In a new report, the Dell’Oro group has revised down the expected 5% decline in broadband access equipment spending to a 7% fall now, to hit US$11.4 billion worldwide, and then it will rise 5% next year.
Report author Jeff Heynen (pictured), senior research director at the group, said: “The pandemic and its resulting orders to stay at home for work and education have shown the world just how critical adequate broadband access is to the global economy. As a result, global initiatives to expand and improve broadband access are either underway or will be shortly.”
Nearly all service providers told Dell’Oro that “they have reached their planned capacity utilization rates for the entire year in the first half of 2020”, said Heynen. “Thus, they will need to expand this capacity to maintain comfortable operating levels.”
Dell’Oro said in January it expected the market to fall by an average 2% a year between 2019 and 2024. Now it has revised that upwards, but still forecasts an average fall of 0.9% a year over the five-year period.
However, spending on passive optical networks (PONs) will rise to 1% a year, up from the research company’s previous estimate of a flat market. “China, which has historically accounted for anywhere from 65-80% of total PON spending, has peaked in terms of total ONT [optical network termination] units consumed on an annual basis. The Chinese FTTH [fibre-to-the-home] market has matured, with broadband penetration in the country reportedly nearing 80%.
As the Chinese market plateaus, the group expects additional growth from the rest of the world – particularly North America and western Europe.
The Rural Digital Opportunity Fund (RDOF), run by the Federal Communications Commission (FCC) in the US, will spend $20 billion to “help transition a significant number of rural areas to fibre”, and “in western Europe, major operators including Orange, DT [Deutsche Telekom], BT Openreach, and Proximus [in Belgium] are all expanding their fibre rollouts and even moving quickly to XGS-PON for symmetric 10 G services”, says the report.
