Spending on 10G PON equipment skyrocketed 500% in Q1 – Dell’Oro

A massive jump in spending on 10-gig PON technologies drove the overall broadband access equipment market to double-digit growth in Q1 2021, fresh data from analyst company Dell’Oro Group shows.

Worldwide broadband access market revenue rose 18% year-on-year to $3.3 billion. Dell’Oro VP of Broadband Access and Home Networking Jeff Heynen told Fierce XGS-PON revenue skyrocketed 500% year-on-year to about $200 million, reflecting several quarters of steady growth as fiber players up their game in anticipation of competition from cable operators deploying DOCSIS 4.0.

“You can see the trajectory. It’s very clear that operators, if they’re deploying new fiber networks, in a lot of cases they’re doing so starting off with 10-gig. And even those that are beginning the process of upgrading from the first-generation GPON technologies they’re also doing so with XGS,” he said. This trend was accelerated by the Covid-19 pandemic, he added.

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Heynen noted that with cable operators plotting upgrades to faster speeds with DOCSIS 4.0, “I think what has happened among operators, particularly in North America, is that they’re starting to realize that if we deploy more fiber and we do so with multi-gigabit capabilities then we’re putting ourselves in a position to anticipate and at least already be competitive with that DOCSIS 4.0 rollout.”

Cable access concentrator revenue of $243 million increased 15% year-on-year, driven by new hardware purchases of Converged Cable Access Platform (CCAP) chassis, line cards and distributed access architecture (DAA) nodes. DOCSIS license purchases, however, were down.

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According to Heynen, it’s normal for hardware spending and license purchases to see-saw in cycles. “You’ll see a quarter where there’s a significant investment in new hardware, and subsequent quarters where the licenses get purchased to fill up all that additional capacity that they’ve bought through the new hardware,” he explained. “That’s what happened in this quarter. It’s a very good sign cable operators are still investing.”

Heynen noted revenue from purchases of remote-PHY and remote MAC-PHY equipment was up 66% from Q4 2020, which he said can be interpreted as a sign that cable operators are resuming long-term projects that were put on hold during the height of the pandemic last year.

He concluded overall broadband access market growth in the quarter could “have be quite a bit higher if not for the supply chain constraints everybody’s wrestling with right now.” Heynen said end-points such as cable modems, gateways and PON optical network terminals have been the hardest hit.

“It’s just really hard on the consumer electronics side,” he said. “They’re really feeling the pain of the semiconductor shortages right now, and I think that’s going to be a real constraint at least on CPE growth, not necessarily infrastructure growth, this year.”