LightTrends

 

Transceivers for mobile fronthaul to top $1 billion by 2020

 

 

LightCounting releases the Second Edition of its “Mobile Fronthaul Optics” report.

 

 

Almost everyone supplying transceivers for fronthaul applications now knows that 2014 was a fantastic year, and that 2015 is a little soft in comparison. In spite of this, LightCounting is predicting that the fronthaul optics market will resume growth in 2016, and reach over $1 billion in sales by the year 2020.

How can we be so sure? First, because the market softness in 2015 is temporary. China Mobile deployed an astonishing 733,000 LTE basestations in 2014, but will only install 100,000 or so this year, partly due to a politically driven reorganization. China Telecom and China Unicom have ramped up LTE deployment now, but it’s not enough to offset the decline in China Mobile’s consumption. However, the LTE tide is still rising around the world and we believe initial deployments and capacity upgrades will increase demand for fronthaul transceivers steadily from now through 2020.

The second reason for our confidence is our analysis of recent data on mobile traffic growth. Figure 1 shows the Internet traffic growth overall, global mobile data traffic, and mobile traffic growth in China. The global mobile traffic is a composite of Cisco VNI and Ericsson Mobility Report data, while the data for China comes from the Chinese Ministry of Industry and Information Technology.

Figure 1 - Network traffic growth rates


Source: Cisco, Ericsson, LightCounting

The traffic growth data shows just how dramatic the shift to mobile networks has been in the smartphone era, with mobile traffic growing at rates 20-25 points higher than overall Internet traffic. And the data from China is even more dramatic, showing a jump in traffic growth in 2015, following deployment of LTE by China Mobile the year before. Over the next five years the growth estimates range from 60% to 40% per year, meaning that mobile networks will have to carry seven times more traffic in 2020 than in 2015. And estimates of mobile data traffic growth have been increasing: Ericsson raised its estimated CAGR from 45% to 55% between its 2014 and 2015 Mobility Reports.

We also use the traffic data to do a ‘sanity check’ on our forecast. First we calculate the total cumulative bandwidth implied by our fronthaul forecast, and then we calculate the associated growth rates, and compare them to the traffic growth rates, as shown in Figure 2. You can see that our forecast growth rates for fronthaul bandwidth are lower than the traffic growth rates, and this is despite the fact that we are predicting significant use of 25G modules for fronthaul starting in 2018. So if anything, we feel our forecast is conservative.

Figure 2 - Fronthaul bandwidth vs. mobile traffic growth rates

Source: LightCounting Market Research

Our updated Mobile Fronthaul Optics report and forecast provides a detailed look at the mobile fronthaul and backhaul optical transceiver opportunity. It provides a five-year forecast of shipment volumes, prices, and revenues, with breakdowns by speed and reach. Current and future fronthaul architectures, service provider deployment trends, component requirements, products sold today, and future needs are discussed. Leading vendors of optical fronthaul transceivers are profiled, and historical shipment data is included, along with a visual guide to mobile networks.

Recently published reports:

  1. State of the Optical Communications Industry, May 2015
  2. High-speed Datacenter Interconnects, June 2015
  3. Next-Generation FTTX Optics, July 2015
  4. Optical Communications Market Forecast, August 2015
  5. Quarterly Market Update Report September 2015
  6. Mobile Fronthaul Optics Report & Forecast, November 2015

Coming soon:

  1. Active Optical Cables and Embedded Optical Modulest, December 2015
  2. Quarterly Market Update Report (December 2015




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.