology
chain used for this FTTH techno-economic
model is shown in Figure 4. It depicts a home
run architecture, in which feeder cable from
Figure 4: The home run Ethernet FTTH technology chain
# Henry Stewart Publications 17541662 (2008) Vol. 1, 3 294310
Active Ethernet FTTH deployments
POP will reach to the distribution point
through manholes or hand holes and,
eventually, the micro-ducts will serve individual
SDUs or MDUs in the nal digging distance.
The following modules are also dened in
this model:
. access network architecture description (areas,
customer demography, deployment phases,
income level of customers, distribution of
MDUs and SDUs in each area)
Journal of Telecommunications Management 299
Azodolmolky and Tomkos
. denitions and parameters (penetration
schedule, revenues, cable denitions and
terminal value of the infrastructure during
and at the end of study period)
. costs consisting of rollout costs, POP costs
and the costs associated with buildings
connection and customer acquisition
. study period: the model has a forecast period
of X years.
A functional diagram of the model is shown in
Figure 5. The key component of this model is
the core routines that process the input data,
considering the denitions and parameters, cost
gures and generating various outputs. The
rst step in the modelling approach is to
provide the model with demographic data. In
Table 2, the table header and a sample row are
presented.
Figure 5: The key components of the FTTH techno-economic model
Table 2: Sample input data table
Sub-area Active/ Phase Income
deactive level
1, 2, 3 , . . . 1/0 1, 2, 3, . . . H/M/L
300 Journal of Telecommunications Management
The model considers the provision of
infrastructure to a building consisting of many
units, both MDUs and SDUs. The model
examines the use of three basic services (triple
play): voice services, data services and video on
an average revenue per user (ARPU) basis. The
addressable customers are grouped in SDU and
MDU subscribers. The wholesale customers
who will use the FTTH infrastructure in order
to provide their own services to the potential
customers are also considered.
In order to combine the sub-area in a larger
group with similar features, a zone denition
matrix is included in the model. Using this
matrix, the sub-areas can be grouped together
based on similar characteristics (eg deployment
phase and/or income level of customers) and
preserving the canonical form of the group
with reference to a geographical map. This
SDUs MDUs Total Area (km2) No. of units
buildings
eg 400 eg 1,600 eg 2,000 eg 3.5 eg 13,200
Vol. 1, 3 294310 # Henry Stewart Publications 17541662 (2008)

