Broadband Access revenues
ZTE sees demand for fixed broadband and smart home solutions while 5G lags
According to a senior executive, ZTE Corp has seen “tremendous” opportunities due to the increased demand for high-speed internet and smart home solutions globally following the COVID-19 pandemic. That’s despite a slower-than-expected development of 5G outside of China.
“Deployment of 5G technology in overseas markets has been slower than what we previously thought and investments in the field have also lagged behind,” said Chen Zhiping, vice-president of ZTE Corp.
“However, we have seen rapid growth of two sectors in our business – fixed broadband and home network solutions – internationally, especially in the Latin American market.”
The COVID-19 pandemic has pushed up demand for these two types of businesses, as people who were confined to their homes became more reliant on high-speed internet connections and home automation, she said.
“We are actively promoting these two areas of business in Latin America. Besides, the Asia-Pacific region is also where we put great focus on, such as Indonesia, Malaysia and Thailand, as the region has a huge demand for network convergence, network modernization and digitalization,” Chen said.
The Asia-Pacific region is a market from which the company generates most of its overseas revenue, she added.
ZTE posted 60.7 billion yuan ($8.36 billion) in operating revenue in the first half of the year, up 1.5 percent from the year-ago period, according to its interim results announced on Aug 18. Of the total, 17.6 billion yuan, or 29 percent, came from international markets.
Net profit grew 19.9 percent on a yearly basis to 5.47 billion yuan.
“Exploring the domestic market is far from enough for a technology company, whether it is research and development or marketing. We have been committed to the international markets and promoting the globalization of research and development, supply chain and collaboration all along,” she said.
Chen acknowledged that factors such as geopolitical tensions, economic slowdown and a deteriorating business environment in some countries have posed serious challenges to ZTE‘s operations in overseas markets. She stressed that the company had established a sound system of management as well as risk identification and control to deal with potential risks.
On November 225, 2022, the Federal Communications Commission (FCC) voted unanimously to ban U.S. sales of new Chinese telecommunications equipment and devices produced by Huawei and ZTE—as well as to restrict the use of other Chinese-made video surveillance equipment—over national security concerns. The Chinese companies have denied the allegations.
According to a report by German market intelligence platform Statista, the global ICT market is expected to reach $6 trillion in 2023, up from $5.5 trillion last year. China would rank third in global market share with over 11%, following the United States and European Union (EU).
References:
https://www.chinadaily.com.cn/a/202309/02/WS64f26e23a310d2dce4bb384f.html
Vodafone Idea (Vi) to launch 5G services “soon;” Awards optical network equipment contract to ZTE
FCC bans Huawei, ZTE, China based connected camera and 2-way radio makers
BroadbandNow Research: Best & Worst States for Broadband Access
A recent study by BroadbandNow Research has assessed the best and worst states in the U.S. for broadband internet access in 2023. The study evaluated each state and the District of Columbia based on various factors such as access to wired or fixed wireless broadband, access to low-priced broadband, median download speed, and median upload speed.
Key Findings:
- Availability of low-priced broadband has increased across the U.S. There is now only 1 state with less than 20% of the population having access to a broadband plan for $60 per month or less (down from 25 states last year). Having said that, in only one state, Wyoming, more than half of residents have access to such a plan.
- Latency (round trip time) is a measure of responsiveness–the time between when you click something and when you get a response–and it’s critical for a smooth internet experience, especially for real-time interactions such as gaming or video calls. There is a huge geographic disparity between states that do well in this metric, like New York or Washington with median round trip times less than 7.5 milliseconds, and states that do poorly, like Hawai’i and Massachusetts with median round trip times greater than 61 milliseconds.
- Delaware is the best state for broadband internet, with 46.2% of its population having access to low-priced broadband and a median download speed of 96.1 Mbps. On the other hand, Alaska ranked at the bottom of the list, with only 20% of its population having access to affordable broadband and a median download speed of 58.5 Mbps.
- We support changing the definition of broadband speeds from 25Mbps down and 3Mbps up to 100Mbps down and 25Mbps up, but we’re a long way away from widespread access to those speeds. Nationally, only 39% of Americans are getting 100Mbps down, and only 25% are getting 25Mbps up.
10 Best States for Broadband
10 Worst States for Broadband
According to the study, there is only one state, Nevada, with less than 20% of its population having access to a broadband plan for $60 per month or less. This is a significant drop from the 25 states that had such limited access last year.
