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China Tops $1 Billion for PON Equipment Revenue in 2Q for the First Time Ever

September 15, 2015

Optical technology is designed to deliver more services with high bandwidth capacity to the end user. In countries with large populations, such as China, the limitations of cable can no longer to meet the growing demand for services requiring more bandwidth. The quarterly IHS Infonetics PON, FTTH, and DSL Aggregation Equipment market research report, points to the changes taking place in China. The country set a record for passive optical network (PON) equipment revenue in the second quarter of 2015 by passing the $1 billion mark for the first time ever.

According to the report, global broadband aggregation equipment revenue for DSL, PON, and Ethernet FTTH grew 12 percent sequentially in 2Q15 and 11 percent year-over-year (YoY). This growth was primarily being driven by record Gigabit Passive Optical Network (GPON) equipment shipments in China and an increase in very-high-bit-rate DSL (VDSL) deployments.

Research director for broadband access and pay TV at IHS, Jeff Heynen sees the push and support by the government to expand fiber-to-the-home (FTTH) deployments as the biggest contributor for the growth in China.

“Service providers realize that fixed broadband services provide some of the highest margins among all their services, so investment levels to expand the speed and capabilities of fixed broadband should remain steady with a continued focus on pushing fiber deeper into access networks and closer to customers,” said Jeff Heynen, research director for broadband access and pay TV at IHS.

The report also revealed Q2 spending on PON equipment around the world was up, and IHS expects the growth to continue for the remainder of 2015 as more operators deploy FTTH services. However the growth is not as uniform in the North American market. The report showed this region experienced a 10 percent decline in GPON expenditures from 1Q15, but still managed to be up by 1 percent from 2Q14.

Image via Shutterstock

While GPON expenditure was down, DSL spending grew 5 percent from 1Q15, but this has to be taken in context, as it was also low in general compared to the same period in 2014, when it was up by 18 percent.

Overall, IHS predicts the investment China is making in this sector will continue to drive the market, and it sees the global broadband aggregation market to reach $9 billion in 2019.

The research reports on BPON, EPON, GPON, FTTH, FTTB, PON and DSL aggregation equipment and subscribers. Some of the vendors that were tracked include ADTRAN, Alcatel-Lucent, Alphion, Arris, Calix, Cisco, Dasan Networks, ECI, Fiberhome, Fujitsu, Genexis, Hitachi, Huawei, Iskratel, Mitsubishi, NEC, OF Networks, PacketFront, Sagemcom, Sumitomo, Tilgin, Ubiquoss, UTStarcom, Zhone, ZTE, ZyXEL and others. 

Edited by Dominick Sorrentino

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