2020 broadband access equipment sales to drop more than originally expected: Dell’Oro
Dell’Oro Group now expects worldwide spending on broadband access equipment to drop 7% in 2020, a gloomier outlook than the 5% decline it anticipated back in January of this year. However, the increase in bandwidth demand driven by work- and stay-at-home initiatives to stem the spread of COVID-19 should create a reversal of fortunes in 2021, the market research firm predicts in its most recent Broadband Access 5-Year Forecast Report.
Revenues for 2020 should slip to $11.4 billion in 2020, before rebounding to grow by 5% next year, according to the report. Emblematic of this two-year dynamic is the cable broadband segment. Cable MSOs are working off what Dell’Oro analysts describe as a “glut of DOCSIS channel capacity” that depressed equipment spending last year. Operators often have been able to bring on reserve capacity with minimal spending in response to pandemic-led bandwidth demand jumps, all while postponing investments in next-generation Digital Access Architecture (DAA) technology. Dell’Oro analysts believe DAA projects will resume either in the latter half of this year or 2021.
Looking forward, after what the market research firm terms “two years of under-investing in infrastructure,” cable operators should increase spending over the 2019-2024 forecast period. In North America and Western Europe, much of this spending will target mid- and high-split projects to increase upstream capacity.
Similarly, spending on PON gear, particularly optical network terminals (ONTs), should turn around as well. In fact, Dell’Oro has increased its forecast of PON-related revenues over the next five years from flat to an increase of just under 1%. As usual, a lot of this spending will be driven by Chinese operators, whose fiber to the home (FTTH) roll-outs have peaked as penetration approaches 80%. However, a transition to 10G-PON is underway, requiring new ONTs for an upgrade cycle that Dell’Oro estimates will last longer than original EPON and GPON roll-outs. Meanwhile, growth opportunities remain in North America and Western Europe, where FTTH penetration is nowhere near that of China and a move toward 10G-PON is expected as well. Similar adoption of 10G-PON is underway in Japan and South Korea, while PON gear requirements in India, Indonesia, and Malaysia should be significant during the forecast period as well.
Overall, Dell’Oro balances its greater pessimism for 2020 broadband gear demand with a more positive attitude for the five-year forecast period. The market research firm has revised its forecast for the 2019-2024 timeframe from the -2% CAGR predicted in its January report to -0.9% now.
Dell’Oro’s Broadband Access 5-Year Forecast Report provides tables covering manufacturers’ revenue, average selling prices, and port/unit shipments for cable, DSL, and PON equipment. Such equipment includes Converged Cable Access Platforms (CCAPs); DAA; DSL access multiplexers (DSLAMs) by technology (ADSL/ADSL2+, G.SHDSL, VDSL, VDSL Profile 35b, G.fast); PON optical line terminals (OLTs); CPE for cable, DSL, and PON; and SOHO WLAN equipment, including mesh routers.
For related articles, visit the Business Topic Center.
For more information on FTTx technology and suppliers, visit the Lightwave Buyer’s Guide.
To stay abreast of optical communications technology, subscribe to Lightwave’s Enabling Technologies Newsletter.
Stephen Hardy | Editorial Director and Associate Publisher, Lightwave
Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.
Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.
He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.
You can connect with Stephen on LinkedIn as well as Twitter.