The Market for Access Optics is Returning to Growth, but it is all About China, Again.
LightCounting has just published its annual Next Generation Access Optics report and forecast
Sales of optical transceivers for wireless fronthaul and backhaul more than doubled in 2019 because of acceleration in deployments of 5G in China. This market segment will continue to grow rapidly in 2020-2021, but it is projected to decline after that, as shown below. Chinese service providers plan to complete most of their fronthaul deployments for 5G in the next 2-3 years and growing demand for these products from all other regions will not be sufficient to compensate for lower sales in China. Service providers in the US and Europe have a lot less fronthaul fiber deployed and other regions are even farther behind. While all service providers will continue to deploy more fiber and fronthaul optics, all these projects combined will not be able to match the scale of initial deployments of fronthaul optics in China.
Sales of FTTx optics declined in the last 3 years, but this segment is projected to return to growth in 2020-2024. Despite significant investments to 5G, China Mobile (CM) and China Telecom (CT) plan to offer higher speed (up to 1Gbps) wireline connectivity to a wide range of customers next year and scale up deployments of 10G PON ONUs to support higher-speed connections. The combined number of CM and CT FTTx customers account for more than 50% of the total number of FTTx subscribers in the world. These two service providers will continue to dominate demand for FTTx optics in 2020 and beyond, just like they did in 2016-2019.
China has what could be the best environment for a healthy access optics demand of any country. It has the world’s largest population, living in largely urban settings, and a central government willing to spend large amounts of money on infrastructure such as Internet access.
While some small countries have achieved much higher penetration rates of FTTx and mobile broadband, the other large countries have relied to a great extent on market forces to direct investment in fixed and mobile broadband. As a result, China has been and will remain the largest single-country market in terms of consumption of both wireless and fixed access optics for the next five years.
LightCounting offers a detailed report and forecast on optical transceivers for the fronthaul, backhaul, and FTTx access market segments. More information can be found here.