Multi-Dwelling UnitsThe Pathway to a Successful FTTH Deployment

An ADTRAN White Paper

• Multi-Dwelling Units—The Pathway to a Successful FTTH Deployment2

OverviewMulti-Dwelling Units (MDUs) are structures where there are more than one living unit per location. They range from a single-story building with two to four tenants to multi-complex/multi-story developments with hundreds of tenants. This is an important distinction to note since serving them with fiber will result in different architec-tures driven by the concentration of tenants. MDUs are primarily apartments or condos where the former is typically rented and the latter is typically owned. It is important to remember this distinction as well since tenant “turnover” is higher for renters. In other words, the telecom provider is going to have more chances to win or lose customers over a span of time in the apartment MDU market. Most importantly, telecom providers tend to forget two important factors when addressing this market. The first is the selling the service. Unlike the Single Family Unit (SFU) market, success in the MDU market requires not only convincing the tenant but the building owner as well. Both of them have to understand the benefits to reach a sales agreement. Second, just because it is an MDU does not mean you need an MDU Optical Network Terminal (ONT). Too often telecom providers are trying to fit a specific ONT type with a particular structure or customer. It is important to remember that MDUs house residential customers. MDU ONTs are perfect for duplexes and fourplexes. It is large apartment complexes, condominium and high rises that require an alternative solution for FTTH. Two of the preferred solutions are micro ONTs and multi-service edge switches. Micro ONTs offer several distinct advantages. The first, and perhaps the most important is size. So small that they can fit in the palm of your hand, these devices are perfect for MDUs. They can be shipped to the customer for self-install and are easy to transition from one tenant to the next. For MDUs where Gigabit services are required, multi-service switches offer the ability to deliver high-speed Gigabit services such as IPTV to residences and Carrier Ethernet services for adjacent busienss applications..

According to the U.S. Census Bureau's American Housing Survey for the United States:2011, issued in 2013, over half of all residential buildings are over 40 years old. Older buildings can be more challenging regarding re-wiring, pulling new fiber due to poor or full ducting or lack of duct plans. To support accelerating the delivery of premium broadband in these situations leveraging the new ITU-T G.fast standard regarding the gigabit over existing phone wires can be of great benefit to the FTTH service provider.

Unlike the Single Family Unit (SFU) market, success in

the Multi-Dwelling Unit (MDU) market requires not only

convincing the tenant but the building owner as well.

3An ADTRAN White Paper •

MDUs represent about 30 percent of the total

residential market for Fiber ToThe Home (FTTH). Therefore, it is difficult to be successful with FTTH in the residential market without a success-based strategy for MDUs.

Marketing MDUsThe American Housing Survey also notes that there are over 32 million MDUs in the U.S. which is around 25 percent of all residential buildings. Roughly one third of the over 32 million MDUs have two to four units, another third consists of five to 19 units, while the final third are span from 20 to in excess of 50 units. MDUs represent about 30 percent of the total residential market for Fiber To The Home (FTTH). Therefore, it is difficult to be successful with FTTH in the residential market without a success-based strategy for MDUs. The first step in developing that strategy involves understanding the owners of MDUs. The people that own MDU buildings (like the one shown to the right) are not enamored with the advanced technology of FTTH. Their primary interests lie with the economic metrics of rental rates, rental duration, occupancy levels and turnover. The telecom provider must address how FTTH translates into making those economic metrics improve for an MDU owner. Do higher internet speeds translate into higher rental rates? If so, this would be an important metric to share with residential building owners. It can be a major asset to the telecom provider when negotiating access to the building and space for equipment. Moreover, it is equally important to show the owners how FTTH as a service offering will surpass cable and satellite over time. MDUs are long-term assets where upgrade and rehabilitation expenses are a normal part of business. This is important to remember if rewiring a building becomes necessary to compete with cable and satellite. Now this could be a challenge for older buildings with poor cable duct plans or full ducts. It should be noted that Gigabit services delivery over phone wires will be available. These Fiber-to-the-building (FTTB) solutions will be based on the new telecom standard called G.fast. This allows FTTH networks to be extended within the MDU with the least amount of rewiring.