approach is shown in Figure 6, in which two
sub-areas (ie 19 and 21) with similar
characteristics, are grouped together to make a
zone (ie Zone 8).
In order to produce the output reports (eg
Figure 6: Grouping sub-areas to make zones
Table 3: Cost and sizing factors
Cost/sizing component Parameter
POP Ports per rack
Racks per POP
POP fan-out
Floor space per POP
POP tting cost
Rent cost
Utility cost
Active equipment cost per port
Building connection costs Final digging (cost and amount)
POP equipment cost per customer
Optical termination
Installation cost
CPE cost
Customer acquisition cost Subscriber acquisition cost
Rollout costs CAPEX per metre of duct
Cost of MH/HH
# Henry Stewart Publications 17541662 (2008) Vol. 1, 3 294310
Active Ethernet FTTH deployments
CAPEX, OPEX or cash ow) and results (eg
number of POPs, trenching length, inter-
building spacing (IBS)), the core routines of the
model require particular parameters, which are
provided by a denitions and parameters
module. The cabling plan part of the model
reports the number of required POPs,
maximum bre loop length, port utilisation in
each zone and also the number of required
manholes (or hand holes). This report depends
on the parameters that determine the available
cables and POP sizing (eg number of ports per
rack or number of racks per POP). The model
has four dierent cost modules (rollout, POP,
building connection and subscriber acquisition),
which are dedicated for cost assumptions. Each
of sizing parameters and cost factors is
summarised in Table 3.
The demographic data, technical denitions,
Description
Denes the number of FTTH ports in each rack
Determines the number of racks per each POP
This parameter determines the number of cables that
goes out of the POP to serve the coverage area of
each zone. In current version of the model, it can be
4, 6 or 8
Based on the number of racks per POP, the required
oor space is computed. The derived value is used
for computation of POP tting cost and rental cost
The associated cost for tting the POP specied per
square metre
This cost is specied per square metre per month
This cost is dened per month
The cost of active equipments in POP (measured per
port)
Two parameters dene the amount of nal diggings
to reach the customer premises and the cost per
metre of this nal digging
The associated POP equipment cost for connecting
each customer
The cost of optical termination for each building
The installation cost per customer
The cost of CPE for SDUs, MDUs and wholesale (if
any)
This cost can be dened for SDU, MDU and
wholesale customers
This cost includes the materials and labour cost of
each metre of duct
Cost of each manhole or hand hole. It is assumed
that for every 48 buildings a MH/HH will be installed
Journal of Telecommunications Management 301
Azodolmolky and Tomkos
parameters and costs will enable the FTTH
core routines to derive important deployment
information such as:
. number of total required POPs (based on the
available ports in each POP) and number of
POPs for each zone
. the average IBS (with some optional routing
ineciency considerations)
. total trenching length
. maximum bre loop length per zone
. suggested cable type for each zone
. POP port utilisation per zone.
Given the cost and revenue parameters, the
model is able to generate nancial reports and
charts to give the project managers concrete
gures to make an educated decision for the
project in hand. Among other reports and
charts, the model generates capital expenditure
(CAPEX), operating expenditure (OPEX), cash
ows and earning before interest, tax,
depreciation and amortisation (EBITDA)
charts. The CAPEX per POP and OPEX per
POP reports are especially important in order
to select the optimum number of POPs for the
deployment area. Key performance indicators
such as net present value (NPV) and internal
rate of return (IRR) for a given interest rate
are also computed by the model. The next
section presents the results generated using this
model for a deployment in a European capital
city.
CASE STUDY RESULTS
This section presents the results generated for
an active Ethernet FTTH deployment scenario
in Athens. The raw data are collected for 39
sub-areas based on municipal divisions. The
area of each sub-area, number of buildings and
population of each sub-area is collected. The
study assumes a telecom rm which is planning
to provide services in a particular area. The
telecom companies may have some copper or
cable infrastructure prior to FTTH
implementation but, for symmetry, it is
supposed that the company does not have any
infrastructure prior to planning.
302 Journal of Telecommunications Management
Based on reports from National Statistical
Authorities and collected data, 20 per cent of
the buildings in each sub-area are addressable
SDU customers, and the remaining are
potential MDU customers, with one exception
for selected high-income areas, in which 80 per
cent of buildings are SDUs, and the remaining
20 per cent are MDUs with an average of six
units per MDU. Furthermore, it is assumed
that 1 per cent and 5 per cent of the SDUs and
MDUs addressable customers, respectively,
will turn out to be wholesale customers in each
year. It is assumed that there are 100,000
customers for each phase of the project and
300,000 in total. By means of the zone
denition matrix, the sub-areas are grouped
into 20 zones with two constraints of
preserving the canonical form (rectangle) of
zones according to the geographical map of
Athens and putting the sub-areas with similar
deployment phase and income level in the same
zones (partially shown in Figure 6). The Athens
city centre is considered a single zone (zone 10)
in the zone denition matrix. The sub-areas are
categorised in three income levels (high,
medium and low), and it is assumed that the
deployment will take place in three consecutive
years. A summary of sub-area data is presented
in Table 4. As indicated in this table, the model
computes the trenching length for each phase
and in total to provide an initial estimate of the
trenching cost for the project in hand.
Table 5 presents the zone summary. The
model computes the important parameters (eg
IBS and trenching length) for each zone and
similarly enables the designer to determine the
distribution of MDUs and SDUs in order to
meet the total number of targeted customers.
Another output of the model is the total
number of required bres per zone. It is
assumed that there is one bre for each SDU
and two bres for MDUs. This assumption can
be modied, however, as the number of
required bres for each zone is considered a
model parameter.
The distribution of IBS and the trenching
length for all 20 zones are shown in Figure 7.
The most frequent IBS is between 50 and 60
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 Active Ethernet FTTH deployments

