Modems versus Routers

I have to admit that today’s blog is the result of one of my minor pet peeves – I find myself wincing a bit whenever I hear somebody interchange the words modem and router. That’s easy enough to do since today there are a lot of devices in the world that include both a modem and a router. But for somebody who’s been around since the birth of broadband, there is a big distinction. Today’s blog is also a bit nostalgic as I recalled the many kinds of broadband I’ve used during my life.

Modems. A modem is a device that connects a user to an ISP. Before there were ISPs, a modem made a data connection between two points. Modems are specific to the technology being used to make the connection.

In the picture accompanying this blog is an acoustic coupler, which is a modem that makes a data connection using the acoustic signals from an analog telephone. I used a 300 baud modem (which communicated at 300 bps – bits per second) around 1980 at Southwestern Bell when programming in basic. The modem allowed me to connect my telephone to a company mainframe modem and ‘type’ directly into programs stored on the mainframe.

Modems grew faster over time and by the 1990s we could communicate with a dial-up ISP. The first such modem I recalled using communicated at 28.8 kbps (28,800 bits per second). The technology was eventually upgraded to 56 kbps.

Around 2000, I upgraded to a 1 Mbps DSL modem from Verizon. This was a device that sat next to an existing telephone jack. If I recall, this first modem used ADSL technology. The type of DSL matters, because a customer upgrading to a different variety of DSL, such as VDSL2, has to swap to the appropriate modem.

In 2006 I was lucky enough to live in a neighborhood that was getting Verizon FiOS on fiber and I upgraded to 30 Mbps service. The modem for fiber is called an ONT (Optical Network Terminal) and was attached to the outside of my house. Verizon at the time was using BPON technology. A customer would have to swap ONTs to upgrade to newer fiber technologies like GPON.

Today I use broadband from Charter, delivered over a hybrid coaxial network. Cable modems use the DOCSIS standards developed by CableLabs. I have a 135 Mbps connection that is delivered using a DOCSIS 3.0 modem. If I want to upgrade to faster broadband, I’d have to swap to a DOCSIS 3.1 modem – the newest technology on the Charter network.

Routers. A router allows a broadband connection to be split to connect to multiple devices. Modern routers also contain other functions such as the ability to create a firewall or the ability to create a VPN connection.

The most common kind of router in homes is a WiFi router that can connect multiple devices to a single broadband connection. My first WiFi router came with my Verizon FiOS service. It was a single WiFi device intended to serve the whole home. Unfortunately, my house at the time was built in the 1940s and had plaster walls with metal lathing, which created a complete barrier to WiFi signals. Soon after I figured out the limitations on the WiFi I bought my first Ethernet router and used it to string broadband connections using cat 5 cables to other parts of the house. It’s probably good that I was single at the time because I had wires running all over the house!

Today it’s common for an ISP to combine the modem (which talks to the ISP network) and the router (which talks to the devices in the home) into a single device. I’ve always advised clients to not combine the modem and the WiFi router because if you want to upgrade only one of those two functions you have to replace the device. With separate devices, an ISP can upgrade just one function. That’s going to become an issue soon for many ISPs when customers start asking the ISPs to provide WiFi 6 modems.

Some ISPs go beyond a simple modem and router. For example, most Comcast broadband service to single-family homes provide a WiFi router for the home and a second WiFi router that broadcasts to nearby customers outside the home. These dual routers allow Comcast to claim to have millions of public WiFi hotspots.  Many of my clients are now installing networked router systems for customers where multiple routers share the same network. These network systems can provide strong WiFi throughout a home, with the advantage that the same passwords are usable at each router.

Shaking Up the FTTP Industry

Every once in a while I see something in the equipment market that surprises me. One of my clients recently got pricing for building a gigabit PON FTTP network from the Chinese company ZTE. The pricing is far under the market price for other brands of equipment, and it makes me wonder if this is not going to put downward price pressure on the rest of the industry.

There are two primary sets of electronics in a PON network – the OLT and ONTs. The OLT (Optical Line Terminal) is a centrally located piece of equipment that originates the laser signal headed towards customers. The OLT is basically a big bay of lasers that talk to customers. The ONT (Optical Network Terminal) is the device that sits at a customer location that has the matching laser that talks back to the OLT.

ZTE’s pricing is industry shaking. They have priced OLTs at almost a third of the price of their competition. They have been able to do this partially by improving the OLT cards that hold the lasers and each of their cards can connect to twice as many customers as other OLTs. This makes the OLT smaller and more energy efficient. But that alone cannot account for the discount and their pricing is obviously aimed at gaining a foothold in the US market.

