The broadband access equipment market, and particular PON, is growing, propelled by COVID-19's impact on bandwidth demand from work and study at home. PON has supported FTTH subscriber growth for years, with initial strength in the Asia-Pacific region, followed by EMEA, and more recently in North American and South and Central America. Next-gen PON, namely 10G PON, is gaining momentum, extending the use of the same infrastructure for SMEs, smart cities, and 5G small cell transport. Network reuse supports faster ROI for CSPs, whether integrated, fixed-only or wholesale-only.
COVID propelled PON and upgrades; the positive impact will continue
Many access network demand drivers will continue post-pandemic as people continue to work or study from home more than ever. Virtual social communications will continue given their popularity and video streaming will remain strong.
The pandemic accelerated the adoption of next-gen PON. Next-gen PON OLT port shipments approached 830,000 in 2Q20, up 70% YoY. By 2025, the majority of GPON ONTs/ONUs will be 10G capable.
COVID-19 highlighted the broadband digital divide between the haves and have-nots. Several governments have initiated major programs to lessen the digital divide, including the Rural Digital Opportunity Fund in the US. In July, Openreach outlined plans to make ultra-reliable and gigabit-capable FTTP broadband to some of the UK’s hardest to serve homes and businesses.
PON infrastructure reuse is ubiquitous today
FMC goals include a single, fiber-based access network to support multiple service segments. PON infrastructure is fulfilling this role. CSPs are accelerating the reuse of their PON infrastructure for nonresidential customers and applications, such as SMEs, smart cities, and xHaul (transport for 5G small cells). Next-gen PON, such as 10G, and in the future 25G, can easily support gigabit and multigigabit symmetrical bandwidths. This strategy provides CSPs with additional sources of revenue, leading to faster ROI.
- Smaller CSPs use 10G PON to support SMEs in a business district while efficiently using limited fiber assets. Larger CSPs move existing SME customers to 10G PON networks, and use point-to-point fiber for higher-value subscribers, such as enterprises.
- CSPs are supporting video surveillance for municipalities through 10G PON and cloud-based services. PON infrastructure can reach long distances, thereby streamlining public safety network design and operations.
- PON infrastructure has been used to support small cell backhaul but 10G PON can support the higher bandwidth due to dense 5G small cell deployments. PON’s point-to-multipoint topology enables fiber asset efficiency versus point-to-point solutions. This efficiency becomes vital when a CSP plans to deploy significant volumes of small cells.
The vendor landscape is shifting, reflecting opportunities
The traditional PON equipment vendor landscape is changing with three new challenger groups:
- Switching and routing vendors;
- Cable broadband solution providers; and
- SD (software-defined) white box/disaggregated-focused solution providers
The challengers see interest from many CSPs for less traditional PON infrastructure approaches, such as enabling switching and routing equipment to support PON OLT functions or, for cable operators, the ability to use the same cloud-based operating system regardless of the underlying medium, whether coax or fiber. Other CSPs are still transitioning to a more SD environment that encompasses white box solutions versus traditional OLT chassis.
In parallel, selected PON equipment vendors face significant opportunities to increase market share due to "clean network" policies and strong PON deployments in Western Europe.
PON equipment must choose their opportunities wisely given the strong growth in PON deployments and upgrades by CSPs. They must focus on how their solutions solve CSP challenges while enabling faster ROI.
– Julie Kunstler, Senior Principal Analyst, Omdia