Table 4: Summary of sub-areas in Athens

Phase No. of SDUs No. of MDUs Total No. of Area (km2) Total No. of Inter-building Trenching (km)
buildings units spacing (m)

1 4,864 11,724 16,588 62.19 120,031 58 969

2 9,392 37,574 46,968 95.20 385,136 44 2,060
3 4,454 17,817 22,270 66.66 182,632 54 1,197
Total 18,710 67,115 85,826 224.04 687,799 4,227

Table 5: Zone summary

Zone Phase Income level Area (km2) No. of units IBS (m) Trenching (km) No. of bres

1 1 H 7.76 12,555 71 109 2,596

2 1 H 4.13 7,924 65 63 1,656
3 1 H 14.14 20,237 76 187 3,716
4 1 H 4.38 6,888 72 61 1,434
5 1 H 15.09 20,619 77 195 3,122
6 1 H 3.09 19,338 36 85 3,102
7 1 H 4.57 18,151 45 101 3,284
8 1 H 5.08 5,153 44 114 3,041
9 1 H 3.95 9,166 59 66 1,980
10 2 M 38.96 213,288 39 1,007 7,329
11 2 M 24.28 49,321 64 382 4,769
12 2 M 9.63 20,359 62 155 4,318
13 2 M 13.27 70,373 39 337 5,098
14 2 M 9.06 31,795 48 187 4,496
15 3 L 26.10 76,723 53 494 6,397
16 3 L 9.28 27,576 53 177 3,829
17 3 L 8.57 25,263 53 163 3,795
18 3 L 16.36 29,358 68 242 3,858
19 3 L 4.03 17,140 44 92 3,667
20 3 L 2.33 6,572 54 43 1,327

metres. The most frequent trenching length is dened in order to produce the key performance
between 100 and 200 km per zone. indicators. The values used in the study are
As mentioned earlier, there are some presented in Table 6. In the study, it was assumed
parameters and cost factors that should be that there is no installation cost. The CPE costs

