This report segments data applying to optical networking equipment according to the following protocols: WDM, PON, Carrier Ethernet and SDM. These terms are defined and described in the report. Total addressable markets amount to multi-billion $ total globally. Sales into the Asia-Pacific region form the largest contribution – notably China but also India, Japan and South Korea.
Global market segmentations for 2029 applying to the various protocols are presented in detail. WDM always leads these markets although sales into PON and SDM applications also remain strong throughout the time scale of this report. New-generation PON increasingly dominates the PON space. Optical transceivers are vitally important in this industrial sector and a major performance parameter associated with these products is the maximum bit rate they can handle. Complete details are given in the report. Throughout the forecast period transceivers with maximum capacities ranging from 100 G through 400 G will always remain important. 800 G (also some 1200 G) are now entering this space.
The core of this report comprises nine-year forecasts of all the protocols listed above and these are presented in terms of total addressable market (TAM) values and shipments. The product/market strategies of leading actors across this space are analysed as well as appropriate strategies for optical networking and other firms to better penetrate the 5G fronthaul and backhaul market.
Substantial details are provided concerning 18 communications services providers and 11 supply-side OEMs.
This report includes updates to reflect the effects of the COVID-19 pandemic on the market.
Table of Contents
Executive Summary
The objectives of this five-section report are to identify the business opportunities for the optical networking equipment market segmented by four protocols (‘ports’: WDM, PON, Carrier Ethernet and SDM) as well as fronthaul and backhaul for 5G. Our goal is also to quantify these opportunities in both monetary value (TAM) terms and unit (volume) sales in nine-year forecasts.
This report is focused exclusively on the optical networking equipment itself. Regionally segmented data are also provided. In addition, we briefly examine the prospects for alternatives to fiber optics in the 5G infrastructure. These comprise millimeter and microwave radio and also free space optics.
At the core of this report are nine-year forecasts for the optical networking equipment market. We have also analyzed the product/market strategies of leading actors in this space and have examined appropriate strategies for optical networking and other companies to better penetrate the 5G fronthaul and backhaul market.
The methodology used in the compilation of this report is similar to that used in other reports by the publisher. Both secondary and primary sources were used to compile this report and details are provided within its body. In this report the term “densify” applies to the 5G networks. It is not to be confused with the Canadian software company known as “Densify”.
Many sources provide forecasts of the numbers of subscribers to 5G and these data represent an important driving force toward the development of the underlying networks.
Regional data clearly indicate a surge in Asia Pacific numbers during year 2023, followed by slight decline and then further growth through most remaining years considered here.
Whilst these data are interesting they do not provide significant guidance regarding the markets for optical networking equipment. Such data – representing the core of this report – have been established by means of basic market analysis. It is also very important to appreciate that Enterprise Market opportunities are already of great and strongly growing significance.
This report presents the results of extensive market research concerning the markets for optical networking equipment going into each of four protocols (or ‘ports’). The ‘ports’ considered are:
- WDM (wavelength-division multiplexing);
- PON (passive optical networks;
- Carrier Ethernet;
- SDM (space-division multiplexing).
In addition, market data are provided for optical networking transceivers, segmented according to maximum bit rate specifications, ranging from 10 G through to 400 G +.
Within this report detailed profiles are provided for most of the important players. The two important overall categories are:
- Communications Service Providers (CSPs);
- Optical networking equipment OEMs.
The 18 CSPs profiled are:
AT&T, British Telecom (with a subsidiary known as EE), Charter Communications, China Mobile, China Telecom Corporation Ltd., China Unicom, KDDI Corporation, KT Corporation, LG Uplus, NTT DoCoMo, Orange, SK Telecom, SoftBank, Telefónica (owns O2), Three UK, T-Mobile USA, Inc., Verizon – and Vodafone.
And the 11 optical networking equipment OEMs profiled are:
Acacia Communications, Adtran, ADVA, Ciena, Cisco, Ericsson, Huawei, Infinera, NeoPhotonics, Nokia and ZTE.
Total addressable markets (TAMs) are provided (in US$, generally abbreviated ‘$’) for each year across the time span 2020-2029. Sales volumes are also forecasted for the same years in terms of unit volume sales.
Specific units are generally: for TAMs are either $ (millions or billions of US $, as appropriate), for volumes 1,000s of units.
By adding together all the monetary data the overall global grand totals were determined.
From these data it can be seen that the optical networking equipment needed to support 5G represents a huge market opportunity.
For all the remaining market data we have segmented the markets by geographic region as follows: N. America (Canada and the USA), Europe (all European regional countries), Asia Pacific and “RoW” (rest of the world).
In the Asia Pacific region, the market (TAM) for optical networking equipment grows very strongly over the full forecast period: 2020-2029. The Asia Pacific region is forecasted to always dominate the consumption of optical networking equipment. Across Asia Pacific, in countries such as China, India, Japan and South Korea, governments are investing considerably in expanding 5G technology, which relies heavily on optical networking equipment. China’s $32 billion vision to make the country “wired for 5G technology” has created more demand for this equipment in the Asian region.
Deploying 5G wireless with speeds 10 to 100 times faster than 4G will cost well over $100bn in optical networking equipment alone over the next 5 to 6 years in the US. It is regarded as imperative for US wireless carriers to improve their 5G network infrastructures. Important CSPs include AT&T and Verizon Communications Inc.
The major markets are into WDM, PON and SDM ‘port’ applications. In all these instances annual billion-dollar overall global markets are found.
The strong trends from traditional technologies regarding mobile fronthaul technology enable companies to reduce the deployment and maintenance cost of a 5G network. The increasing adoption of WDM-based fiber fronthaul is driven by the Common Public Radio Interface (CPRI’s) intensive consumption of optical fiber resources, combined with the lower reliability and lack of supervisory measures for managing networks. Next-generation PON is suited to 5G fronthaul applications and is now attracting widespread industry attention.
The additional capacity and speed provided by 5G networks result in increasing stress on mobile backhaul networks. 5G backhaul depends on densification of the network, for example the number of small/macro cells within a given geographical area. Major initiatives in the emerging economies are expected to increase investments in mobile backhaul solutions because there
is a very strong demand for managing old infrastructure and assets.
We also present market data on an annual basis for optical networking transceivers. Maximum bit rate categories considered are 10 G, 100 G, 200 G and “400 G +”. By summer 2020 several OEMs announced products specified to operate at 800 G and above – including some at 1200 G.
Companies Mentioned
- Acacia Communications
- Adtran
- ADVA
- Ciena
- Ericsson
- Furukawa Electric
- Huawei
- Infinera
- Nexans
- Nokia
- Sumitomo Electric Lightwave
- ZTE