Spending on PON and cable equipment, along with fixed wireless customer premises equipment (CPE), will peak in 2024, largely thanks to a ramp-up of fiber buildouts and broadband network subsidization programs, Dell'Oro Group predicts in its latest five-year forecast.

Dell'Oro expects total spending across those markets to reach $95 billion between 2021 and 2026, with annual revenues peaking at $18 billion in 2024.

Figure 1:

Helping to fuel the fixed wireless trend, Verizon added 78,000 FWA customers in Q4 2021, extending its total to 228,000. Pictured is the CPE for Verizon's 5G Home service.
(Source: Verizon)

While PON equipment and fixed wireless CPE segments are on a growth tear, cable equipment spending is expected to flatten out, even with distributed access architecture (DAA) and DOCSIS 4.0 upgrades still on the horizon.

Sticking with cable, Dell'Oro projects that revenues for distributed access equipment – including virtual converged cable access platforms (vCCAPs), remote PHY devices and remote MACPHY devices – will climb to nearly $900 million by 2024 as operators pursue DOCSIS 4.0 upgrades.

Cable spending will level off and come nowhere near the heights seen in 2017 and 2018 when MSOs were building out DOCSIS 3.1 access networks, according to Jeff Heynen, VP of broadband access and home networking at Dell'Oro Group.

DAA deployments are underway, and DOCSIS 4.0 is coming. But the size of the overall DOCSIS market is expected to shrink as operators pursue fiber-to-the-premises (FTTP) deployments in greenfield areas, and in some cases, FTTP overlays and fiber upgrades in brownfield areas currently served by hybrid fiber/coax (HFC) networks. Examples of the latter include Altice USA's fiber upgrade activity in its Optimum footprint in New York, New Jersey and Connecticut, and Virgin Media O2's major FTTP deployment underway in the UK.

"The pie for DOCSIS is expected to get smaller with respect to the addressable customer base in the long term," Heynen said. He added that some cable operators may opt for FTTP in areas where they face competitive threats from fiber broadband providers or decide to make the leap to FTTP rather than deploying amps and filters to freshen up aging HFC infrastructure.

Bullish on fixed wireless and PON

Dell'Oro's new five-year forecast is its first to include fixed wireless CPE. The firm expects spending in that category to surge to $2.8 billion by 2026.

As for growth trends, Heynen notes that T-Mobile and Verizon are getting traction with their respective fixed wireless access services, while operators in regions such as the Middle East and Africa are seeing growth from their 4G/LTE-based offerings.

On the PON front, Dell'Oro expects annual revenues to jump from $8.3 billion in 2021 to $9.8 billion in 2026, driven largely by XGS-PON deployments in multiple regions around the globe. Heynen said peak PON equipment spending will likely reach $10.2 billion in 2024, attributing the increase in part to subsidy programs such as the US Rural Digital Opportunity Fund, large-scale fiber rollouts from companies such as BT and China's anticipated shift to 50-Gig PON.

"Valuation of fiber networks coming out are off the charts, and that's helping to drive more investment in additional fiber expansions," Heynen said.

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— Jeff Baumgartner, Senior Editor, Light Reading