In the Tri-State area, Illinois secured the 14th spot with 95.7% of its residents having access to wired or fixed wireless broadband. Additionally, 31.4% of the population had access to low-priced broadband. Illinois also boasted a median download speed of 85.3 Mbps, surpassing the national median.
Indiana ranked 23rd overall, with an impressive download speed of 85.7 Mbps. 31.4% of its population also had access to low-priced broadband. However, the state fell short in terms of overall broadband access, with only 92.8% of residents having access to wired or fixed wireless broadband.
Kentucky landed at the 36th spot, with a mere 25% of its population having access to affordable broadband. In an effort to improve access, Governor Andy Beshear, Senator Mitch McConnell, and other lawmakers secured over $1 billion in funding for broadband access in June, marking the largest public investment in high-speed internet in the state’s history.
References:
GAO: U.S. Broadband Benchmark Speeds Too Slow; FCC Should Analyze Small Business Speed Needs
FCC proposes 100 Mbps download as U.S. minimum broadband speed
Dell’Oro: Broadband Equipment Spending to exceed $120B from 2022 to 2027
Dell’Oro Group predicts the broadband equipment market will surpass $120 billion in cumulative spending between 2022 and 2027. The market research firm says sales of PON equipment for fiber-to-the-home deployments, cable broadband access equipment, and fixed wireless CPE will show a 0.2% Compounded Annual Growth Rate (CAGR) from 2022 to 2027. Service providers continue to expand their fiber and DOCSIS 3.1/4.0 networks, while also increasing the reliability and sustainability of their broadband access networks.
“After three consecutive years of tremendous broadband network expansions and upgrades, 2023 is expected to show a return to normalized levels of spending,” said Jeff Heynen, Vice President of Broadband Access and Home Networking research at Dell’Oro Group. “After 2023, spending is expected to increase through 2026 and 2027, driven by 25 Gbps and 50 Gbps PON, Fixed Wireless CPE, as well as DAA and DOCSIS 4.0 deployments.”
Labor markets are “still being challenged” and a number of fiber based network operators (AT&T, Altice USA, Frontier) have reduced their expansion plans and homes passed targets. “To close out 2022 we did see a significant uptake in equipment purchases, and what happened there was supply chains appeased. A lot of orders that had been on the books for a long time have been fulfilled.”
Network equipment vendors are working through that inventory they had built up while taking on “additional equipment purchases.
Additional highlights from the Broadband Access & Home Networking 5-Year July 2023 Forecast Report:
- PON equipment revenue is expected to grow from $11.8 B in 2022 to $13.3 B in 2027, driven largely by XGS-PON deployments in North America, EMEA, and CALA.
- Revenue for Cable Distributed Access Equipment (Virtual CCAP, Remote PHY Devices, Remote MACPHY Devices, and Remote OLTs) is expected to reach $1.6 B by 2027, as operators ramp their DOCSIS 4.0 and fiber deployments.
- Revenue for Fixed Wireless CPE is expected to reach $2.7 B by 2027, led by shipments of 5G sub-6GHz and 5G Millimeter Wave units.
- Revenue for Residential Wi-Fi Routers will surpass $5.2 B in 2027, owing to massive shipments of Wi-Fi 7 units.
“Which isn’t going to float to manufacturers until you know, late 2024, really into 2025,” he said. “I think in the interim, XGS-PON in the European market is certainly going to catch up. We’re also seeing considerable growth in XGS-PON deployments now in China.”
In Dell’Oro’s five-year forecast published in January, Heynen expected fixed wireless subscriber growth, particularly in North America, would “start to moderate” beginning in 2024, due to factors like “capacity issues and fiber expansion.”
Heynen has increased his revenue predictions for the fixed wireless CPE market – which he previously tipped would hit $2.2 billion in five years – and now predicts subscriber growth to continue into 2025.
“Part of that is because of the net reduction in homes passed for fiber,” he said. “In the meantime, fixed wireless will be able to cover more ground while the operators who are building out fiber kind of extend their overall deployment plans.”
Further, operators like T-Mobile and Verizon “are seeing fixed wireless as a way to secure broadband subscribers away from cable operators. The U.S. market is really dynamic in terms of how services can be marketed.”
