1. Fiber to the Desk Where Is It Cost-Effective Today? Eric R. Pearson, CPC, CFOS President, Pearson Technologies, Inc. TIA Fiber Optics LAN Section Copyright © 2003, Telecommunications Industry Association.

2. Copyright 2003, Telecommunications Industry Association. 2 Agenda Fiber to the Desk, Where Is It Cost-Effective Today?  Expanded TIA Fiber Optics LAN Section scope  Cabling market review & forecast  Comparing fiber installed first costs with copper

3. Copyright 2003, Telecommunications Industry Association. 3 TIA Fiber Optics LAN Section Background and Mission  Formed in 1993 as part of TIA’s Fiber Optics Division  Members include: 3M, ADC, Berk-Tek, CommScope, Corning, Fluke Networks, Leviton Voice & Data, OFS, Optek Technology, Ortronics, Pearson Technologies, Panduit, Sumitomo Electric Lightwave, Transition Networks, Tyco/AMP Electronics  Original mission: To create a resource where people can learn about the technical advantages and affordability that optical transmission brings to customer-owned networks

4. Copyright 2003, Telecommunications Industry Association. 4 Expanded Focus Result of Target Audience & Member Input  Fiber-based LANs  Storage area networks  Data centers  Industrial applications  Building automation systems  Fiber in security systems  Fiber in the home

5. Copyright 2003, Telecommunications Industry Association. 5 TIA Fiber Optics LAN Section Many Resources Available  Webcasts  Trade press articles  White papers  Press releases  Editor briefings  Stimulate complementary standards development  Interoperability demonstrations  Presentations at industry conferences  Enterprise fiber case histories  Equipment directories www.fols.org

6. Copyright 2003, Telecommunications Industry Association. 6 Market Trends Copper and Fiber Cable Shipment Forecast*  Late 90’s: double digit enterprise cabling growth due to UTP LAN installations in large enterprises  2001-2002: 20% declines in enterprise cabling market  2003: Flat market with slow recovery late in year  2003-2008  Single digit growth for UTP  Double digit growth for fiber *Source: “US Building Fiber & Copper Cabling Systems” FTM Consulting, February 2003 Total Cabling System Forecast $(B)

7. Copyright 2003, Telecommunications Industry Association. 7 Fiber-Copper Cable Shipments Cable Product Value Shipments  2004-2007: –Major shift to fiber cable  Major fiber applications –Gigabit Ethernet –Fiber to the zone –Fiber to the desk –Storage area networks  2001-2003 –Copper cable still dominant –Declining market –Declining copper cable prices Source: FTM Consulting

8. Copyright 2003, Telecommunications Industry Association. 8 Selecting the Horizontal Media UTP Copper or Multimode Fiber? UTP Copper  Perceived lowest system cost  The “easy” choice  Almost “universal” installer familiarity  Smooth Ethernet upgrade path  More complex to install & test  Susceptible to EMI, RFI & crosstalk  Limited cable pull strength  100 meter maximum @ 1 Gbps  Shorter useful life Multimode fiber  Higher bandwidth  Simplified installation  Significantly reduced testing costs  Lower life-cycle infrastructure costs  Smooth Ethernet upgrade path  Immunity to EMI, RFI & crosstalk  Superior cable pull strength  Reduced initial installed costs with centralized architecture  Perception of complexity  Less installer familiarity  High priced electronics

9. Copyright 2003, Telecommunications Industry Association. 9 So, Why Not More Fiber? Are Costs Really Higher?  Perception: fiber is still more expensive than copper  Erroneous assumption: fiber networks should be designed exactly like copper networks  Reality: fiber electronic capabilities allow the network cost to be reduced in many applications-by tens of thousands of dollars. In these applications, UTP is too expensive to justify!  Reality: network lifecycle costs not the primary driver

