Because it is such a small part
of the overall cost of building a new network, some companies may think about sourcing
cheaper operator equipment – known in the industry as Optical Line Terminal
(OLT) technology – but this is a mistake.
Simply focusing on cutting down costs regardless
of the consequences is a short-sighted view. When deploying a fibre network,
political, geographical and logistical challenges are commonplace. Ignoring
these risks, almost always leads to additional costs.
For working out the potential expenditure for
PON projects, we must separate costs between OLTs, Optical Network Terminals
(ONTs), Optical Distribution Network (ODN) equipment and labour necessary for
trenching and laying optical cables. On average, the cost of providing OLTs in FTTH
network builds amounts to only about 1% of the total build cost. An OLT is the
operator’s equipment that connects with end-user devices, such as routers or
home gateways. Other parts of the network require more expenditure than operator
equipment, including this end-user equipment and the ODN. The ODN is typically
an expensive outlay as it is used for data transmission and is responsible for
the performance and reliability of the system. By comparison, the labour cost
of digging or laying fibre is estimated to be on average 60% of the total cost
of a project.
When we look at several PON projects that have taken place, one example we can draw on is from the early days of GPON technology in Suupohja, Finland, from 2005 to 2007. This was a greenfield deployment in very rural location. The total investment surpassed 10 million Euros and the project aimed to see 5,000 homes passed with fibre. By estimating that it was 2,000 Euros per user, the price could be estimated to establish the OLT price per user. For this example, the average spend on OLT was just 0.47%.
Another example is an ongoing project in Bóly City, Hungary. It covers both rural and urban areas across 14 towns with a total population of around 12,000 people. The total number of subscribers has reached 1,458 institutions and companies, and the project has connected 99.5% of all premises. In this case, the OLT cost was just 0.57%.