The Dell’Oro Group Broadband Access & Home Networking 5-Year Forecast Report provides a complete overview of the Broadband Access market with tables covering manufacturers’ revenue, average selling prices, and port/unit shipments for PON, Cable, Fixed Wireless, and DSL equipment. Covered equipment includes Converged Cable Access Platforms (CCAP), Distributed Access Architectures (DAA), DSL Access Multiplexers (DSLAMs), PON Optical Line Terminals (OLTs), Customer Premises Equipment ([CPE] for Cable, DSL, PON, Fixed Wireless), along with Residential WLAN Equipment, including Wi-Fi 6E and Wi-Fi 7 Gateways and Routers. For more information about the report, please contact [email protected].
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, security, enterprise networks, data center infrastructure markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell’Oro Group at +1.650.622.9400 or visit www.delloro.com.
References:
https://www.fiercetelecom.com/telecom/broadband-equipment-market-eclipse-120b-2027-delloro
Dell’Oro: XGS, 25G, and Early 50G PON Rollouts to Fuel Broadband Spending
Dell’Oro: Bright Future for Campus Network As A Service (NaaS) and Public Cloud Managed LAN
Dell’Oro: FWA revenues on track to advance 35% in 2022 led by North America
Dell’Oro: PONs boost Broadband Access; Total Telecom & Enterprise Network Equipment Markets
Dell’Oro: U.S. suppliers ~20% of global telecom equipment market; struggling in RAN business
Futuriom and Dell’Oro weigh in on SD-WAN and SASE market: single vendor solutions prevail
AT&T, Verizon and Comcast all lost fixed broadband subscribers in 2Q-2023
The three most dominant broadband wireline ISPs in the U.S. all lost wireline subscribers in Q2-2023.
1. AT&T’s net total broadband access showed a loss of 35,000 subscribers in Q2-2023, which widened from a loss of -25,000 in the year-ago quarter. AT&T ended Q2 with 15.3 million broadband connections (including DSL), down 1.3% from 15.5 million a year earlier.
AT&T continued to add new fiber subscribers, but the pace of that growth slowed. AT&T added 251,000 fiber subs in Q2, down from +316,000 in the year-ago quarter and down from +272,000 in the prior quarter.
AT&T ended the period with 7.73 million fiber subs. Fiber average revenue per user (ARPU) was $62.26, up from $57.64 in the year-ago period.
(Source: AT&T Q2 2023 earnings presentation)
AT&T added about 500,000 fiber locations during the quarter, ending Q2 with 20.2 million. CEO Stankey said AT&T remains on track to build fiber-to-the-premises (FTTP) tech to 30 million locations by 2025.
AT&T’s average fiber penetration rate is hovering at 38%. “Everywhere we put fiber in the ground, we feel good about our ability to win with consumers,” Stankey said.
AT&T shed 286,000 non-fiber subscribers in the quarter, lowering that total to 5.95 million. AT&T also lost another 25,000 DSL subs in the quarter, ending the period with just 259,000.
Source: AT&T
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2. While Verizon added 54K FiOS internet subscribers in 2Q-2023 (51K FiOS net adds from Consumer, 3K from Business customers), it had a net loss of 304K wireline broadband subs when the loss of DSL subscribers was factored in.
From Verizon’s 2Q-2023 earnings call presentation:
Source: Verizon
Remarkably, Verizon added a net 384K fixed wireless subscribers, an increase from 256,000 fixed wireless net additions in second-quarter 2022. Verizon now has nearly 2.3 million subscribers on its fixed wireless service.
Due to FWA growth, Verizon reported total broadband net additions of 418,000 in 2Q-2023.
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Comcast, the largest U.S. ISP, lost 20,000 residential broadband subscribers, lowering its total to 29.79 million. Comcast’s total broadband subscriber loss of 19,000 (including a gain of 1,000 business broadband customers), was better than the -74,000 expected by Wall Street analysts.
Comcast, which lost 10,000 residential broadband subs in the year-ago quarter, warned in April that it doesn’t expect to see much in the way of broadband subscriber growth gains in the near-term. The company also noted that it expected those numbers to be even lower in Q2 due to a slow housing move market paired with traditional “seasonality” driven by students and retirees returning for the summer.
Dave Watson, president and CEO of Comcast Cable, said on today’s earnings call that he expects Comcast to return to broadband subscriber growth “over time.” One way Comcast is pursuing subscriber growth is through network expansion and edge-outs that will total about 1 million locations in 2023. Comcast, which operates in 39 US states, also intends to participate in the Broadband Equity Access and Deployment (BEAD) program, which recently announced state-by-state funding allocations.
