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The sky is the limit for the global FTTx market in 2015, but what should we expect in 2016-2020?



LightCounting releases a report titled “Next Generation FTTx Optics: Catching the Second Wave 2015-2020



As this newsletter “goes to print”, the Chinese government is still searching for measures to sustain growth in the domestic stock market, but it had no problem boosting growth in the FTTx market earlier this year.

Figure 1 shows the original projections for the number of global FTTx subscribers and the new plan, reflecting the latest decision made by the Chinese government.

Figure 1: Global FTTx subscribers (Historical data and Forecast)

Although China’s 70 million FTTx subscribers was the most of any country at the end of 2014, it ranked 82nd in average broadband connectivity speed, according to Akamai’s State of the Internet report.

On May 13, 2015 Premier Li proposed that broadband connectivity speeds should be doubled, while cost to end-users be reduced by 40% by the end of 2015. A week later China’s State Council issued guidance on accelerating broadband network construction.

The original plan for China was to increase the number of FTTx subscribers to 110 million in 2015, adding more than 40 million new optical connections. The new target for 2015 seems to be closer to 70 million new connections, limited only by the production capacity of GPON ONU and laser suppliers.

The hard work of installing fiber to the home is well ahead of the FTTx subscriber growth in China, with close to 170 million FTTx ports installed by the end of 2014. With just 70 million existing FTTx subscribers, there are 100 million more potential customers eligible for faster connectivity, if they are willing to pay for it. Premier Li’s suggestion of a 40% cost reduction dimmed service providers’ hopes of charging more for higher speed connections.

This situation was reflected in another recent initiative of China’s Ministry of Industry and Information Technology (MIIT) -- to replace all DSL connections in urban areas with fiber by the end of 2017. Realization of such a program would boost the number of FTTx subscribers in China to more than 200 million or about half of the households in the country.

Our research indicates that implementation of DSL replacement with fiber connectivity is well under way. China’s FTTx subscriber numbers already exceed 100 million, and 140 million subscribers by the end of 2015 seems within reach. The GPON market is red hot in 2015 and it should remain strong in 2016-2017.

What happens to the FTTx market in 2018-2020 depends on deployments of next generation PON technologies and use of optical connectivity in the densely populated developing countries of South Asia. There is very little doubt that China will be exporting their broadband networking expertise and technology, just like it does with its energy and transportation programs.

The total market opportunity for FTTx component suppliers is projected to reach $8 billion over the 6-year period of 2015-2020.

This new report provides a detailed look at the FTTx optical component opportunity, focusing on how product requirements will evolve over time due to changing operator service models and network architectures. It provides a five-year forecast of transceiver, BOSA, and triplexer shipment volumes, prices, and revenues, with breakdowns by architecture and by OLT/ONU. Current and future FTTx architectures, service provider deployment strategies and trends, component requirements, products sold today, and the products needed for future systems are discussed. Leading vendors of FTTx equipment and components are profiled, and historical shipment data is included, along with a visual guide to FTTx networking.

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ABOUT LIGHTCOUNTING MARKET RESEARCH
LightCounting is a leading optical communications market research company, offering semiannual market updates, forecasts, and state-of-the-industry reports based on its analysis of primary research with dozens of leading module, component, and system vendors as well as service providers and other users. LightCounting is the optical communications market’s first choice source for the accurate, detailed, and relevant information necessary for doing business in today’s highly competitive environment. For more information, visit: www.LightCounting.com or follow us on Twitter at @LightCounting.