Once the benefits of FTTH have been developed for the building owners, a targeted campaign to educate the MDU community is the second step. Going after all markets in the initial rollout of FTTH is not feasible. It is wise to select specific areas within single-family FTTH markets at the beginning to validate the offering, the solution, and costs associated with serving this unique market. This can usually be done in conjunction with the single-family campaign in the area. In any case, work with the organizations (ex. “Broadband Communities”, etc.) in targeted areas to educate the building owners on all the present and future benefits of FTTH before you take any further action.

• Multi-Dwelling Units—The Pathway to a Successful FTTH Deployment4

SFU vs. MDUWorking to have ONTs fit a specific FTTH deployment is a difficult task. All too often, the telecom provider sees this as purely an ONT/ mechanical/cabling issue rather than a market issue. For example, what is the difference between serving a single family home and a duplex apart-ment? Not much. Roughly one third of the over 32 mil-lion MDUs have 2 to 4 units, another third consists of 5 to 19 units, while the final third are 20+ and even up 50+ units. FTTH deployment is NOT about fitting a type of ONT to a particular dwelling. It is about finding the right solution for a particular market. If MDUs can be served with Single Family Unit (SFU) ONTs, then that is the best solution. It is a misperception that FTTH lowers op-erational support complexity. Actually, deploying ONTs (especially multiple versions), increases it. Low-density MDU-like duplexes or multicomplex, low-story MDU developments tend to look more like single-family homes from an FTTH perspective. In all of these cases, the preferred solution would be indoor SFU ONTs as shown below. The reason for taking the ONT indoors is the same for these MDU types as with SFUs. Cost, flexibility and future ONT improvements make the indoor ONT a better solution than the traditional outdoor version. In the quest to lower the cost per subscriber, FTTH operators have begun to migrate from outdoor to indoor ONTs. This transition has also been spurred on by the desire to reduce the comparatively larger power and battery backup of outdoor units. Extending the indoor ONT value proposition have been new micro ONTs. These offer a wealth of advantages including the ability to be left at the residence. This makes them ideal for MDU applications and eliminates the need for truck rolls to retrieve the ONT when tenants change. It also enables instant activation for the next resident. Flexibility is another key attribute. These ONTs simplify and streamline installation procedures, improve security and prevent vandalism by being indoor. A third major benefit is that they are independent of the wireless router. This increases the life of the ONT, thus improving Return on Investment (ROI) because the ONT does not have to be replaced as Wi-Fi standards evolve. It also eliminates the cost of a truck roll to upgrade service and most importantly, they improve customer satisfaction.

Lastly, the Micro ONT may experience some changes (GPON to XGPON1 or NGPON2, etc.) in the future but it is certain that the RG will continue to evolve over time. Having the customer drop by a service center to get a

new indoor RG is infinitely better than technicians traveling to every residence (single family and multi-dwelling) swapping out outdoor ONTs.

On the other end of the spectrum of MDUs are high rise complexes. In this case, the density of tenants increases as well as the complexity to serve these units with FTTH. These types of MDUs lend themselves to more centralized solutions like VDSL2, Fiber Ethernet, Wi-Fi and GPON. All four of these technologies represent different levels of service and capital commitment. Two interesting new technologies have recently immerged that may be “game changers” for serving MDUs— VDSL2 with vectoring and G.fast. These technologies may prove to be a superior solution for serving high-density MDUs. This new DSL acceleration standard, G.fast, can extend 500 Mbps up to Gigabit fiber-like speeds 300 feet over the existing CAT-3 in-home phone wiring to the RG. If the telecom provider were to locate a fiber-fed Remote Terminal (RT) either next to or inside a high-rise MDU, they could serve nearly all of this market with minimal capital investment. With commercial availability approaching, VDSL2 with vectoring and G.fast capability needs to be part of your overall MDU serving model.

