Nortel, through its joint venture with LG, has decided to buy its way into the broadband access market with the purchase of passive optical network (PON) vendor Novera Optics.

LG-Nortel is paying an initial $16 million (€10.4 million), plus a potential extra $10 million (€6.5 million) if certain business targets are met during the next 18 months. The transaction closed on August 1.

Novera Optics specialises in wavelength-division multiplexed PON (WDM-PON), which delivers one wavelength per customer while retaining the advantages of a shared fibre infrastructure. In contrast to GPON, there is no time-sharing of the upstream bandwidth, which allows users to have high-bandwidth symmetrical and secure connections.

Although there appears to be a perception in the telecoms industry that WDM-PON is "tomorrow's technology", Nortel argues that the technology is mature and ready for deployment today. Indeed, Korea Telecom has deployed more than 150,000 subscriber lines using Novera's WDM-PON platform. What's more, Novera's products have recently made their way to Europe and the US via a reseller arrangement with ADC Telecommunications.

Technology cycles are getting shorter, and Nortel believes that GPON's days may already be numbered. "Current access technologies [like GPON] have proven to be inadequate for carriers around the world," Mervyn Kelly, Nortel's director for Carrier Ethernet, EMEA, told fibresystems.org. "Novera's WDM-PON technology addresses this challenge by boosting customer bandwidth and simplifying delivery of high-speed optical communication services in the fibre access network."

It's also worth noting that other vendors, such as Nokia Siemens Networks, have decided to limit their investments in existing GPON technology, because they believe that the window of technology opportunity isn't going to coincide with mass market deployment, which may still be several years off.

Nortel believes that WDM-PON could provide more than enough bandwidth in the access network over a timeframe of a decade or more, making the investment worthwhile.

Question over costs
One of Nortel's key challenges will be to deliver a platform that's affordable — WDM-PON solutions today are typically two or three times the cost of other types of PON solution, according to industry analysts.

"A number of service providers have either evaluated WDM-PON in their laboratories or studied it in detail. They say that it is a good technology but it is not ready for prime time as it is too expensive," Lynn Hutcheson of market research firm Ovum wrote in a industry comment.

What's more, Novera's key customer, Korea Telecom, said in mid 2007 that it was going to significantly curtail WDM-PON installations because it was too expensive, according to Hutcheson.

"This acquisition couldn't have come at a better time [for Novera], with the company approaching an end to its funding and with no significant customer orders in sight," he added.

Novera Optics had raised over $80 million in its lifetime, of which slightly less than half was invested in WDM-PON technology. The earlier portion of funding was invested in acousto-optic tunable filter technology for ROADMs that the company was developing prior to 2004.

Novera's nifty innovation
Products resulting from the Novera Optics acquisition will be announced "fairly soon", according to Nortel's Kelly. In fact, Nortel has already been pitching the technology to potential customers and conference attendees — the vendor gave a presentation at IIR's WDM & Next-Generation Optical Networks conference in Cannes at the end of June.

One of the pieces of nifty innovation in Novera's solution is the laser that's deployed in the customer equipment. "You don't need coloured interfaces at the customer unit — the SFP you plug into your customer unit is exactly the same no matter what wavelength you're on," Oliver Couderc told delegates in Cannes.

The laser itself is a standard Fabry-Perot laser with the isolator removed. A broadband light source at the headend sends out a low-intensity signal, which is sliced by the WDM splitter in the PON, and the laser automatically tunes itself to the received wavelength.

This method eliminates the inventory issues associated with different customers having different wavelengths. It also allows the customer device to track any drift in wavelength resulting from temperature changes at the WDM splitter.