10. Copyright 2003, Telecommunications Industry Association. 10 Comparing Fiber - Copper Costs Several Comprehensive Studies  Tolly Group, August 2000  Migrating to Fiber-The Case for Centralized LAN Cabling  Still available for download #200505  http://www.tolly.com/UTS/UTS_home.aspx (page 8) http://www.tolly.com/UTS/UTS_home.aspx  TIA/EIA-568 B issued  Revision B includes the collapsed backbone, or FTTD network  TIA Fiber Optics LAN Section, November 2001  First generation cost model  Very popular download from FOLS website  TIA Fiber Optics LAN Section, July 2003  Second generation cost model  Available for download as of September 19: www.fols.orgwww.fols.org  Also visit Pearson Technologies web site: www.ptnowire.comwww.ptnowire.com

11. Copyright 2003, Telecommunications Industry Association. 11 Second Generation Cost Models Significant Market Changes  Decreased UTP component prices  Decreased Fiber cable and connector prices  Decreased Fiber transceiver prices  Long wavelength (1300 nm) decreases substantial  Short wavelength (850 nm) also decreased  Decreased overall network costs  UTP-fiber  All fiber

12. Copyright 2003, Telecommunications Industry Association. 12 TELECOMMUNICATIONS ROOM HORIZONTAL WORK AREA IO PATCH CORD HOME RUNS EQUIPMENT ROOM HIGHCOUNTRISERSHIGHCOUNTRISERS ACTIVE EQUIPMENT SINGLE POINT CROSS CONNECT PATCH CORDS PC OUTLET SPLICE OR INTERCONNECT Electronics Electronics No electronics ) Centralized Fiber Architecture Designed for fiber (300 meters) Standardized in TIA/EIA-568-B.1 & ISO-11801, 2nd Edition

13. Copyright 2003, Telecommunications Industry Association. 13

14. Copyright 2003, Telecommunications Industry Association. 14 Installed First Costs Model Assumptions Hierarchical Star UTP vs. Centralized Fiber  Building model  8 story, 48 ports/floor  Costs calculated on “per port” basis  Port utilization Copper: 70% Fiber: 90%  Horizontal subsystem  UTP: Cat 5e or Cat 6 UTP  Fiber: 62.5 or 50 µm multimode fiber  Riser subsystem  Fiber used in riser subsystem (both models)

15. Copyright 2003, Telecommunications Industry Association. 15 Comparing Installed First Costs Additional Assumptions  Loaded labor rate  $60.00/hour [median value]  Telecom room construction costs  $150.00/ft 2 [median value]  5 year power costs  Lighting, heating & cooling  Does not apply to centralized fiber network  Estimated at $450 for 5 years  Cost models completely interactive

16. Copyright 2003, Telecommunications Industry Association. 16 Telecommunications Room Costs Significantly Less Expensive With Fiber UTP/FiberAll Fiber UPS$1,000 Not required Temperature control $10,000 Not required Telecom room size 6’x10’6’x5’ Telecom room cost $9,000$4,500 Total cost$20,000$4,500 Equipment to heat and cool electronics is costly.

17. Copyright 2003, Telecommunications Industry Association. 17 Key Point  Model has a major bias against fiber ($93.75/port)!  Twelve out of twelve scenarios had the same result  Initial installed fiber cost lower than initial installed UTP/fiber cost  Significance: fiber is cost effective in many scenarios;  Network planners should calculate their fiber network cost with the model to find opportunity for cost reduction

18. Copyright 2003, Telecommunications Industry Association. 18 Multiple Scenarios Examined Second Generation Cost Models 1. SG, list price 2. SG, 80% of list price 3. K-12 4. Fiber to the zone 5. Tier II electronics, street 6. Tier I electronics, mixed price sources 7. Tier I electronics, reduced cost switch 8. Cat 6 Tier I cable 9. Cat 6 Tier II cable 10. Low cost solution 11. 100BASE-SX, list price 12. 100BASE-SX, street price

19. Copyright 2003, Telecommunications Industry Association. 19 Cost Summary, SG at List Price Scenario 1  SG is the Generic name for Volition, or VF-45 connector and electronic fiber system  SG components have one of lowest fiber costs  With SG at list price, the fiber network saves  $16,037.10  $41.79 /port  6.2%

20. Copyright 2003, Telecommunications Industry Association. 20 SG at List Price : Details SG List Price Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room $216.10$151.04$25.03$35.00 Fiber in & to telecom room 0.908.400.410.00 Support costs 426.0493.750.630.00 Equipment room 8.47328.060.4620.00 Total cost per port 678.04 636.25