The next solution in serving high-density MDUs leverages a combination of optical Ethernet and Wi-Fi. This has bandwidth superiority over using in-home copper wiring solutions, but is more capital intensive. It requires a fiber-fed active device placed inside the MDU (typically in the basement or equipment room) and CAT-5 wiring to all common areas and/or each unit. In the case of wiring out only to wireless Access Points (APs), the telecom provider can provide ubiquitous Internet (over Wi-Fi) service throughout the building. The limitation is video and higher-speed internet. However, ease of use and the ability to easily acquire customers (tenants and visitors) additional benefit with the solution. This is contingent upon having a easy-to-use “splash” page for your internet service offerings. This

allows the customer to enter their credit/debit card information securely

and instantly be online. This capability is the key to

being successful. It can help enable installing more CAT-5 and placing an Ethernet

Customer Premises Equipment (CPE)

device in every unit to pick up higher-speed

internet and video customers.

Integrated Residential Gateway (RG) ONT

5An ADTRAN White Paper •

Residential and Business Services CoexistenceAlso quite prevalent in high-density, high rise MDU buildings, is the coexistence of commercial suites in the lower floors with the residential suites in the upper floors. This fact drives the need for FTTH solutions which can effectively support a mix of SLA-based business Ethernet services with the residential service. As well, these types of high-rises suffer from poor mobile phone coverage and therefore are targets for small cell deployments from mo-bile operator. These small cell sites will each require 50-100Mbps of specialized backhaul access. A FTTH ONU solution that can simultaneously address the unique requirements of all three of these market requirements greatly expands the addressable market for premium FTTH services.

GPON is the last and best solution, but it is the most costly. The architecture is a simple concept. Fiber is brought into the building and terminated in the basement or equipment room with an indoor fiber splice enclosure. The enclosure should be located and

configured to accommodate frequent split adjustments. That is the easy part. From the splice enclosure, a fiber is run to each living unit and the common areas of the MDU that are to be served by a wireless AP. Each living unit is then equipped with an indoor ONT. In this case, the best solution would either be an indoor Micro ONT where the customer buys their own RG, or a combined RG/ONT.

At this point, it may sound as if the 'classic' two-, four- or eight-port MDU ONT has no application. On the contrary, it is important to consider MDU ONTs for all applications. However, proliferating MDU versions is not in the best interest of the telecom provider. This is true for any type of ONT (SFU, SBU, etc.). In addition, it is important to remember that MDUs are “residential” buildings. They differ only in size and number of tenants from SFUs. There are no distinct differences in service requirements (i.e. voice, video and data) for residential MDUs and SFUs. That is why telecom providers should also consider serving some MDU buildings with SFU ONTs or Customer Premises Equipment (CPE).

100M CAT3

100M CAT3

GigE CAT3

Multi-Dwelling Unit

High-Rise Business

Residential/Commercial Suites

ILL461A

FTTB MDU ONU

10GE Multi-service Edge Switch

10GE Multi-service Edge Switch

10GE Multi-service Edge Switch

N x 10 GigE

GigE CAT5SmallCell

SmallCell

SmallCell

GigE CAT5

10 GigEFiber

• Multi-Dwelling Units—The Pathway to a Successful FTTH Deployment6

It is important to remember that the MDU owners are not pro-FTTH or any other means to provide telecom services. They are motivated mostly by rent and occupancy improvements at their building(s). Telecom providers must translate the benefits of FTTH into how it can improve the bottom line for MDU owners. Access to buildings, space and overall tenant interest are directly dependent on how much the building owner understands how FTTH benefits them. In addition, MDU owners belong to various groups and organizations that meet regularly. This lends itself well to both direct marketing to the building owners as well as “word of mouth”.

There are all kinds of MDU types in the U.S. market: duplexes, apartment complexes, condos, high rises, etc. They all may need to be served differently but the services required are basically the same. This enables the telecom provider to gravitate towards mostly the same ONT or CPE device. More versions of ONTs or CPE cause more maintenance and support costs. Moreover, the right FTTH solution for a particular MDU may not use an ONT or even be PON based. It is about addressing each type of MDU with the right technical solution.

