Over the past 15 years, the fiber access network has become a global success. The first generation of GPON network has become ubiquitous, and serves hundreds of millions of subscribers. 10G PON is now moving to scale worldwide. And the ITU-T has released first version of next generation PONs standard called higher speed PON on September 2021. This is based on using technology of 50Gbps per wavelength. It means the industry has clearly selected 50G PON for future fiber access technology evolution. Our purpose here is to explain why we believe 50G is the correct choice. The next generation PON will be 50G PON. There are some reasons support this.

First, it has to do with the evolution. As we've seen the evolution from GPON to XG(S)-PON, each generation takes about 8-10 years to move from one to the next and speed increases from generation to generation has to be at least 4 times. Now we are at 10Gbps now. So that means that the next generation is going to have to be at least 40Gbps, and the next commercially viable speed is 50G, hence 50G PON. The second thing is that the standard is clear. The ITU-T has worked on higher-speed PON standardization since 2018, which has selected 50Gbps . And the 50G-PON standard has been officially published in 2021 September already. The entire industry knows the importance of these PON standards, because they help guide both the vendors and the operators to develop and move in the same direction, and only through that we will have a viable ecosystem.
Preference of the Chinese operators should be mentioned. And why the Chinese operators preference so important? It is because China was the first country to reach 100 million subscribers on fiber-to-the-home (FTTH), and it happened in 2015. And currently there are over 480 million subscribers using fiber-to-the-home or fiber-to-the-office technologies.

Chinese operators have declared that 50G PON is their next generation. In fact, they've positively discarded 25G PON as a possibility. Besides the Chinese operators, there are also several tie-1 operators from North America, West Europe explicitly oppose on 25G PON during the standard discussion. Without the support from more than 2/3 of the global market, it is hard to see how any ecosystem could succeed. Also 50G PON fits a wider broadening of the market. 50G PON is more than just increase of the speed. It's being oriented towards more vertical applications, things like front haul, wireless, things like industrial intranets, and other applications that require low latency, high reliability and networks slicing. The 50G PON project has all of those features together.

Now the people who favor 25G PON like to talk about the fact that 25G PON will be cheaper than 50G PON, and it will be available sooner. So they point out that in the Ethernet world, 25G optics have costs reduced. They are going to take advantage of that. The only problem is that this not quite right. The optical specifications for point to point Ethernet and PON are so dramatically different that it's going to be completely different optical modules. You don't get a share of the volume of the Ethernet world. And you have to develop your optics from scratch. That's gonna take time. They like to talk about the fact that, well, 25G must be cheaper than 50G. On first blush, this sounds correct. But it's only true if the volumes are the same. We know that 50G PON is going to have volume of China behind it. Who is going to be driving the volume of 25G PON? It's hard to see. This is perhaps the most important fact of all.

At one last point is that in higher speed PON, this will be the first generation that introduces DSP into the optical transmission system. With the DSP you can make a 25G-rated optic run as 50G quite successfully. And so really, there is no difference in the optics in a 50G ONU vs a 25G ONU. So, there really is no reason to go to 25G. You might as well go to 50G. You will paying for the optics already.
Now, operators are all set to consider the employment risks associated with 25G. You see an operator deploys 25G PON. Their competitors are most likely to play 50G PON. And now they're going to be at a competitive disadvantage. Eventually, they'll have to upgrade to 50G. At best, that means that they're going to have to upgrade twice, 25 and the next to 50. At worst, when they deploy 25G that uses up valuable spectrum on the fiber, there may just be no room to put 50G on that system as well. This requires you to do a lot of fiber re-engineering. It's very costly. And these costs risks really are just too great to bear.

So for these reasons it is clear to us that 50G PON will be the next PON generation. Put simply, it is the right capacity, available at the right time, and at the right cost.