Driven by the service provider's ongoing roll outs of 40 and 100G technology, Infonetics Research forecasts that the Optical Transport Network (OTN) hardware market is set to grow to $10.6 billion by 2015.
In 2011, OTN transport spending by service providers made up 92 percent of the overall OTN hardware market, while OTN only grew 8 percent.
Andrew Schmitt, directing analyst for optical at Infonetics and author of the report, said that while the OTN transition offers a number of benefits, the 40/100G spending transition is the trigger, particularly for OTN switching.
"OTN is going up as a result of several things, but the main catalyst is 40/100G," he said. "The SDH hierarchy just isn't worth expanding into these higher speeds, and OTN offers a much better solution going forward, including the capability of handling Ethernet transparently, better OAM&P (management) and true service transparency. Although OTN switching and transport hardware collectively made up 45 percent of the overall global equipment spending the first half of last year, Infonetics forecasts that it will grow to 70 percent of the revenue mix by 2015."
Schmitt added that the OTN switching and OTN transport segments are following their own growth patterns.
"Each segment is in a different stage of adoption and has a wildly different growth rate," Schmitt said." "Case in point: OTN switching revenue jumped 132 percent in 2010 over 2009, while OTN transport revenue grew 9 percent."
From a vendor perspective, the OTN transport market is currently dominated by Huawei. Huawei has secured a number of contracts with a number of China's main service providers, which have been early adopters of OTN-based networks.
OTN will have utility for any incumbent operator that operates multiple networks that are layered on top of one another, because it enables them to unify their transport infrastructure.
"Carriers with homogeneous networks of all the same service type will see less benefit, and there are some carriers out there that have said they see no need for OTN," Schmitt said. "But most carriers don't have the luxury of having a homogeneous network and must operate a wireless, broadband, Enterprise connectivity and internet transit network at the same time."
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