As advanced triple-play and quad-play services become a reality, system vendors are required to understand the services as well as the network and equipment that drive them. Home networks are at the end-point of most of these advanced data, voice and video services, terminating the service and interacting directly with the end-user.

The purpose of this paper is to familiarize you with the home networking market, drivers and technologies. Special emphasis will be put on Home Gateways, which are seen by several service providers as an extension of their access network into the end-user’s home.

This paper is based on information collected through customer meetings, conferences, and analyst briefings and reports.

Broadband penetration
The broadband market has experienced significant growth in recent years. At the end of the third quarter of 2005 there were 190 million broadband subscribers worldwide¹. Compared to 152 million subscribers at the end of 2004, this represents a 25% growth year-over-year, and adds to a 52% growth in worldwide broadband subscribers in 2004².

Residential broadband access speeds
Residential broadband access speed offerings have seen a remarkable increase since 2002. Average maximum access speeds offered by European incumbents have gone from under 1Mbps in 2002 to just over 7.5Mbps in 2005³. Among European alternative service providers the rise has been even more dramatic, reaching 22Mbps in 2005.

From multiple PCs to advanced services
Traditionally, the most basic requirement and main driver of home networks has been the ability for two or more computers to share a single broadband Internet connection. In 2005, 31% of US households had more than one PC⁴. Twenty six percent of US broadband households had a home network. As service providers begin to offer advanced services such as Voice over Internet Protocol (VoIP) and IP Television (IPTV), the requirements of these services become the new drivers for the growing prevalence and acceptance of home networks.

The introduction of these advanced services into the home network brings with it new challenges:

• Increased home network complexity and ease of use issues. These translate into user acceptance barriers and to higher service provider support Operating Expenses (OPEX).
• Home multimedia content distribution challenges.

These challenges will be discussed later in this paper.

What is a home gateway?
A home gateway is defined as an intelligent, software-intensive, future-proof, remotely managed service enabler that in most cases is supplied to the customer by the service provider.

Market size
The total market for home gateways is expected to reach approximately 230 million units by 2009⁵. The unit price of home gateways is expected to decrease from $95 in 2005 to $80 in 2009, resulting in a conservative worldwide market size of roughly $18 Billion.

Home gateway market trends and drivers
The evolution of home gateways away from traditional simple Customer Premises Equipment (CPE) is being driven by the following factors:

• Strategic importance to service providers – Traditionally, simple modems and CPE were provided to customers as connectivity only devices. As service providers face increasing competition from other providers, one of their defense mechanisms becomes the home gateway. The home gateway is the service provider’s outreach into the home environment and is the only point in the network that directly interacts with the customer. By providing their customers with a branded, smart home gateway that enables unique services and functionality, service providers can create the much-needed “stickiness” factor that will keep customers from churning to the competition. Examples can be seen in the home gateway strategies of France Telecom/Wanadoo (Livebox), Telecom Italia (Discus), Free (Freebox), and others.
• Software functionality – Simple CPE is based mainly around modem functionality, with some software added to allow connectivity. With home gateways, the hardware modem functionality is still in place, but the real value of the device is derived from the accompanying software. Advanced software providing security, VoIP, Quality of Service (QoS), remote management, and other advanced functionality creates the real value of the device.
• Project specific – CPE is generally mass-produced commodity devices. As such, they aim to satisfy the requirements of a wide range of customers and projects, with little or no customization. Home gateways are designed to differentiate the service provider’s offering from that of the competition. As such, home gateways are highly customized devices, specially tailored for each service provider and each project/geography.
• Remote management – Home gateways are designed to enable advanced services. Deployment of such services is expected to significantly increase service providers’ customer support OPEX. Under these conditions, truck-roll reducing remote management becomes a necessity. Service providers deploying home gateways expect these devices to have a lifespan of 4-5 years⁶, during which services are bound to evolve and change. The ability to remotely deploy, provision, manage, and maintain services is a must have for service providers.

Will home gateways become commodity products?
Over the last four years, the CPE market has become a commodity price-driven market. Is the home gateway market set to follow?
Let us examine the respective food chains and players of both the CPE and home gateway markets.

CPE food chain

CPE has traditionally been manufactured in a three-link food chain.

• Silicon vendors, such as Infineon, Texas Instruments, Conexant, that produce modem silicon provide along with their chip a hardware reference design and a software package. The reference design and software are provided to Original Design Manufacturers (ODMs) at little or no charge as a means of selling silicon.
• ODMs, such as Asustek, Askey, Castlenet, are hardware manufacturers, usually located in the Far East. ODMs perform cost reduction of the silicon vendors’ reference design to fit specific product lines and make minor software customizations to the provided software packages. They then package the CPE according to system vendors’ branding requirements.
• System vendors resell the CPE.

