Succeeding As a Rural Telco

By Paul R. Morkel

Rural local exchange carriers (rural LECs) must offer services as varied, innovative and powerful as their national and regional counterparts — with neither the resources nor the customer base of the larger service providers. It’s obviously a tall challenge, but a number of rural LECs are finding ways to succeed.

There’s governmental help to be tapped. To the goal of ensuring that the “digital divide” never grows too great, the United States Department of Agriculture (USDA) has had a financing program in place for some years to help the rural telco provide state-of-the-art services at competitive prices.

But, by themselves, low-interest loans for equipment won’t keep a rural LEC competitive. There are also strategic choices the rural telco must make in optical-transport infrastructure to help ensure its ongoing success. Efficient, simple network support for today’s and tomorrow’s needs, low entry cost and tight control of operational expenditures (OPEX) are especially important factors for these service providers.

Business Drivers

Rural LECs, in many cases, have business roots of more than 100 years. These companies have survived by keeping attuned to what their customers want, and one thing that those customers absolutely want is to not be left behind by innovation in communications services just because they do not live in the nation’s metropolitan areas.

Just like their urban counterparts, rural customers seek high-bandwidth services such as high-speed Internet, video distribution, video on demand, teleworking, video conferencing, online gaming and e-commerce — delivered in ever easier, more flexible and personalized ways. Rural LECs, consequently, are faced with the challenge of cost-effectively transitioning to support these disruptive, next-generation services and to accommodate the associated capacity growth on their networks.

The Rural Utilities Service (RUS), a branch of the USDA, provides rural telecommunications service providers with low-interest financing to bring broadband access to remote areas and narrow the country’s digital divide. This helps keep costs down, encourages lower-priced services and enhances the rural telcos’ competitiveness against regional and national carriers. As this financing can be used for purchases of only approved equipment, RUS certification of a product is a very important consideration for the rural telco that is contemplating infrastructure builds.

Residential offerings of broadband Internet and video — high-definition television (HDTV), Internet Protocol television (IPTV) and video-on-demand (VoD) services, for example—are expected to become fast-growing bandwidth drivers on the rural telco’s network. Many rural carriers have deployed triple-play services based on overlay networks. As it runs out of capacity in some areas of its usually circuit-based, Time Division Multiplexing (TDM) network, the rural telco must determine whether to overbuild Synchronous Optical Network (SONET) rings or gain maximum scalability and optimal performance by deploying Wavelength Division Multiplexing (WDM)-enabled optical networking. With the rollout of IPTV and on-demand services, Ethernet-enabled WDM also provides the ideal means to converge the network to a common infrastructure for simplification of network operations.

The revenue opportunities offered by next-generation services demand that a rural telco unify data, voice and video on a flexible infrastructure, build scalability for high-bandwidth applications such as broadband Internet, IPTV and HDTV and ensure native-speed performance for latency-sensitive applications such as voice over IP (VoIP). Overbuilding SONET infrastructures with WDM provides the rural telco with the long-range, cost-effective, flexible and powerful backbone support for all current and future services.

WDM in the Backbone

In WDM, individual applications are assigned wavelengths of light (or “virtual channels”), multiplexed at one end of an optical-fiber strand and de-mulitplexed at the other end. As protocol conversion is unnecessary, there are no limitations regarding bit rates, protocols or latency. Application performance is native speed.

WDM supports simple, cost-effective growth in bandwidth, services and users without the physical installation of additional optical fiber; cards can be provisioned remotely, with upgrades performed in only the particular areas of the network needing more capacity or application support.

The reliability of WDM matches that of SONET’s “five 9s,” carrier-class standard—a prime consideration for the rural LEC offering VoIP service, for example. Optical protection switching supports high-availability services when WDM systems are deployed in diverse path configurations, such as reconfigurable optical add/drop multiplexer (ROADM) rings.

The availability of Coarse WDM (CWDM), Dense WDM (DWDM) and hybrid platforms supports the varied needs of different service providers. The choice is CWDM for cost or DWDM for capacity—with hybrid platforms offering a compelling option for the service provider that seeks to support some channels today but seamlessly accommodate larger needs in the future.

Lower-cost, uncooled, distributed-feedback lasers, passive filters and small-form-factor transceivers are enabling technologies in CWDM, producing system costs running 30 to 50 percent less expensive than DWDM systems of the same channel count and system functionality. With wavelengths spaced 20 nanometers apart from one another, CWDM supports up to eight virtual channels across an optical fiber strand.