Comcast has cited average revenue per user (ARPU) growth as the key metric of its broadband business. And Comcast’s broadband ARPU grew 4.5% in the quarter, matching the ARPU growth rate it posted in the prior quarter.
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Here are the top 20 broadband wireline ISPs in the U.S.:
| # | Internet Service Provider | Type | States |
| 1 | Comcast | Cable | National |
| 2 | Charter Communications | Cable | National |
| 3 | AT&T | Fiber | National |
| 4 | Verizon | Fiber | Mid-Atlantic, Northeast |
| 5 | Cox Communications | Cable | National |
| 6 | Altice USA | Cable/Fiber | National |
| 7 | Lumen Technologies | Fiber | West, Florida |
| 8 | Frontier Communications | Fiber | National |
| 9 | Mediacom Communications | Cable | Midwest, Southeast |
| 10 | Astound Broadband | Cable/Fiber | National |
| 11 | Windstream Holdings | Fiber | South, Midwest, Northeast |
| 12 | Brightspeed | Fiber | Midwest, Southeast |
| 13 | Cable One | Cable | West, Midwest, South |
| 14 | Breezeline | Cable/Fiber | East Coast |
| 15 | WideOpenWest (WOW!) | Cable/Fiber | AL, FL, GA, MI, SC, TN |
| 16 | TDS Telecom | Cable/Fiber | National |
| 17 | Midco (Midcontinent Communications) | Cable | MN, ND, SD, WI, KS |
| 18 | Consolidated Communications | Fiber | National (22 states) |
| 19 | Google Fiber | Fiber | National (16 states) |
| 20 | Ziply Fiber | Fiber | WA, OR, ID, MT |
Source: https://dgtlinfra.com/top-internet-providers-us/
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References:
https://about.att.com/story/2023/q2-earnings.html
Point Topic: Global Broadband Tariff Benchmark Report- 2Q-2022
In the twelve months to the close of Q2 2022, global residential fixed line broadband subscribers saw their average monthly charges decrease by 4% on copper, cable and fiber-based tariffs. Across the three technologies the average bandwidth increased by 22% year-on-year (y-o-y), due to the increased innovation and proliferation of fiber-based networks globally. Business subscribers continued to struggle with rising monthly charges, with the average monthly charge increasing by 12% and the average downstream speed standing at 426 Mbps compared to residential tariff averages of 464 Mbps.
The Asia-Pacific region retained its dominant bandwidth position with average speeds of 1,146 Mbps, up from 1,355 Mbps in Q4 2021 and 1,135 Mbps y-o-y, followed by North America, Western Europe, and Southeast Asia with the three regions reaching a combined average of around 465 Mbps.
Qatar, Switzerland and Southeast Asian countries still remain at the top of the league by average bandwidth along Italy, France and Bulgaria; these countries all rank in the top ten cheapest for residential broadband in terms of average cost per Mbps being less than $0.10 PPP.
In Q2 2022, the combined average download bandwidth grew by 20% compared to Q2 2021 and stood at 426 Mbps. This was caused by the boost in the average speed over cable and especially fibre, 14% and 22% respectively. Copper maintained largely the same average download speed compared to the previous quarter. However, the overall global average monthly cost across the three technologies has increased by just over 12% from $217 PPP to $244 PPP at the close of Q2 2022
References:
Global Broadband Tariff Benchmark Report, Q2 2022 (point-topic.com)
USTelecom Broadband Pricing Index (BPI): substantial price reductions for broadband access
While U.S. inflation in 2022 has soared to a 40+ year high (at 8.6% YoY), the price of broadband internet access is still falling and consumers are getting even more for less.
USTelecom’s latest analysis of the broadband marketplace: 2022 Broadband Pricing Index (BPI). This year’s report finds pricing for the most popular and highest-speed broadband internet services continues to decline while value continues to increase. The research compares prices over two time periods: the year-over-year price difference from 2021-2022; and a longer-term view of price changes between 2015 and 2022.
The third installment of the USTelecom Broadband Pricing Index (BPI) reveals continued substantial price reductions for both the most popular and highest-speed broadband internet services.
As in previous years, the BPI uses FCC and other public data sources to assess recent trends in residential fixed broadband pricing in the United States. The 2022 edition of the BPI compares prices over two time intervals:
- The price difference from 2021-2022
- A longer-term view in price changes between 2015 and 2022
In both cases, as in the past, the BPI creates an index that allows comparisons between the most popular speed tiers in each year (BPI-Consumer Choice) and the highest speed tiers in each year (BPI-Speed).