Home gateway food chain

The software complexity required of home gateways, along with the high degree of customization per service provider, create a gap in the CPE food chain. Silicon vendors cannot afford to support the software requirements at a loss as a tool for selling silicon. ODMs don’t have the software capabilities, nor is it in their business model to support the software and customization requirements. Whereas ODMs base their business on low cost, high volume products, home gateways are developing into intensive, lower volume products.

System vendors must fill this gap with support from a new link in the food chain — the software vendor. Software vendors, such as Ashley Laurent, Intoto, Jungo, Wipro, specialize in the development of software for embedded systems and home gateways. They provide generic solutions as well as the professional services required for customization.

In order to provide home gateways, system vendors can

• Develop their software on their own (e.g. Thomson, 2Wire)
• Original Equipment Manufacture (OEM) the software completely to a software vendor (Linksys is an example), or
• OEM the generic software and develop customization and differentiation on their own.

Shift in value chain
This shift in the food chain from CPE to the home gateway creates a non-commodity product. Home gateway hardware will most likely continue to be manufactured by ODMs, while the more significant software elements will be developed by software vendors and system vendors.

Currently, dedicated vendors such as Thomson, 2Wire, Pirelli and AVM, mostly own the home gateway market. These vendors have either evolved from CPE and home device manufacturers (Thomson, AVM) or have pioneered the home gateway market (2Wire).

As the home gateway market becomes a reality, and as service providers increasingly see the home gateway as part of their network, network equipment vendors are taking up positions in the market. Today most network equipment vendors have a stake in the home gateway market in one way or another:

• Alcatel: Alcatel sold their CPE division to Thomson in 2004. In December 2005 Alcatel acquired 25% of 2Wire as part of a deal with AT&T.
• Siemens: Siemens developed their own home gateways for the European market and acquired Efficient Networks in 2001 to support the US market.
• Cisco: Cisco acquired Linksys in 2003 as a residential and Small/Medium Business (SMB) division. In November 2005 Cisco acquired Scientific Atlanta to extend its reach into the home with a set-top box offering.
• ZTE: ZTE promotes a complete home networking solution and has answered European home gateway tenders.
• Huawei: Huawei sells a home gateway product, although the specific functionalities are not clear at this point.
• ECI Telecom: ECI caters to the home gateway market through its complete product line of B-FOCuS and G-Light gateways.

One of the major challenges confronting service providers in the deployment of residential multimedia services is the issue of home content distribution. Providing the customer with a fast Internet connection that supports the bandwidth required for multimedia services is just one side of the equation. Once a media stream reaches the home, it needs to be distributed to the end devices (e.g. set-top box). This, as it turns out, is not a trivial task.

In an ideal world, the content would be distributed through the home over wireless connections. In this scenario, the home gateway would act as a wireless access point and each end device would include a wireless client. In the real world, today’s wireless technologies do not provide the consistent bandwidth and QoS, required to support streaming multimedia content.

The next solution that comes to mind is home networking over Category 5 (CAT5) cables. This would provide 100Mbps connectivity to any point in the home. However, in existing homes the OPEX involved with deploying CAT5, as well as customers’ reluctance to spin new wires through their homes, eliminate CAT5 as a viable option in most situations. So the challenge remains: how to deploy advanced services over existing home wires? This section reviews the available alternatives to overcoming the challenge.

HomePNA 3.0
The Home Phoneline Networking Alliance defines the HomePNA 3.0 standard for home networking over existing twisted-pair and coax cables. The alliance is led by 3Com, AMD, Intel, AT&T Compaq, HP, IBM and Lucent, as well as others.

HomePNA 3.0 reaches a tested speed of 128Mbps and has been selected by AT&T as the main home networking technology for their Project Lightspeed.

MoCA
The Multimedia over Coax Alliance defines the MoCA standard for home networking over existing coax cables. The alliance is led by Cisco, Comcast, Motorola, Panasonic and Toshiba as well as others.

MoCA reaches a tested speed of 270Mbps and has been selected by Verizon as the main home networking technology for their FiOS project.

Wireless LAN (WLAN): 802.11g / 802.11n
IEEE defines WLAN standards under the 802.11 working groups. The WiFi Alliance defines interoperability standards and testing requirements for WLAN equipment.

The most common WLAN technology being deployed today works according to the 802.11g standard. 802.11g reaches a theoretical speed of 54Mbps. However, in real world situations the maximum speed is typically in the range of 20Mbps and decreases dramatically when interference or walls are present.

