PON market to reach $7.62bn in five-years

CALIFORNIA, USA: Rising demand for bandwidth-intensive triple play content, development of next-generation PON technologies, and continued migration from copper to fiber based broadband access will stimulate global passive optical network (PON) equipment market to reach $7.62 billion by 2015.

Reaching out for last mile with FTTH

This is according to Global Industry Analysts Inc. (GIA), an analyst group, who released a report, 'Passive Optical Network (PON) Equipment: A Global market report'.

Rising demand for bandwidth-intensive triple play content has strained legacy communications networks and caused bottlenecks, specifically in the head-ends and in-the-last-mile of the communications infrastructure.

Service providers are looking out for solutions to capitalize on the efficiency of existing bandwidth availability and economically transport and manage digital traffic within networks, and minimize the need to build new networks for triple play content distribution.

A 100 percent fiber-optic network such as PON has the capability to deliver a broader and more vibrant entertainment experience to all its users. Using fiber, passive optical network equipment enables broadband access from the central office of local service providers to the office or residence of subscribers.

North America and Asia will continue to be the favourable markets for PON equipment during the next five years.

Growth in PON market would be primarily driven by large-scale deployments of PON in China, and increasing GPON (Gigabit Passive Optical Networking) deployments across the world, for the purpose of upgrading access networks, and offering new services such as broadband TV.

Service providers are increasingly turning to PON as the next-gen residential broadband access technology, predominantly in areas where DSL penetration has reached its maturity and vendors are seeking to increase their ARPU (average revenue per user).

Globally, GPON is the primary PON technology for the deployment of FTTB and FTTH networks and will continue to remain so through 2011. GPON technology is gaining momentum in North America and Europe but the reign of EPON in China will restrict its growth prospects in Asian markets.

In coming years, revenue growth for GPON equipment will be challenged, as the industry's focus has shifted to developing more advanced 10G EPON and WDM-PON technologies.

In spite of double-digit revenue increase for global GPON manufacturers during Q1 2009, overall PON market witnessed erosion in growth due to declines in EPON and BPON revenues. PON revenue forecasts are slightly down as key service providers adopt a more cautious approach by postponing fiber upgrades until they regain confidence about subscriber uptake of high-broadband services.

Many service providers, who were previously actively advocating PON deployments in an attempt to solidify their market position, are showing reluctance and will justify the cost associated with extending fiber to residences and buildings. On the other hand, service providers such as NTT, Verizon, Hanaro, and KT who had already allocated resources to fiber rollouts & upgrades, will continue with their plans hoping to gain a strategic advantage.

As stated by the new market research report on PON equipment, the Asia-Pacific and Japan collectively account for a major share of the global PON market.

Demand for PON equipment in Asian markets such as Korea and Japan are encouraged by the government regulations while the US will witness significant demand for PON equipment from local telecom operators. The global PON equipment industry is expected to witness strong growth across all of the regional markets, with developing markets of Asia-Pacific poised to score the highest gains.

In segmental perspective, strong opportunities for growth lie in the Fiber-to-the-home PON equipment sector.

Key players dominating the marketplace include Alcatel-Lucent, Allied Telesis Inc, Broadlight Inc, Calix Network Inc, Telefonaktiebolaget LM Ericsson, Freescale Semiconductor Inc, Fujitsu Network Communications Inc, Hitachi Telecom, Mitsubishi Electric Corporation, Motorola Broadband Communications, NEC Corporation, Occam Networks Inc, Oki Electric Industry Co. Ltd., PMC-Sierra Inc, Sumitomo Electric Networks Inc, Teknovus Inc, Tellabs Inc, UTStarcom Incorporated, and Wave 7 Optics Inc, among others.