21. Copyright 2003, Telecommunications Industry Association. 21 SG at Street Price Scenario 2  Assumes 80% of list price  With SG at street price fiber network saves:  $38,970.43  $101.51 /port  15%

22. Copyright 2003, Telecommunications Industry Association. 22 SG At Street Price: Details SG 80% of List Price Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room $216.10$151.04$25.03$35.00 Fiber in & to telecom room 0.908.400.410.00 Support costs 426.0493.750.630.00 Equipment room 8.47268.340.4620.00 Total cost per port 678.04 576.53

23. Copyright 2003, Telecommunications Industry Association. 23 Tier II Switch, Street Price Scenario 5  Tier II switch at street price  Tier II switch is not from dominant manufacturer  Fiber network saves  $48,290.59  $125.77 /port  20%

24. Copyright 2003, Telecommunications Industry Association. 24 Tier II Switch, Street Price: Details Tier II Electronics Street Price Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room 163.83182.4325.0335.00 Fiber in & to telecom room 0.9014.130.410.00 Support costs 426.0493.750.630.00 Equipment room 13.21159.430.4620.00 Total cost per port 630.51 504.74

25. Copyright 2003, Telecommunications Industry Association. 25 Tier I Switch Plus Other Electronics Scenario 6  Switch is from a dominant manufacturer  Electronics are from various sources  Fiber network saves  $52,026.13  $135.49 /port  21%

26. Copyright 2003, Telecommunications Industry Association. 26 Tier I Switch Plus Other Electronics: Details Tier I Electronics, Mixed Price Sources Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room 180.58182.4325.0335.00 Fiber in & to telecom room 0.9014.130.410.00 Support costs 426.0493.750.630.00 Equipment room 17.85171.100.4620.00 Total cost per port 651.90 516.41

27. Copyright 2003, Telecommunications Industry Association. 27 Tier I Switch And Reduced Cost GbE Switch Scenario 7  Same switch as the previous scenario  Reduced price GbE switch  Fiber network saves  $47,968.88  $124.93 /port  19%

28. Copyright 2003, Telecommunications Industry Association. 28 Tier I Switch And Reduced Cost GbE Switch Cisco 2950 with Reduced Cost GbE Switch Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room 180.58182.4325.0335.00 Fiber in & to telecom room 0.9014.130.410.00 Support costs 426.0493.750.630.00 Equipment room 7.29171.100.4620.00 Total cost per port 641.34 516.41

29. Copyright 2003, Telecommunications Industry Association. 29 Tier I Switch, Cat. 6 UTP Scenario 8  Based on Scenario #7  Uses Category 6 UPT cable Tier I switch in the TR  Fiber network saves  $72,824.72  $189.65/port  27%

30. Copyright 2003, Telecommunications Industry Association. 30 Tier I Switch, Cat. 6 UTP: Details Cat 6 Tier I Cable Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room 239.49182.4325.0335.00 Fiber in & to telecom room 0.7914.130.410.00 Support costs 426.0493.750.630.00 Equipment room 13.21171.100.4620.00 Total cost per port 706.06 516.41

31. Copyright 2003, Telecommunications Industry Association. 31 Low Cost, Tier II Switch with Cat. 6 UTP Scenario 9  Based on Scenario #7  Uses lower cost switch in TR and Cat. 6 Cable  Fiber network saves  $70,548.72  $183.73 /port  26%

32. Copyright 2003, Telecommunications Industry Association. 32 Low Cost, Tier II Switch With Cat. 6 UTP: Details Cat 6 Reduced Cost Configuration Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room 239.49182.4325.0335.00 Fiber in & to telecom room 0.7914.130.410.00 Support costs 426.0493.750.630.00 Equipment room 7.29171.100.4620.00 Total cost per port 700.14 516.41

33. Copyright 2003, Telecommunications Industry Association. 33 Lowest Cost UTP Network Scenario 10  Switch and electronics chosen for low cost  Fiber network saves  $7,615.53  $19.85/port  3%