Key Findings of the Report:
Broadband Pricing Ran Counter to Significant Overall Inflation in the Past Year
- Real BPI-Consumer Choice broadband prices dropped by 14.7% from 2021-2022
- Real BPI-Speed broadband prices dropped by 11.6% from 2021-2022
- In contrast, the cost of overall goods and services rose by 8% from 2021-2022
Historical Broadband Pricing Analysis Shows Real Broadband Prices Have Been Cut in Half from Seven Years Ago
- Real BPI-Consumer Choice tier prices dropped by 44.6% from 2015-2022
- Real BPI-Speed tier prices dropped by 52.7% from 2015-2022
The Consumer Value of Broadband Service Has Never Been Higher
- Providers have increased the speeds of their broadband offerings. When combined with the price drops for that service, the overall value to customers (measured on a dollars/megabit basis) shows a dramatic improvement over the past seven years.
- The real cost per megabit of both the most popular and fastest service offerings have dropped by around 75% since 2015. This gives the consumers a boost in their wallet and in their daily online performance.
References:
https://ustelecom.org/wp-content/uploads/2022/06/USTelecom-Broadband-Pricing-Report2022.pdf
Dell’Oro: PONs boost Broadband Access; Total Telecom & Enterprise Network Equipment Markets
According to a newly published report by Dell’Oro Group, total global revenue for the Broadband Access equipment market increased to $16.3B in 2021, up 12 percent year-over-year (Y/Y). Growth came once again from spending on both PON infrastructure and fixed wireless CPE.
“2021 was a record year for PON (Passive Optical Network) equipment spending, with some of the highest growth coming from the North American market, where expansion projects and fiber overbuilds are picking up considerably,” said Jeff Heynen, Vice President, Broadband Access and Home Networking at Dell’Oro Group. “These fiber expansion projects show no signs of slowing heading into 2022.”
Additional highlights from the 4Q 2021 Broadband Access and Home Networking quarterly report:
- Total cable access concentrator revenue increased 4 percent Y/Y to just over $1B. Steady growth in Distributed Access Architecture (DAA) deployments helps offset declines in traditional CCAP licenses.
- Total PON ONT unit shipments reached a record 140 M units for the year, bucking the supply chain constraints that have dogged the cable CPE market.
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Separately, Dell’Oro just completed the 4Q2021 reports for all the Telecom Infrastructure programs covered, including Broadband Access, Microwave & Optical Transport, Mobile Core Network (MCN), Radio Access Network (RAN), and SP Router & Switch. The data contained in these reports suggests that total year-over-year (Y/Y) revenue growth slowed in the fourth quarter to 2%, however, this was not enough to derail full-year trends.
The market research firm estimates suggest the overall telecom equipment market advanced 7% in 2021, recording a fourth consecutive year of growth, underpinned by surging wireless revenues and healthy demand for wireline-related equipment spurred on by double-digit growth both in RAN and Broadband Access. Total worldwide telecom equipment revenues approached $100 B, up more than 20% since 2017.
In addition to challenging comparisons, we attribute the weaker momentum in the fourth quarter to external factors including COVID-19 restrictions and supply chain disruptions.
The analysis contained in these reports suggests the collective global share of the leading suppliers remained relatively stable between 2020 and 2021, with the top seven vendors comprising around 80% of the total market.
Despite U.S. sanctions, Huawei continued to lead the global market, underscoring its grip on the Chinese market, depth of its telecom portfolio, and resiliency with existing footprints. Initial readings suggest the playing field is more even outside of China, with Ericsson and Nokia essentially tied at 20% and Huawei accounting for around 18% of the market.
The relative growth rates have been revised upward for 2022 to reflect new supply chain and capex data. Still, global telecom equipment growth is expected to moderate from 7% in 2021 to 4% in 2022.
Risks are broadly balanced. In addition to the direct and indirect impact of the war in Ukraine and the broader implications across Europe and the world, the industry is still contending with COVID-19 restrictions and supply chain disruptions. At the same time, wireless capex is expected to surge in the U.S. this year.
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Top 10 Enterprise Network Equipment Vendors:
References:
Key Takeaways—2021 Total Enterprise Network Equipment Market
MoffettNathanson: Robust broadband and FWA growth, but are we witnessing a fiber bubble?