Figure 7: (a) Distribution of IBS and (b) trenching length

# Henry Stewart Publications 17541662 (2008) Vol. 1, 3 294310 Journal of Telecommunications Management 303
Azodolmolky and Tomkos
Table 6: Values for parameters and cost factors
Cost/sizing component Parameter
POP Ports per rack
POP fan-out
POP tting cost
Rent cost
Utility cost
Active equipment cost per port
Building connection costs Final digging (cost and amount)
POP equipment cost per customer
Optical termination
Installation cost
CPE cost
Customer acquisition cost Subscriber acquisition cost
Rollout costs CAPEX per metre of duct
Cost of MH/HH
Customer ARPUs SDU
MDU
Wholesale
were also ignored; however, the model is
capable of taking into account the cost of CPE
for SDU, MDU and wholesale customers.
After dening the zones, the network
planner can dene the POPs. There are two
key parameters in the model that determine the
size of a POP. The rst parameter is the
number of ports per rack, and the second is the
number of racks per POP. The values of these
parameters are set to 1,500 and 3, respectively,
in the study. Based on these parameters and
demographic data, the model derives the
number of POPs that are required for the
whole city. There are three key constraints in
order to compute the number of POPs. The
rst is the reach of optics, which translates to
the coverage area of each POP. The fan-out
parameter, which determines the number of
ducts per POP is the second constraint and,
nally, the physical size of the POP is a
limiting factor. The computed value is 24
POPs. By changing the number of racks per
POP, the total number of POPs will obviously
change. In order to nd the optimum number
of POPs, however, the OPEX costs were
computed for dierent scenarios by varying the
number of racks per POP and, as shown in
Figure 8, the optimum point is for three racks
per POP, which leads to a total of 24 POPs for
the whole city.
304 Journal of Telecommunications Management
Description
1,500
4
US$1,400/m2
US$45 per month/m2
US$200 per month
US$350
10 m, US$10
US$20
US$80
US$0
US$0
SDU:US$30; MDU:US$20; Wholesale: US$20
US$60
US$1,300
US$50
US$200
US$10
In Figure 8, the total OPEX is computed
based on the rental and utility cost. Increasing
the number of racks per POP will also increase
the required space, which leads to more rental
cost and utility cost. The graph shows that
three racks per POP (or 4,500 ports per POP)
is the optimum point. The corresponding total
OPEX for the resulting 24 POPs with three
racks in each of them amounts to around
US$200,000 per year.
In the model, the network designer can
dene the cables that can be used for cabling.
Currently, four dierent cables have been
dened in the model; however, there is no
logical limitation for this parameter. All
dened cables have seven sub-ducts and 96
bres per sub-duct. The numbers of ducts per
cable are 8, 4, 2 and 1 for each cable type.
Table 7 presents the cabling plan, which is
computed and suggested by the model.
As indicated in this table, the model
computes the maximum bre loop length for
each zone, the number of POPs and the
utilisation percentage of ports for each zone.
Based on the fan-out parameter of the POP
and the number of required bre terminations,
the model also derives the optimum cable type
for each zone. It was assumed that, for every N
buildings, one manhole or hand hole will be
installed, and hence the numbers of manholes
Vol. 1, 3 294310 # Henry Stewart Publications 17541662 (2008)
 Active Ethernet FTTH deployments

Figure 8: OPEX vs racks per POP parameter

Table 7: Cabling plan

Zone Max. bre loop No. of POPs Suggested cable No. of MH/HH per
length (km) type zone

1 2.79 1 4 32
2 2.03 1 4 20
3 3.76 1 4 51
4 2.09 1 4 18
5 3.89 1 4 52
6 1.76 1 4 49
7 2.14 1 4 46
8 1.59 1 4 54
9 1.99 1 4 23
10 4.41 2 3 542
11 3.48 2 4 125
12 3.10 1 3 52
13 2.58 2 4 179
14 3.01 1 3 81
15 3.61 2 4 195
16 3.05 1 3 70
17 2.93 1 3 64
18 4.04 1 3 75
19 2.01 1 3 44
20 1.52 1 3 17

# Henry Stewart Publications 17541662 (2008) Vol. 1, 3 294310 Journal of Telecommunications Management 305
Azodolmolky and Tomkos

Table 8: Penetration schedule

Penetration Schedules Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9

# of SDUs: 4,431 11,492 13,938 12,544 11,290 10,161 8,129 6,503 3,902
Addressable # of MDUs: 9,755 16,077 20,893 14,625 10,238 7,166 4,300 2,580 1,032
Total: 14,176 27,569 34,831 27,170 21,528 17,327 12,429 9,083 4,934

SDU % 10% 10% 10% 10% 10% 20% 20% 40% 40%
Penetration MDU % 30% 30% 30% 30% 30% 40% 40% 60% 100%
Percentages (%) Wholesale % (from SDUs): 1% 1% 1% 1% 1% 1% 1% 1% 0%
Wholesale % (from MDUs): 5% 5% 5% 5% 5% 5% 5% 5% 0%

# of SDUs: 442 1,149 1,394 1,254 1,129 2,032 1,626 2,601 3,902
Number of # of MDUs: 2,927 4,823 6,268 4,388 3,071 2,867 1,720 1,548 1,032
Connected # of Wholesale % (from SDUs) 44 115 139 125 113 102 81 65 0
SDus MDUs and # of Wholesale % (from MDUs) 488 804 1,045 731 512 358 215 129 0
Wholesales # of Wholesale 532 919 1,184 857 625 460 296 194 0
Total Connected: 3,901 6,891 8,846 6,499 4,825 5,359 3,642 4,343 4,934

