IHS-Infonetics raised its outlook for the broadband customer premises equipment (CPE) market, which includes DSL, cable, fiber-to-the-home (FTTH), residential gateways and mobile broadband CPE. In a September 2015 report, the firm noted it increased its 2019 worldwide broadband CPE forecast by 8 percent, to US$12.4 billion.
BROADBAND CPE MARKET HIGHLIGHTS:
- The big story this quarter is FTTH optical network terminals (ONTs) in China, unit shipments of which more than doubled year-over-year, from 9.8 million to over 20 million from 2Q14 to 2Q15
- In 2Q15, the global broadband CPE market grew 5 percent from the previous quarter, to $2.9 billion; unit shipments grew 11 percent, to 61 million
- Worldwide total broadband CPE revenue is up 7 percent from the year-ago second quarter, when it was just under $2.7 billion
- Quarter-over-quarter, from 1Q15 to 2Q15:
- DSL CPE unit shipments were down 1 percent to 23 million, with VDSL IADs posting the highest growth (+11 percent)
- Cable CPE units were up 1 percent to 11.6 million (90% of which were WiFi-enabled), with DOCSIS 3.0 modems posting the highest growth (+13 percent)
- Fixed LTE CPE shipments grew 4 percent
“The primary source for raising our global broadband CPE forecast is the massive investment currently ongoing in China. Despite reported economic headwinds, the Chinese government continues to subsidize telco investments in fiber infrastructure to expand accessibility and throughput. The result is heavy spending on GPON and EPON ONTs,” said Jeff Heynen, research director for broadband access and pay TV at IHS.
“At the same time, the shift from fiber-to-the-building (FTTB) to FTTH architecture is well underway in China. A primary reason for this architectural shift is that FTTB plus ADSL take-rates at China Telecom have been disappointing; consumers aren’t interested in a connection that offers only a marginal improvement over what they already have. If they are to subscribe to a home broadband service, it needs to provide a minimum of 8MB to 10MB speeds,” Heynen said.
BROADBAND CPE REPORT SYNOPSIS:
The quarterly IHS Infonetics PON, FTTH, Cable, DSL, and Wireless Broadband CPE market research report tracks DSL, cable and FTTH CPE; mobile broadband routers; and residential gateways. The research service provides worldwide and regional market size, vendor market share, forecasts through 2019, analysis and trends. Companies tracked include Alcatel-Lucent, Arris, AVM, Cisco, Comtrend, D-Link, Dasan Networks, Fiberhome, Hitron, Huawei, Mitsubishi, Netgear, OF Networks, Pace, Sagemcom, SMC Networks, Sumitomo, Telsey, Technicolor, TP-Link, Ubee Interactive, Zhone, ZTE, ZyXel, and others.
From a May 2015 BBC report titled China reveals ambitious broadband plan:
China is to accelerate the development of its high-speed broadband network to raise speeds but cut prices, its State Council has said. Fewer than half of the country’s population has internet access and those who do can often experience slow connections. The country’s premier also urged telecoms companies to cut fees, including data roaming charges. It was not revealed how much money would be invested.
Besides the government investment, Premier Li Keqiang also urged telecoms companies to cut their prices and up their speeds, according to China’s cabinet the State Council. He also said they should cut data roaming charges for Chinese tourists, although he acknowledged that it was ultimately for the market to decide. He did, however, announce a round of investment infrastructure improvements to the same end.
“China has more cell-phone users than any other country, but its internet service speed ranks below 80th in the world due to underdeveloped information infrastructure,” the premier said, according to a release from the State Council.
He added that “speeding up the construction of information infrastructure will boost investment and support” in China, as well as helping “mass innovation.”
Mr Li did not say how much investment would be needed, but officials have previously earmarked around 2tn yuan ($322bn, £204bn) to improve China’s broadband infrastructure by 2020.
China’s internet penetration rate was only 47.9% last year, with connectivity especially low in smaller cities and rural areas. This compares with about 75% of people in the United States. In the UK, 73% of households have broadband access, Ofcom said in December 2014.
The Chinese cabinet’s statement added that the nation would look to open up the telecoms market and encourage increased competition, including through expanding a pilot scheme for broadband services this year.
“There is still not enough competition, which has led to telecoms fees being relatively high while there is still a lot of room to improve the quality of service,” the statement said, citing an official at China’s official State Information Centre.
IHS-Infonetics CABLE WEBINAR:
Join analyst Jeff Heynen Sept. 29 at 11:00 AM ET for Delivering Cable Services in the Cloud Era, a free, live event that examines how virtualization will impact the MSO network and takes a look at key residential and commercial offerings enabled by NFV and SDN. Register here.