What, I think, you mean to say is "Layer 1" of the OSI model, which is still incorrect. An active device, even when "dumb" is a "Layer 2" (Data Link) device. Ultimately a "bridge" networking device. The device is doing local media conversion which can't be accomplished by physical media interconnects alone. Even if the data link protocol is the same on both sides bridging the media types often requires a conversion. But in the case of ONT it's not going to be Ethernet on the WAN / carrier side. Not sure of the setup here but the PON is usually a very "dumb" last mile as it's often some sort of DWDM driven headend that's splitting out wavelengths for downstream consumption by the PON via the OLT and then broken out to Ethernet on the CPE, which is an ONU in this case.
> In networking terms it's "Level 1"
What, I think, you mean to say is "Layer 1" of the OSI model, which is still incorrect. An active device, even when "dumb" is a "Layer 2" (Data Link) device. Ultimately a "bridge" networking device. The device is doing local media conversion which can't be accomplished by physical media interconnects alone. Even if the data link protocol is the same on both sides bridging the media types often requires a conversion. But in the case of ONT it's not going to be Ethernet on the WAN / carrier side. Not sure of the setup here but the PON is usually a very "dumb" last mile as it's often some sort of DWDM driven headend that's splitting out wavelengths for downstream consumption by the PON via the OLT and then broken out to Ethernet on the CPE, which is an ONU in this case.