# of SDUs: 3,979 10,343 12,544 11,290 10,161 8,129 6,503 3.902 0

Number of not # of MDUs: 6,829 11,254 14,625 10,238 7,166 4,300 2,580 1,032 0
Connected Total not Connected; 10,807 21,597 27,170 21,528 17,327 12,429 9.083 4,934 0

or hand holes (for N=48) are computed and
presented in this table.
Table 8 presents the penetration schedule used
for the study. The penetration schedule enables
the designer to dene the marketing plan by
specifying the percentage of each group of
customers that will be absorbed in each year.
In Table 7, only the rst nine years of
deployment are presented, but the model is
capable of considering the penetration schedule
for every individual year of the deployment
period. It is assumed that, by the end of the
fth year, all the addressable customers will be
connected. The terminal value of the FTTH
infrastructure is derived and included in the
cash ow computation.
The project overview is presented in Figure 9.
In this gure, the CAPEX, revenue and
EBITDA for a period of 15 years are plotted. In
addition to this graph, the model also computes
the key performance indicators including NPV
and IRR. For the given scenario the discount
rate is set at 7 per cent, and the computed NPV
is US$191,047,850. The IRR parameter for the
mentioned setting is 15 per cent. In the last year
(year 15), the value of the infrastructure is also
included in the graph.
The cash ow of the project and the
cumulative cash ow are also presented in
Figure 10. With the current cost assumption
and demographic data, it seems that the cash
ow of the project breaks even after the eighth
year of the project. The NPV turns positive at
the tenth year.
The discussion on the techno-economic
analysis of the FTTH economic model is not
complete without a brief discussion on
sensitivity. Figure 11 shows the results of the
sensitivity analysis on some key parameters.
Trenching costs have the main contribution on
the cost per unit in FTTH deployments.
Changing the trenching cost from US$30 to
US$70 simply leads to a change of about
US$1,500 on CAPEX per unit. The cases in
which there are some available spaces in the
ducts were also studied, and it was found that,
in these cases the CAPEX per unit reduced to
US$900 per unit (subscriber). Varying the
penetration percentage from 50 per cent to 100
per cent (at the end of year 9) results in a
variation of US$1,140 per unit. The amount of
nal digging and its cost have the least
contribution on the CAPEX per unit variation.
Variation in the cost of active equipment in the
POP has only a modest (US$145) impact on
the cost per unit. Another important factor also

306 Journal of Telecommunications Management Vol. 1, 3 294310 # Henry Stewart Publications 17541662 (2008)

Figure 9: CAPEX, revenue and EBITDA
studied was the density of subscribers per
deployment area, which aects the nal
CAPEX per unit. In the high-density zone
with around 20,000 subscriber per square
kilometre, the CAPEX per unit amounts to
US$564, while the same factor increases to
US$2,654 for a low-density deployment of
only 3,700 subscriber per square kilometre. For
these results, high-density and low-density
zones of Athens were selected.
# Henry Stewart Publications 17541662 (2008) Vol. 1, 3 294310
Active Ethernet FTTH deployments
OTHER CASE STUDIES
In order to study the eect of dierent
demographic data and parameters on the
results, a comparison study between three
other cities was performed. The cost and
denition parameters were kept constant for
all the studies. Table 9 includes the important
characteristics of these three cases and some
results obtained using the techno-economic
model. The rst city was a capital city with
Journal of Telecommunications Management 307
Azodolmolky and Tomkos