According to a new comprehensive, market research report from MoffettNathanson (written by our colleague Craig Moffett), Q4 2021 broadband growth, at +3.3%, “remains relatively robust,” and above pre-pandemic levels of about +2.8%.
Meanwhile, the U.S. fixed wireless access (FWA market) captured ~ 38% share of broadband industry net adds in the fourth quarter of 2021. Approximately half of Verizon’s FWA customers are coming from commercial accounts, T-Mobile has indicated that about half its FWA customers are coming from former cable Internet subscribers. FWA’s strong Q4 showing left cable’s flow share at just 66%, about the same as cable’s share of installed US broadband households. “In other words, Cable likely neither gained nor lost share during the quarter, and instead merely treaded water,” Moffett noted. FWA “has gone from low-level background noise to suddenly a major force, with Verizon and T-Mobile alone capturing more than 300K FWA subscribers in the fourth quarter,” Craig noted. However, he isn’t sure that wireless network operators will allocate enough total bandwidth capacity for FWA to fully scale.
In 2020, a year that witnessed a surge in broadband subs as millions worked and schooled from home, the growth rate spiked to 5%. Here’s a snapshot of the broadband subscriber metrics per sector for Q4 2021:
Table 1:
| Sector | Q4 2021 Gain/Loss | Q4 2020 Gain/Loss | Year-on-Year Growth % | Total |
| Cable | +464,000 | +899,000 | +3.8% | 79.43 million |
| Telco | -26,000 | +21,000 | -0.4% | 33.51 million |
| FWA* | +302,000 | +81,000 | +463.9% | 869,000 |
| Satellite | -35,000 | -35,000 | -6.6% | 1.66 million |
| Total Wireline | +437,000 | +920,000 | +2.8% | 112.95 million |
| Total Broadband | +704,000 | +966,000 | +3.3% | 115.48 million |
| * Verizon and T-Mobile only (Source: MoffettNathanson) |
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U.S. broadband ended 2021 with a penetration of 84% among all occupied households. According to US Census Bureau data, new household formation, a vital growth driver for broadband, added just 104,000 to the occupied housing stock in Q4 2021, versus +427,000 in the year-ago period. Moffett said the “inescapable conclusion” is that growth rates will continue to slow, and that over time virtually all growth will have to stem from new household formation.
Factoring in competition and other elements impacting the broadband market, MoffettNathanson also adjusted its subscriber forecasts for several cable operators and telcos out to 2026. Here’s how those adjustments, which do not include any potential incremental growth from participation in government subsidy programs, look like for 2022:
- Comcast: Adding 948,000 subs, versus prior forecast of +1.25 million
- Charter: Adding 958,000 subs, versus prior forecast of +1.22 million
- Cable One: Adding 39,000, versus prior forecast of +48,000
- Verizon: Adding 241,000, versus prior forecast of +302,000
- AT&T: Adding 136,000, versus prior forecast of +60,000
Are we witnessing a fiber bubble?
“The market’s embrace of long-dated fiber projects rests on four critical assumptions. First, that the cost-per-home to deploy fiber will remain low. Second, that fiber’s eventual penetration rates will be high. Third, that these penetration gains can be achieved even at relatively high ARPUs. And fourth, that the capital to fund these projects remains cheap and plentiful.
None of these assumptions are clear cut. For example, there is an obvious risk that all the jostling for fiber deployment labor and equipment will push labor and construction costs higher. More pointedly, we think there is a sorely underappreciated risk that the pool of attractive deployment geographies – sufficiently dense communities, preferably with aerial infrastructure – will be exhausted long before promised buildouts have been completed.
Revenue assumptions, too, demand scrutiny. Cable operators are increasingly relying on bundled discounts of broadband-plus-wireless to protect their market share. What if the strategy works, even a little bit? And curiously, the market’s infatuation with fiber overbuilds comes at a time when cable investors are growing increasingly cautious about the impact of fixed wireless. Won’t fixed wireless dent the prospects of new overbuilds just as much (or more) as those of the incumbents.”
Moffet estimates that about 30% of the U.S. population has been overbuilt by fiber over the past 20 years, and that the number is poised to rise as high as 60% over the next five years. But the big question is whether there’s enough labor and equipment to support this magnitude of expansion. “Our skepticism about the prospects for all of the fiber plans currently on the drawing board is not born of doubt that there is enough labor to build it all so much as it is that the cost of building will be driven higher by excess demand,” Moffett explained. “There are already widespread reports of labor shortages and attendant higher labor costs,” he added.
