Global spending on broadband access equipment and CPE is expected to drop 7% in 2020, dipping to $11.4 B, before increasing 5% in 2021, according to a newly updated forecast from Dell’Oro Group. In January 2020 Dell’Oro forecasted a 5% decline in total revenue in 2020.
Some highlights:
- Dell’Oro increased its five-year CAGR (2019-2024) from -2% from our January forecast to -0.9%. In response to the worldwide COVID-19 pandemic, new initiatives to improve broadband access are either underway or will be shortly.
- The five-year CAGR for PON equipment has been increased from 0% to just under 1%. China, which has historically accounted for anywhere from 65-80% of total PON spending, has peaked in terms of total ONT units consumed on an annual basis. The Chinese FTTH market has matured, with broadband penetration in the country reportedly nearing 80%. Though subscriber growth is slowing, there is still a tremendous installed base of subscribers that will continue to require new ONTs. This is especially the case beginning this year, when all three major operators begin purchasing 10 G units, based on either 10G EPON or the asymmetric XG-PON technologies. The 10 G upgrade cycle in China for ONTs will be extended over a longer period of time than the initial 1G EPON and 2.5 G GPON rollouts, as individual systems announce gigabit city initiatives.
- The glut of DOCSIS channel capacity that helped push down cable equipment revenue in 2019 has actually been beneficial to operators this year as they have been able to address significant increases in both upstream and downstream traffic during the pandemic with minimal increases in spending.