Figure 10: Cash ow

Figure 11: Sensitivity analysis for the Ethernet FTTH deployment in Athens

308 Journal of Telecommunications Management Vol. 1, 3 294310 # Henry Stewart Publications 17541662 (2008)

Table 9: Three-city case study
Case IBS (m) Density
(customer/km2)
City 1 40 2,089
City 2 51 1,487
City 3 37 3,767
baseline values for density of customer per
area (square kilometres) compared with other
two cases. The other two cities were selected
so as to have dierent values for this density
quantity. As indicated in Table 9, active
Ethernet deployments in densely populated
areas results in a lower amount of CAPEX per
unit value. Another interesting outcome of
this study reveals that, for all three cases, the
average required space for each POP is in the
range 1528 m2, which is not an enormous
size for active Ethernet-based FTTH
deployments.
CONCLUSIONS
Fibre deployment to residences is a huge
investment that should last for many decades.
Although every deployment scheme for FTTH
has its own merits, there is a high risk that
short-term saving in particular bre
infrastructure deployments will signicantly
aect the future use of the expensive bre
infrastructure without major follow-on
investments. The presented techno-economic
model paves the way for a better view of the
costs, revenue and cash ow of a typical FTTH
deployment. The main cost of FTTH projects
is the construction of the FTTH network
infrastructure. The model provided also assists
service providers or network planners to
determine the optimum number of POPs,
based on demographic data. A service provider
must carefully consider the market opportunity
before investing in a FTTH project. The cash
ow, key performance indicators and
sensitivity analysis are presented in this work.
Active Ethernet FTTH deployment in densely
populated areas leads to lower CAPEX per
customer value.
# Henry Stewart Publications 17541662 (2008) Vol. 1, 3 294310
Active Ethernet FTTH deployments
No. of buildings/ POP size (m2) IRR (%) CAPEX/cust.
km2
710 28 6.4 US$2,112
432 28 5.2 US$2,119
844 15 6.9 US$1,184
In summary:
. Current and emerging applications, such as
triple play oerings, business services (ASP,
IT-outsourcing and virtual business
networks), personal services (e-health, care
for elderly people and e-medicine), working
and learning (teleworking, citizen
journalism and communities), and nally
entertainment with huge bandwidth
requirements are the main market drivers of
FTTH deployment.
. Fibre to the home networks can be
categorised into two main architectures:
home run architecture, in which a dedicated
bre connects each home to the POP, and
star architectures, where many homes share
one feeder bre.
. Several technologies have been proposed for
FTTH networks, such as Ethernet-based
FTTH, other variations of AONs and
various avours of PONs (eg BPON,
GPON, EPON).
. Ethernet FTTH enables a service provider
to guarantee bandwidth for each
subscriber. In Ethernet FTTH topology,
the dedicated bre is the most secure
medium today. In addition, Ethernet
switches can provide physical port level
and logical customer trac separation
capabilities with many robust security
features. Ethernet FTTH requires
considerably more bre and OLTs
compared with other shared infrastructure.
. Before deploying the Ethernet FTTH, it is
important to evaluate the key performance
metric of the project from both the technical
and economic points of view. Therefore,
services providers require a tool which, given
Journal of Telecommunications Management 309
Azodolmolky and Tomkos
the desired technology, will assist them to
evaluate their return on investments and to
make educated decisions on deployment.
. The presented techno-economic model can
determine the optimised number of POPs
based on the customer demographic data
and technical specication of each POP,
along with associated cost of each POP.
. In addition to technical information, the
model presented also provides key
performance indicators for business
planning. These information include
CAPEX, OPEX, Revenue, EBITDA, NPV
(for given interest rate), IRR, cash ow and
also cumulative cash ow.
. For the case study of the FTTH deployment
in Athens, the computed NPV is
US$191,047,850 and the IRR is 15 per cent.
The CAPEX per unit for this case study is
US$1,281.
. Using the model, the number of POPs for
the case of deployment in Athens is 24.
. Trenching cost, density of customers per
square kilometre and the penetration
percentage are two sensitive parameters,
which greatly aect the overall CAPEX per
unit.
310 Journal of Telecommunications Management
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Vol. 1, 3 294310 # Henry Stewart Publications 17541662 (2008)