“The outlook for broadband growth for all the companies in our coverage, particularly the cable operators, is more uncertain than at any time in memory. IMarket share trends are also more uncertain that they have been in the past. Cable continues to take share from the telcos, but fixed wireless, as a new entrant, is now taking share from all players. Share shifts between the TelCos and cable operators are suppressed by low move rates, likely due in part to supply chain disruptions in the housing market. This is likely dampening cable growth rates. In at least some markets, returns will likely be well below the cost of capital,” Moffett forecasts.
References:
U.S. Broadband: Are We Witnessing a Fiber Bubble? MoffetNathanson research note (clients and accredited journalists)
Dell’Oro: PON ONT spending +15% Year over Year
According to a newly published report by Dell’Oro Group, total global revenue for the Broadband Access equipment market increased to $3.9 B in 3Q 2021, up 7% year-over-year (Y/Y). Growth came from spending on both PON infrastructure and fixed wireless CPE. Please see chart below.
“5G fixed wireless deployments joined fiber as the primary drivers for spending this quarter,” noted Jeff Heynen, Vice President, Broadband Access and Home Networking at Dell’Oro Group. “Despite supply chain constraints and increased costs, operators continue to focus on expanding broadband connectivity,” explained Heynen.
Additional highlights from the 3Q 2021 Broadband Access and Home Networking quarterly report:
- Total cable access concentrator revenue decreased 27 percent Y/Y to $257 M. There was a clear mix shift this quarter to remote PHY and remote MACPHY devices, both of which saw Y/Y revenue increases.
- Total PON ONT unit shipments reached 32 M units, marking the fourth quarter in row-unit shipments have exceeded 30 M globally.
- Component shortages are clearly impacting cable CPE and home networking device sales, with unit shipments down markedly Y/Y.
The Dell’Oro Group Broadband Access and Home Networking Quarterly Report provides a complete overview of the Broadband Access market with tables covering manufacturers’ revenue, average selling prices, and port/unit shipments for Cable, DSL, and PON equipment. Covered equipment includes Converged Cable Access Platforms (CCAP) and Distributed Access Architectures (DAA); Digital Subscriber Line Access Multiplexers ([DSLAMs] by technology ADSL/ADSL2+, G.SHDSL, VDSL, VDSL Profile 35b, and G.FAST); PON Optical Line Terminals (OLTs), Cable, DSL, and PON CPE (Customer Premises Equipment); and SOHO WLAN Equipment, including Mesh Routers. For more information about the report, please contact [email protected].
Separately, Dell’Oro reports that the worldwide Campus Switch market revenue reached a record level in 3Q 2021. Growth was mostly propelled by 1 Gbps, which reached a record level in shipments during the quarter, while Ethernet NBase-T ports were down Y/Y.
“We have been predicting the demand in the market to remain strong, but what surprised us is the level of shipments and revenues that vendors were able to achieve during the quarter, despite ongoing supply challenges,” said Sameh Boujelbene, Senior Director at Dell’Oro Group. “It appears, however, that these supply challenges are impacting the newer technologies more than the older ones, due to a less diversified ecosystem, and in some cases, a less mature supply chain,” added Boujelbene.
Additional highlights from the 3Q 2021 Ethernet Switch – Campus Report:
- Extreme, HPE, and Juniper each gained more than one point of revenue share in Europe, Middle East and Africa (EMEA)
- H3C outperformed the market and captured the revenue leading position in China
- Power-over-Ethernet (PoE) ports up strong double-digits and comprised 30 percent of the total ports
The Dell’Oro Group Ethernet Switch – Campus Quarterly Report offers a detailed view of Ethernet switches built and optimized for deployment outside the data center, to connect users and things to the Local Area Networks. The report contains in-depth market and vendor-level information on manufacturers’ revenue, ports shipped and average selling prices for both Modular and Fixed, and Fixed Managed and Unmanaged Ethernet Switches (100 Mbps, 1, 2.5, 5, 10, 25, 40, 50, 100 Gbps), Power-over-Ethernet, plus regional breakouts as well as split by customer size (Enterprise vs. SMB) and vertical segments. To purchase these reports, please contact us by email at [email protected].
About Dell’Oro Group
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, networks, and data center IT markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell’Oro Group at +1.650.622.9400 or visit www.delloro.com.
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