The ONT pricing is even more striking. They offer a gigabit Ethernet-only indoor ONT for $45. That price is so low that it almost turns the ONT into a throw away item. This is a very plain ONT. It has one Ethernet port and does not have any way to connect to existing inside wiring for telephone or cable TV. It’s clearly meant to work with WiFi at the customer end to deliver all services. Their pricing is made even more affordable by the fact that they offer lower-than-normal industry prices for the software needed to activate and maintain in future years.

This pricing is going to lead companies to reexamine their planned network design. A lot of service providers still use traditional ONTs that contain multiple Ethernet ports and that also have ports for connection to both telephone copper and cable company coaxial wiring. But those ONTs are still relatively expensive and the most recent quotes I’ve seen put these between $200 and $220.

Using an Ethernet-only ONT means dumping the bandwidth into a WiFi router and using that for all services. That means having to use voice adapters to provide telephone service, similar to what’s been used by VoIP providers for years. But these days I have clients that are launching fiber networks without a voice product, and even if they want to support VoIP the adapters are relatively inexpensive. This network design also means delivering only IPTV if there is a cable product and this ONT could not be used with older analog-based cable headends.

ZTE is an interesting company. They are huge in China and are a $17 Billion company. They make a lot of cellphones, which is their primary product line. But they also make a lot of different kinds of telecom gear like this PON equipment. They claim they FTTP equipment is widely used in China and that they have more FTTP customers connected than most US-based vendors.

This blog is not a blanket endorsement of the company. They have a questionable past. They have been accused of bribery in making sales in Norway and the Philippines. They also were fined by the US Commerce Department for selling technology to North Korea and Iran, both under sanctions. And to the best of my knowledge they are just now trying to crack into the US market, which always is something to consider.

But this kind of drop in FTTP pricing has been needed. It is surprising that OLTs and ONTs from other manufacturers still basically cost the same as they did years ago. We generally expect that as electronics are mass produced that the prices will drop, but we have never seen this in a PON network. One can hope that this kind of pricing will shake up other manufacturers to sharpen their pencils. Larger fiber ISPs already get pricing cheaper than what I mentioned above on today’s equipment. But most of my clients are relatively small and they have little negotiating power with equipment vendors. I hope this shakes the industry a bit – something that’s needed if we want to deploy fiber everywhere.

Indoor or Outdoor ONTs?

I have a lot of clients with FTTP networks and I find it interesting that they have significantly different views for placing subscriber fiber terminals (ONTs) outdoors on the side of the premise versus indoors. There are significant pros and cons for each position and many of my clients wrestle hard with the issue.

Originally in the industry the outdoor ONT was the only option and all the FTTH networks that were built until a few years ago had outdoor ONTs. But now there are pros and cons of each type of ONT, which doesn’t make this an easy decision.

Pros for Outdoor ONTs

  • An outdoor ONT allows technicians to install and service the ONT without having to schedule and coordinate with customers. In today’s world of working families this is often a huge plus in getting access to the ONTs during working hours.
  • Outdoor ONTs are generally undisturbed once installed and customers rarely touch them.
  • Creates a clear demarcation points between the ISP and the customer – what’s inside is the customer’s responsibility.

Cons for Outdoor ONTs

  • If not installed properly the ONTs can allow in water or dust and invite corrosion. But if installed properly this should not be an issue – but those who use contract installers worry about this.
  • Uses existing home wiring. In many cases that means running new copper, coaxial or Cat5 cables.
  • Can be powered outside from the electric meter, but this adds costs and in some states increases installation costs if a licensed electrician is required to tie into a meter. If powered from inside the ONT runs the risk of being unplugged by customers – a fairly common occurrence.

Pros of Indoor ONTs

  • Can be a little less expensive, but that’s not automatic and you need to consider installation labor as well as the cost of the electronics.
  • Avoids the outdoor power issue and can be plugged in anywhere in the home. This makes it easier to deploy where the customer wants it rather than where the fiber happens to hit the house. Generally easy to feed into an existing phone jack for voice service.
  • Allows for customers to help with troubleshooting by looking at the colors of various light indicators.

Cons of Indoor ONTs

  • Requires running fiber through the wall and somewhere into the home. This muddies the demarcation point between ISP and customer.
  • Since the ONT is connected to fiber, there are numerous opportunities for customer to bend, break or pinch the fiber.
  • Customers often walk away with them when they move.
  • One new issue is that many indoor ONTs now include a WiFi modem. Considering the rapid changes in wireless technologies it’s likely that the WiFi modem will need to be upgraded before the normal lifecycle of the ONT, adding considerable replacement costs over time.

The issue become further complicated by the fact that most FTTP vendors now have dual-use ONTs that can be used indoors or outdoors. But even that causes some dilemmas because these ONTs are probably not the perfect solution for either location. But these flexible-use ONTs do allow a company to put some indoors and some outdoors, depending upon the customer situation. But any company that chooses to deploy both ways then faces the dilemma of needing two different set of processes for dealing with technicians and customers – something that most of my clients try to avoid.