China's smart grid drive creates $1.5 billion opportunity for PON vendors, says Ovum

Smart grid trend creates 'very large market opportunity,' says analyst
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PON vendors are going to find a large market to sell their wares in China's utility market, according to Ovum.

As Chinese utility companies start to migrate toward smart grids in their electric infrastructure and leverage PON equipment to backhaul electric data on usage and outages, Ovum forecasts this trend will be a $1.5 to $2 billion opportunity for PON component and equipment vendors.

Similar to U.S. utilities like Chattanooga, Tenn.-based EPB, China-based utilities such as State Grid Corporation of China (SGCC) could use the PON networks for two purposes: powering their smart grids and offering Fiber to the Home (FTTH) services to consumers and businesses.

"Building a fiber-based smart grid communications network creates a very large market opportunity for PON vendors," said Julie Kunstler, principal analyst of Components at Ovum.

The timing of SGCC's interest in PON comes as PON OLT port shipments are forecast to decline this year after major FTTX buildouts in China are completed.

However, China's utility opportunity could benefit a number of PON OLT equipment vendors, including Huawei, ZTE, Alcatel-Lucent (NYSE: ALU) and FiberHome, whose products simultaneously support smart grid and triple-play communications services.  

Alcatel-Lucent, in particular, has been winning a number of utility telco deals with U.S.-based municipal electricity providers including Chattanooga's EPB and Bristol Tennessee Essential Services (BTES).  

Besides creating opportunities for PON OLT vendors, the smart grid trend could offer sales opportunities for other members of the last mile fiber network ecosystem, including ONT box manufacturers and component vendors supplying fiber splitters, fiber cabling manufacturers, transceivers, BOSAs, PON MAC chips and optical interface chips.

Despite the allure of China's utility market for PON, vendors that want to participate will face a number of challenges. For one, they will need to establish contacts with China's smart meter companies and government agencies, in addition to PON equipment vendors that have a presence in the country.

For more:
- see the release

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