Omdia: Traditional PON equipment vendors face three major challengers

Recently, Julie Kunstler, senior analyst at Omdia, wrote in LightReading that driven by COVID-19 and network reuse, the PON equipment market has grown strongly, and the PON supplier landscape is quietly changing.

The following is the original translation:

The COVID-19 pandemic has made working and studying from home the norm, and the demand for network bandwidth is increasing. Driven by this, the broadband access equipment market, especially PON, is accelerating its growth. PON has been supporting the growth of FTTH users for many years, initially in Asia Pacific, then in EMEA, and more recently in North America, South America, and Central America.

The development of the next generation of PON (i.e. 10G PON) is gaining momentum. Extending the same infrastructure to small and medium-sized enterprises, smart cities and 5G small base station transmission, this network reuse approach can support communications service providers (CSPs) to achieve higher return on investment.

COVID drives PON upgrades

The positive impact will continue

As working and studying from home become the norm, the demand for access networks will continue after the pandemic. At the same time, given the popularity of virtual social communications, video traffic will continue to maintain strong growth momentum.

At the same time, the pandemic has accelerated the deployment of next-generation PON. In Q2 2020, the shipment of next-generation PON OLT ports was close to 830,000, a year-on-year increase of 70%. By 2025, most GPON ONT/ONU will have 10G capabilities.

In addition, COVID-19 has further highlighted the broadband digital divide. Governments in some countries have launched major programs to narrow the digital divide, including the Rural Digital Opportunity Fund in the United States. In July, Openreach plans to provide ultra-reliable and gigabit-capable FTTP broadband networks to some disadvantaged homes and businesses in the UK.

Today, PON infrastructure reuse is ubiquitous

The goal of fixed-mobile convergence (FMC) is to support multiple business segments through a single, fiber-based access network. And PON infrastructure is playing this role. CSPs are accelerating the reuse of their PON infrastructure for non-residential users and applications such as small and medium-sized enterprises, smart cities, and xHaul (5G small base station transmission). Next-generation PONs, such as 10G, and future 25G, can easily support gigabit and multi-gigabit symmetrical bandwidths. This strategy will provide CSPs with an additional source of revenue, thereby improving return on investment.

• Smaller CSPs use 10G PON to support SME business while effectively utilizing limited fiber resources. Larger CSPs migrate existing SME customers to 10G PON networks and provide point-to-point fiber for high-value users.
• CSPs support municipal video surveillance services through 10G PON and cloud services. PON infrastructure can extend to long distances, simplifying the design and operation of public safety networks.
• PON infrastructure has been used to support small cell backhaul, but due to the dense deployment of 5G small cells, 10G PON is needed to support higher bandwidth. Compared with point-to-point solutions, PON's point-to-multipoint topology improves fiber asset efficiency. This efficiency becomes critical when CSPs plan to deploy a large number of small cells.

The supplier landscape is changing

Three major challengers

The traditional PON equipment manufacturer landscape is changing, with three new challengers.

• Switch and router manufacturers
• Cable broadband solution provider
• Software-defined white box/focused on decoupled solution providers

These challengers see that many CSPs are interested in less traditional PON infrastructure solutions, such as enabling switching and routing equipment to support PON OLT functions, or for cable operators, being able to use the same cloud-based operating system regardless of the underlying medium being coax or fiber. Other CSPs are continuing to move in a software-defined direction, using white-box equipment.

At the same time, due to the so-called "clean network" policy and the accelerated deployment of PON networks in Western Europe, PON equipment suppliers are facing major opportunities to increase their market share.

However, in the face of strong growth in PON deployment and upgrades by CSPs, PON equipment vendors must make wise choices. They must focus on how their solutions can solve the challenges facing CSPs while achieving a higher return on investment.