Global spending on broadband access and consumer premises equipment is expected to dip 7% in 2020, to $11.4 billion, before rebounding and rising 5% in 2021, according to a new forecast from Dell'Oro Group.
The revised forecast for 2020 represents a steeper drop from an earlier one from Dell'Oro that foresaw a 5% decline. Dell'Oro has likewise raised its five-year CAGR for 2019-2024 from -2% to -0.9%, anticipating increased investment in broadband access in the coming years as operators try to stay ahead of a usage curve that steepened during the pandemic as consumers worked and schooled from home.
Among specific categories, Dell'Oro's five-year forecast for PON equipment has ticked up slightly – from 0% to just under 1%. While China's fiber-to-the-premises market – which typically accounts for up to 80% of total PON spending – has matured, there's still a massive installed base there that will continue to require new optical network terminals, the researcher says. Meanwhile, ONT volumes are expected to ramp up in Western Europe and in North America, a region poised to see a rise in FTTP investment derived from the FCC's multi-billion RDOF (Rural Digital Opportunity Fund) program.
On the cable front, vendors took it on the chin in 2019 as operators cut back on spending due to a glut of capacity, but activity has perked up a bit this year as MSOs added capacity (through a blend of software license activations on existing gear and new network hardware purchases) to deal with the recent rise in peak usage.
But Dell'Oro points out that this near-term need to beef up capacity on legacy converged cable access platforms (CCAPs) has also pushed out or postponed some next-gen cable access products related to distributed access architectures.
"We have no doubt these projects will resume, but it won't likely be until the latter part of this year or 2021 before they do," Jeff Heynen, research director for the broadband access and home networking unit with Dell'Oro Group, explained in this blog post.
Cable access and CPE market: a mixed bag
On the cable infrastructure side, revenues this year for CCAP, remote PHY and virtual CMTS products will be down about 3%. That's not a bad result after a rough 2019 that saw cable broadband spending plummet 36% compared to 2018.
Heynen is also seeing activity accelerate with respect to mid-splits and high-splits that beef up the amount of spectrum dedicated to the cable network's upstream. While North American DOCSIS networks typically use an upstream of 5MHz-42MHz, a mid-split would stretch that out to 5MHz-85MHz and a high-split will raise the upstream ceiling to 204MHz.
It's not clear how that part of the market will shake out early on. Cable operators that have already deployed 1-Gig service in the downstream are in the best position to go with a high-split, but operators with more immediate upstream needs could start with a mid-split, Heynen surmised.
As for cable CPE, he sees revenues declining 2% and unit shipments dropping 3%. Heynen attributes that overall decline to a drop in video device spending even as revenues and shipments of DOCSIS 3.1 modems/gateways continue to ramp up.
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