34. Copyright 2003, Telecommunications Industry Association. 34 Lowest Cost UTP Network: Details Low Cost Solution Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room 145.75182.4325.0335.00 Fiber in & to telecom room 0.7914.130.410.00 Support costs 426.0493.750.630.00 Equipment room 7.29241.240.4620.00 Total cost per port 606.40 586.55

35. Copyright 2003, Telecommunications Industry Association. 35 TELECOMMUNICATIONS ROOM WORK AREA PATCH CORDS HOME RUNS EQUIPMENT ROOM LowCOUNTRISERSLowCOUNTRISERS ACTIVE EQUIPMENT SINGLE POINT CROSS CONNECT PATCH CORDS PC SPLICE OR INTERCONNECT Electronics No electronics Extended Backbone Electronics Will be standardized in TIA/EIA-568-B.1 & TIA/EIA-569-B Zone Cabling Architecture Expanding Backbone Bandwidth While Integrating Copper Components Electronics ACTIVE EQUIPMENT ACTIVE EQUIPMENT PATCH CORDS OUTLETS

36. Copyright 2003, Telecommunications Industry Association. 36 Zone Cabling with Telecomm Enclosure LEGEND: = Telecommunications Outlet/Connector Outlet/Connector =Telecomm Enclosure with a switch = Building Pathways and Spaces = Horizontal Cross-Connect = Telecommunications Room TR = Fiber Backbone Cable = Horizontal Cable HC

37. Copyright 2003, Telecommunications Industry Association. 37 Zone (“Tiny TR”) Telecom Enclosure Standards Update  TIA TR-42.3  Defines telecom enclosure  Out for default ballot  To be included in 569-B  TIA TR-42.1  Defines cabling implementation  Balloted in July  To be addendum to 568-B.1 Both standards expected by February 2004

38. Copyright 2003, Telecommunications Industry Association. 38 FTTZ, Tier I Switch Scenario 4  Tier I UTP Switch  SG fiber switch with 100 Mbps uplink  Fiber network saves  $170,173.25  $443.18/port  65%

39. Copyright 2003, Telecommunications Industry Association. 39 FTTZ, Tier I Switch: Details Fiber to the Zone Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room 216.1054.3825.0335.00 Fiber in & to telecom room 0.791.050.410.00 Support costs 426.0493.750.630.00 Equipment room 8.4730.570.4620.00 Total cost per port 677.93 234.75

40. Copyright 2003, Telecommunications Industry Association. 40 K-12 FTTZ Scenario 3  Like previous scenario but technician cost of $78/node added to UTP cost [1 hr/wk; 5 yrs; $30k/yr]  Fiber network saves  $200,173.25  $521.31/port  69%

41. Copyright 2003, Telecommunications Industry Association. 41 K-12 FTTZ: Details K-12 Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room $216.10$54.38$25.03$35.00 Fiber in & to telecom room 0.791.050.410.00 Support costs 504.1793.750.630.00 Equipment room 8.4730.570.4620.00 Total cost per port 756.06 234.75

42. Copyright 2003, Telecommunications Industry Association. 42 Reducing Fiber LAN Electronics Costs TIA/EIA-785 Standard Ratified, May 2001  Low cost, 850 nm LED-based optics  300 meter support  Designed for 62.5 or 50  m multimode fiber  10/100 auto-negotiation support  Parallel detection for interoperability with installed base of 10BASE-FL devices  Not intended to replace or be compatible with 100BASE-FX optoelectronics  Addendum #1 expected to lower costs further Addendum #1 Released 12-23-02

43. Copyright 2003, Telecommunications Industry Association. 43  Media converters  Install new fiber infrastructure  Use legacy electronics until end of useful life  Incrementally upgrade to fiber as required  Convert point-to-point links and workstations-to-hubs/switches  NIC cards  Conversion to fiber at the PC  New PC card products available 100BASE-SX Wall Outlet Media Converter 100BASE-SX Electronics First Dual-Speed Fiber Ethernet 100BASE-SX Fiber PC Card (PCMCIA)