When a problem has many variables the old methodology may not work. Sometimes the solution is better found through non-traditional methods or thinking out of the box. Using the CLEC model may yield better success in the MDU market for the telecom provider. CLECs can bypass operational issues and experiment with various architectures without the fear of failure. As they become more efficient and prosperous specializing in serving MDUs they can be brought back, operationalized and integrated into the company. Equipment and service vendors are ideal partners for this type of endeavor.

Telecom providers must translate the benefits of FTTH into how it can improve the ‘bottom Line for MDU

owners. Access to buildings, space and overall tenant interest are directly dependent on how much the building

owner understands how FTTH benefits them.

SummaryUsing a CLEC Model to SucceedTelecom providers have difficulty serving the MDU market with FTTH because of the applications. It is difficult to “operationalize” a wide variety of options specific to a single serving market. As stated above, slimming down your ONT options is one way of helping but the very nature of the business requires more work. Actually, to be more accurate, the solution really requires them to do the work differently. Many U.S. telecom providers also operate a Competitive Local Exchange Carrier (CLEC) subsidiary. A CLEC operating independently but under the telecom providers’ “flag” can focus on specializing on serving MDUs with FTTH. It can provide two valuable aspects not possible inside a large telecom company. The first is speed to market. This is primarily due to avoidance of operational issues. By nature, large telecom providers have complex “back office” systems necessary to run their business. CLEC’s can operate with smaller, newer and simpler operational systems since they don’t have the large customer base or any legacy systems. The second is focused thinking. Since the CLEC will do only MDUs, it will not have other technical issues to consider and will solicit more “out-of- the-box” thinking. Moreover, a CLEC, due to its small size, is not as concerned with making mistakes. Making mistakes is part of the process necessary to become successful in the MDU market place.

Enlisting the help of equipment and service vendors is also helpful to the CLEC model. They can operate seamlessly with both the CLEC subsidiary and the telecom provider. Enlisting them for specialized engineering, installation, network and product designs also helps speed up the process.

Using the CLEC model is a way to speed up your success in the MDU market. However, it is a short-term solution. As the CLEC works out more and more of the “bugs”, becomes more streamlined and successful; there will come a time to pull some of the MDU accounts and perhaps the entire entity back into company. In other words, the CLEC entity is really the MDU “skunk works” until the entire design can be put into production (i.e. operationalized).

7An ADTRAN White Paper •

Acronym DescriptionACP ADTRAN Certification Program

AE Active (or Point to Point) EthernetAON Active Optical Network

ARRA American Recovery and Reinvestment ActATM Asyschronous Transfer ModeBBF Broadband Forum

BPON Broadband Passive Optical NetworksCATV Community Access or Cable Television

CO Central OfficeDOCSIS Data Over Cable Service

Interface SpecificationDSL Digital Subscriber Line

EPON Ethernet Passive Optical NetworkFiOS Fiber Optic ServicesFTTH Fiber to the Home

GPON Gigabit Passive Optical NetworkHPNA Home Phoneline Networking AllianceILEC Independent Local Exchange CarrierIPTV Internet Protocol Television

ITU International Telecommunications UnionLTE-A Long Term Evolution - AdvanccedMbps Megabits Per SecondMDU Multi-Dwelling Unit

XGPON 1 10 Gigabit Passive Optical Network

Acronym DescriptionMoCA Multimedia over Coax Alliance

NGPON 2 Next Generation PON (4 to 16 wavelengths)OEM Original Equipment ManufacturerOLT Optical Line TerminalONT Optical Network TerminalOTT Over the TopPON Passive Optical Networking

RF Radio FrequencyRFoG Radio Frequency over Glass

RG Residential GatewayROI Return on InvestmentRT Remote Terminal

RUS Rural Utilities ServiceSBU Small Business UnitSFU Single Family UnitSLA Service Level AgreementUSF Universal Service Fund

VDSL2 Very-high-bit-rate Digital Subscriber Line 2VoIP Voice over Internet Protocol

WDM Wavelength Division MultiplexingWDM PON Wavelength Division Multiplexing

Passive Optical networkXGPON 1 10 Gigabit Passive Optical Network

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