Let’s take a quick look at the state of the photon.
Korea - 20M homes by 2010, $5B dollar investment. The fact they are wiring up at $250 a home indicates heavy VDSL use though I have not confirmed this. Equipment supplied domestically, chips provided by both PMC-Sierra (NASDAQ:PMCS) and Teknovus. Japan - 30M homes by 2010, moving away from VDSL as an access technology and going fiber all-the-way. This should substantially increase the amount of ONU chips required - up until now a large proportion of NTT’s (NYSE:NTT) FTTH installs were really fiber to the basement [FTTB] with VDSL reaching the last 100m or so. Equipment still 100% Japanese, and chipset still nearly 100% PMC-Sierra (with a sprinkling of OKI ASICs and Teknovus) Taiwan - Chungwa Telecom (NYSE:CHT) spending $1.84B to connect around 2M residences. Going GE-PON, and word is Teknovus is supplying the chips. China - Huge opportunity. China Telecom (NYSE:CHA) indicating 20M installs initially but I feel demographics favor much larger numbers in the long run (see “The Future of FTTH in China"). It is hard to believe the equipment will be sourced from Japan, so expect to see Huawei, ZTE, UT Starcom (NASDAQ:UTSI), and Fiberhome share in the spoils. I have heard the traditional western players like Alcatel (NYSE:ALU) are out due to lack of mature GE-PON products - they all invested in G-PON. USA - Verizon going full guns with 6.8M homes passed already, and 18M passed by 2010. That’s about 50% of it’s installed base. Verizon projects 4M customers in 2010. Equipment supplied by Tellabs (NASDAQ:TLAB), transitioning to Alcatel and Tellabs (maybe helloMoto too?) when they make the jump to G-PON from B-PON. Europe - France deploying FTTH in pockets (see “FTTH vs. VDSL in France“) and Amsterdam pursuing muni-fiber. British Telecom (NYSE:BT) has ruled out FTTH, and Deutsche Telekom (DT) is going with VDSL. From my perspective, more heat than light on FTTH in Europe.
This is all not good for suppliers of G-PON equipment and components. Word on the street is AMCC (NASDAQ:AMCC) has canceled their GPON development, something anticipated here 15 months ago (see “AMCC Demonstrates GPON MAC“). Broadlight and Freescale are the only ones with any hope of seeing substantial GPON chipset volumes in the next 3 years.
Bob Bailey, CEO of PMC-Sierra, spoke last week at the JPMorgan Tech conference. I asked him how the Chinese-flavored GE-PON (affectionately called CPON) interoperability trials were going with China Telecom. He indicated that PMC was the first to supply working silicon that met their specs, and that they had won the majority of Chinese sockets, including Huawei. He said they should be the market share leader in China. This is a bold prediction and something worth following up on.
The slide below is pulled from his presentation. Practically everything in Asia can be considered GE-PON, everything outside Asia B-PON/G-PON.