PONs generally consist of an OLT (Optical Line Termination), which is connected to ONUs (Optical Network Units), aka subscriber terminals, using only fibre cables, optical splitters and other passive components (do not transmit signals using electricity). Up to 32 ONUs can be connected to an OLT.

The OLT is located at a local exchange, and the ONU is located either on the street, in a building, or even in a user's home.

PONs rely on lightwaves for data transfer.

In a PON, signals are routed over the local link with all signals along that link going to all interim transfer points. Optical splitters route signals through the network; optical receivers at intermediate points and subscriber terminals tuned for specific wavelengths of light direct signals intended for their groups of subscribers. At the final destination, a specific residence or business can detect its specified signal.

PONs are capable of delivering high volumes of upstream and downstream bandwidth (up to 622 Mbps downstream and 155 Mbps upstream), which can be changed "on-the-fly" depending on an individual user's needs.

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