Dell’Oro raises its predictions for broadband spending

In January the analysts at Dell’Oro Group forecast that revenue from the sale of new broadband equipment would reach $17 billion by 2026. But now, it has revised its forecast in light of the broadband spending boom and says revenue will reach $23.4 billion in 2026.

The broadband equipment in its forecast includes passive optical network (PON) equipment for fiber-to-the-home deployments, cable broadband access equipment including DOCSIS 4.0 gear, and fixed wireless CPE.

“We’ve made significant upward revisions to our long-term broadband and home networking forecast, said Dell’Oro Group Vice President Jeff Heynen.

In an email to Fierce, Heynen said there are a number of reasons for the jump.

First, fiber buildouts continue to increase globally, but especially in North America and Europe. So, through 2024, much of the spending will be on these infrastructure buildouts, while the later years of Dell’Oro’s forecast predict significant CPE growth as new fiber subscribers are added. “These ONTs will carry a higher price point than traditional DSL and cable CPE, especially in those key North American and Western European markets, where there will be a larger percentage of ONT gateways as opposed to just bridge ONTs,” he said.

Service providers are moving to one-box architectures for their premium FTTH deployments because they want to have more visibility into service performance both to the home and within the home.

Another reason for Dell’Oro’s bumped-up forecast is that current inflation rates and supply chain shortages are increasing the costs of both network platforms as well as CPE. 

“The typical rates of price erosion we see are just not happening,” said Heynen. “We don’t expect to see a return to those traditional rates of price erosion until after 2023 when backlogs are finally reduced.”

In addition, Dell’Oro is seeing an unprecedented introduction of new technologies into CPE. “I’m thinking here of Wi-Fi 6E and Wi-Fi 7, both of which require more expensive antenna arrays, higher processing power, and more expensive Wi-Fi chipsets,” said Heynen. “All those elements are combining to keep CPE prices from dropping. With all those new fiber and fixed wireless subscribers being added with more expensive gateways, the result was a significant increase in total revenue.”

In other highlights from the report, Dell’Oro says PON equipment revenue is expected to grow from $9.3 billion in 2021 to $13.6 billion in 2026, driven largely by XGS-PON deployments in North America, EMEA, and Latin America and the Caribbean (CALA).

Revenue for fixed wireless CPE is expected to reach $5.1 billion by 2026, led by shipments of 5G sub-6 GHz and 5G millimeter wave units.

Cable operators

In its updated report, Dell’Oro added in forecasts for remote OLTs, which will be used by cable operators to deliver PON from existing node locations. The analysts expect R-OLT revenue to jump to $100 million by 2026. This figure doesn’t include OLTs purchased by cable operators for headend-based deployments of FTTH, which is the more common architecture today.

Dell’Oro predicts total revenue for cable distributed access equipment such as R-OLT, virtual CCAP, remote PHY devices and remote MACPHY devices to reach nearly $1.3 billion by 2026, as operators ramp their DOCSIS 4.0 and fiber deployments.