Wavelengths are packed more densely — separated by 1.6 nanometers or less—in DWDM. This enables more bandwidth to be added with additional wavelength channel cards, as service demands grow. A DWDM-based network, for example, can support 40 or 80 channels of traffic at speeds up to 10 Gbps and even 40 Gbps per wavelength.

With hybrid CWDM/DWDM platforms, a service provider could deploy, say, two or four channels today and cost-effectively add channels as business opportunities take shape. Initial installation costs less than that of a DWDM-only solution. And IT staff training and spares costs are reduced when eventually migrating, because CWDM and DWDM are provided via the same platform.

With WDM providing flexible and powerful backbone support for all legacy and next-generation services, Ethernet is emerging as the preferred data-link/aggregation layer in carrier networking. In this emerging “Optical+Ethernet” approach, the need for intermediate network layers is eliminated. A single, simplified architecture provides flexible, end-to-end delivery, management and transport of Ethernet-based, next-generation services. The emerging Optical+Ethernet model is of interest to the rural telco, which is under extreme pressure to simplify its network and ensure long-term OPEX control.

Consider the example of a residential broadband Internet application in Figure 1. Optical+Ethernet supports end-to-end Ethernet-based services throughout the rural LEC network. Traffic is backhauled via Gigabit Ethernet uplinks from IP-based digital subscriber line access multiplexers (DSLAMs) in the access/backhaul layer, with collector rings feeding the core transport layer to centralized service management location. Typically this hub will also be point of presence for interconnection to other carrier networks. With Ethernet-enabled transport, intermediate SONET layers are obviated, capital expense is reduced and management of the network becomes simpler.

Other Requirements

In addition to RUS certification and the long-term scalability, simplicity and efficiency of WDM-enhanced optical networking, other important considerations for rural LECs include turnkey contracts, with network services such as engineer, furnish and install (EF&I) support, network-planning tools and carrier-class element management. This array of needs all track back to the specific business model of the typical rural telco: a small- to medium-sized business facing competition with greater resources.

Large, Tier 1 telcos often will have large warehouses of equipment awaiting infrastructure build and will use network-engineering resources to configure systems as needed for specific projects. The usually smaller, rural LEC, on the other hand, tends to buy equipment as specific needs arise and puts it into use immediately in its network.

Because of this procedural difference, the rural telco prefers pre-configured systems that are ready to be put in service out of the box, with minimal configuration required of in-house staff. The ability to pre-configure optimized systems for specific projects with rapid turnaround time is, thus, a common requirement among rural telcos.

Similarly, network-planning tools are important to the rural LEC in order to design network upgrades, additions or changes. Where network planning in the SONET world has been a relatively simple undertaking, there are new decisions to be addressed in optical networking: How should the dispersion of the fiber be properly managed? How do we ensure upgradability? What are our options in fibering and cabling? With fewer resources in-house to address these questions, the rural LEC puts a high priority on tools to simplify network-planning questions and equipment selection.

Wise planning of a network first requires a thorough analysis of the current network setup, the carrier’s business goals and its traffic matrix. With this information fed into network-planning software, the telco can then rapidly generate options for the network build—addressing topology, architecture, node configuration, fiber type and cabling plan. Once a design is selected and approved, the planning tool can verify performance and prove interoperability of equipment, to ensure that the network will behave as projected.

Conclusion

As the rural LEC seeks to accommodate its customers’ demands for broadband Internet, IPTV, HDTV, VoIP and other next-generation services, it faces a number of questions in how to upgrade legacy SONET infrastructure for today’s and tomorrow’s requirements. The simplicity, capital and operational cost savings and long-term flexibility of WDM-enhanced optical networks are especially compelling to the rural telco. USDA RUS certification of products can avail the rural telco to low-cost financing of purchases, and comprehensive operational support can also help the rural telco keep prices low, protect profit margins and meet the service needs of the rural subscriber.

The competitive challenges facing rural telcos are considerable—but far from insurmountable. The wisest of these companies have been successfully adapting to and capitalizing on change for decades and are finding ways to do so again.

Paul R. Morkel is Director, Business Management, Carrier WDM, with ADVA Optical Networking. For more information, visit the company online at www.advaoptical.com.

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