GPON gains momentum while EPON enjoys near-term dominance.
After spending the first half of 2009 expanding the ranks of their 3G wireless subscribers, China’s telcos now have shifted their attention to attracting users to wired broadband, with a particular emphasis on Passive Optical Networks (PONs), according to iSuppli Corp.
Among China’s three carriers, China Telecom is the leader in developing wired broadband networks. By the end of June, China Telecom’s PON subscriber base expanded to more than 2.7 million, accounting for approximately 80 percent of the total PON subscribers in China.
China Telecom’s Ethernet PON (EPON) specification, formulated in 2007, has been adopted as a Chinese standard. From the early stages of EPON testing, both equipment vendors and chip suppliers have participated in the formation of the specification. This cooperation formed the foundation of the interoperability between optical line terminals and optical network units from different vendors and chip makers.
The new China Unicom, formed from the merger of the wired network of China Netcom and the wireless network of China Unicom, considers the PON to be a major element of its broadband strategy. China Unicom is behind China Telecom in terms of EPON development. However, the new China Unicom in June issued a tender for EPON to eventually support 11 million subscribers. iSuppli believes the new tender will attract at least 2.5 million EPON subscribers for China Unicom in 2009.
China Mobile, which is weak in terms of wired network resources, seems to be in no hurry to set its PON deployment strategy. Because it lacks a large number of consumer broadband subscribers, China Mobile plans to deploy PON equipment for enterprise users, for the back-hauling of base stations and for wireless city programs. So far, China Mobile hasn’t announced a commercial deployment plan.
The company’s PON test began in 2008. The total test volume is for about 200,000 lines, including both EPON and Gigabit Passive Optical Network (GPON) equipment.
Although China Mobile hasn't determined which technology it will use, iSuppli believes there is a strong possibility GPON will win out. China Mobile is delaying its decision mainly due to GPON’s relative immaturity in China. China Mobile is taking a wait-and-see approach before it commits to a technology.
GPON has made great progress in China in 2009.
In July, the first GPON equipment technology and test specification was set to be approved by China’s Ministry of Industry and Information Technology (MIIT). Ericsson, Alcatel-Lucent, Motorola, ZTE, Fiberhome, Huawei and UTStarcom participated in the test and managed to overcome interconnection problems among various GPON equipments. iSuppli believes the release of GPON specification signals the start of a new stage for the development of GPON in China.
However, in the near term, EPON still will dominate China's PON market. This is because EPON has the first-mover advantage.
With the more than 10 million deployments, EPON is well positioned to expand and upgrade its services.
The dominance of EPON in China is forcing equipment vendors to transform their product strategies.
Alcatel Shanghai Bell, the Chinese subsidiary of Alcatel-Lucent that provides GPON products alone, announced it will begin to offer EPON products in China starting in the third quarter of 2009. Before that, the group of GPON equipment makers—including Alcatel-Lucent, Ericsson, Nokia-Siemens and Motorola—exclusively sold GPON equipment.
In contrast, their Chinese competitors—including ZTE, Fiberhome and Huawei—have pursued a much more flexible strategy that supports both EPON and GPON. Because of this, domestic vendors accounted for more than 95 percent of China’s EPON equipment market at the end of 2008.
Although powerful supporters have lined up behind EPON, GPON is beginning to challenge EPON starting this year.
On the equipment side, GPON backers include Ericsson, Alcatel-Lucent, Huawei, ZTE and Fiberhome. Chip vendors include Broadlight, PMC, Cortina and Ikanos. In 2009, Broadcom Corp. also joined the GPON group to provide GPON chip solutions. This may put GPON in the best position to capitalize on the growth of broadband in China.
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