802.11n is an upcoming standard that aims to resolve the issues plaguing 802.11g and allow multimedia over WLAN. 802.11n uses Multi-Input Multi-Output technology to enable increased speed (reportedly up to 500Mbps) and range. 802.11n is currently under definition with plans for standard ratification toward the end of 2006.

Powerline - HomePlug AV
The HomePlug Power Alliance defines the HomePlug AV standard for home networking over power line cables. The alliance is led by Linksys, Comcast, Earthlink, Intel, Radio Shack, Sharp and Sony as well as others.

HomePlug AV reaches a speed of 100Mbps. However, at the time of writing there is no available technology supporting the full rate.

It is important to note that there are other powerline communications technologies under development such as that defined by the Universal Powerline Association (UPA).

Other wireless technologies

• Bluetooth
• Zigbee
• UWB

Used for specific applications, such as digital home control, short-range communications and others.

Which technology will be the winner?
As listed in this section, there are several available technologies that enable home networking over existing wires. Since different homes in different geographies have different existing home wiring, each location will require a different solution. For example, homes in North America are usually extensively wired with coax. Operators in North America can therefore take advantage of HomePNA 3.0 and MoCA technologies. In some European countries, on the other hand, coax and twisted-pair are almost non-existent. In these countries, powerline home networking technologies such as HomePlug will most likely be used.

Several standards bodies are active in defining elements and interactions within the home network.

DSLHome (within the DSL Forum)

• Deals with control, management, provisioning of devices and services.
• Members include all major industry players.
• Main contributors for home networking: 2Wire, Texas Instruments, Westell.

CableLabs

• The US cable industry’s standards body.
• DOCSIS: Defines cable modem interface. DOCSIS 2.0 widely deployed. DOCSIS 3.0 is the next standard.
• CableHome: Home networking standard. CableHome 1.1 required by all Multiple Service Operator (MSO) tenders. No real deployment to date.
• PacketCable: MGCP-based VoIP standard.
• Main contributors: Texas Instruments, Broadcom, cable modem vendors.

DLNA – Digital Living Network Alliance

• Design guidelines for interoperability and convergence of PCs, consumer electronics, and mobile devices.
• Deals with device and service discovery and control; and media format, transport model, management, distribution and control.
• Led by: HP, IBM, Intel, Huawei, Motorola, Nokia, Microsoft, and others.

UPnP - Universal Plug and Play

• Enabling simple and robust connectivity among stand-alone devices and PCs.
• UPnP AV defines multimedia entities and their interaction.
• Led by: Microsoft, Broadcom, HP, Intel, Siemens, Texas Instruments, Sony, and others.

OSGi Alliance – Open Services Gateway Initiative

• Definition of an industry standard for an open service management and delivery platform.
• Led by: Deutsche Telekom, France Telecom, Ericsson, IBM, Intel, Korea Telecom, NTT, Nokia, Siemens and others.

HGI — Home Gateway Initiative

• Deals with end-to-end service deployment, based on real world service use cases.
• European-led initiative to define the NG service-enabling home gateway.
• Established by European carriers: France Telecom, British Telecom, Deutsche Telekom, Telecom Italia, Telefonica, others.
• Opened for system vendor participation in April 2005.

As service providers deploy advanced services such as VoIP and IPTV in the residential market, the importance of the home network and the network devices that drive these services intensifies. Increasingly, service providers see the home network as the battleground over which customer ownership will be fought. To win, carriers are looking to extending their network into the home. They do so through the introduction of smart, branded home gateways that replace the simple modem CPE of the past. These devices allow them to offer a wider range of advanced services and differentiated offerings, which could ultimately swing the customer in their favor.

Network equipment vendors catering to the needs of these service providers are obliged to understand these developments and need to react and provide solutions where needed.

Ron Levin is Home Networking Marketing Manager within ECI Telecom’s Broadband Access Division, where he is responsible for ECI’s home networking solutions. Prior to ECI, Mr. Levin was Product Manager at Jungo Software Technologies, a developer of software for home and small business gateways. Mr. Levin is a contributing member of the Home Gateway Initiative (HGI). Mr. Levin holds a MSc in Management from the University of Tel Aviv and a BSc in Computer Engineering from the Technion, Haifa.

ECI provides advanced telecommunications solutions to leading carriers and service providers worldwide. By translating a deep understanding of customer needs into innovative, technology excellent solutions, ECI enables its customers to increase network value and reduce operating expenses. ECI’s platforms enable carriers and service providers to easily introduce new revenue-generating services. ECI pioneered key technologies including voice compression, SDH, and DSL, and has enabled the establishment of global networks. ECI specializes in metro optical networks, broadband access, bandwidth management and carrier-class VoIP solutions.

Educational content provided by ECI Telecom