44. Copyright 2003, Telecommunications Industry Association. 44 100BASE-SX, List Price Scenario 11  Compares the cost of 100BASE-SX electronics to Cat. 6 UTP. Assumes volume pricing.  Fiber network saves:  $41,844.61  $108.98 /port  15%

45. Copyright 2003, Telecommunications Industry Association. 45 100BASE-SX, List Price: Details 100BASE-SX List Price Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room 239.49202.4325.0335.00 Fiber in & to telecom room 0.7914.130.410.00 Support costs 426.0493.750.630.00 Equipment room 13.21231.770.4620.00 Total cost per port 706.06 597.08

46. Copyright 2003, Telecommunications Industry Association. 46 100BASE-SX, 90 % List Price Scenario 12  Based on previous scenario with 10% discount on 100BASE-SX electronics  Fiber network saves  $52,318.28  $136.25 /port  19%

47. Copyright 2003, Telecommunications Industry Association. 47 100BaseSx, 90 % List Price: Details 100BASE-SX Street Price Materials/Node ($) UTP/fiber All fiber Labor ($) UTP/fiber All fiber Desktop to telecom room 239.49190.4325.0335.00 Fiber in & to telecom room 0.7914.130.410.00 Support costs 426.0493.750.630.00 Equipment room 13.21216.500.4620.00 Total cost per port 706.06 569.81

48. Copyright 2003, Telecommunications Industry Association. 48 Cost Analysis Summary, Part 1 Where Fiber Makes Sense Today Scenario UTP/fiber All Fiber Fiber $ premium/ savings Fiber % premium/ savings (1) SG at list price $678.04$636.25$41.796% (2) SG at 80% list price $678.04$576.53$101.5115% (3) K-12 $756.06$234.75$521.3169% (4) Fiber to the zone $677.93$234.75$443.1865% (5) Tier II electronics, street $630.51$504.74$125.7720% (6) Tier I electronics mixed price sources $651.90$516.41$135.4921% (7) Tier I electronics reduced cost switch $641.34$516.41$124.9319%

49. Copyright 2003, Telecommunications Industry Association. 49 Cost Analysis Summary, Part 2 Where Fiber Makes Sense Today Scenario UTP/fiber All Fiber Fiber $ premium/ savings Fiber % premium/ savings (8) Cat 6 Tier I cable $706.06$516.41$189.6527% (9) Cat 6, Tier II cable $700.14$516.41$183.7326% (10) Low cost solution $606.40$586.55$19.853% (11) 100BASE-SX at list price $706.06$597.08$108.9815% (12) 100BASE-SX at street price $706.06$569.81$136.2519% Fiber less than copper in every scenario examined. Average fiber savings: $177.70/port (26%)

50. Copyright 2003, Telecommunications Industry Association. 50 Second generation cost model sample screen

51. Copyright 2003, Telecommunications Industry Association. 51 Download from www.fols.org & input your own numberswww.fols.org Developed by Pearson Technologies and the TIA Fiber Optics LAN Section

52. Copyright 2003, Telecommunications Industry Association. 52  Georgia Public Broadcasting  Berne University (Switzerland)  Tullahoma, TN City Schools  Simon & Schuster  American Museum of Natural History  DreamWorks Studios  NASA Goddard Space Flight Center  George Washington University  Binghamton University  Smith Barney  New York City Public Schools (199)  The Gleason Works  J. Paul Getty Center  Siemens ICN  Ohio Board of Regents  Bally’s Las Vegas  Metropolitan Nashville Public Schools  U.S.A.F. Research Laboratory, Wright Patterson Air Force Base  Hilton Hawaiian Village * Various published sources Centralized Fiber Cabling Installations Recent Installations

53. Fiber to the Desk Where Is It Cost-Effective Today? Most New Buildings, Most Retrofits of Older Buildings Schools [FTTZ] Fiber-To-The-Zone Copyright © 2003, Telecommunications Industry Association.

54. Copyright 2003, Telecommunications Industry Association. 54 Acknowledgement  Mr. John Struhar, Chairman of the FOLS, developed this presentation with input from members of the FOLS.

55. Copyright 2003, Telecommunications Industry Association. 55 Thank you for your attention. www.fols.org