Passive Optical Network Equipment Market: Structure and Overview of Key Market Forces Propelling Market

About 80% of the PON equipment revenue generated in 2014 was taken up by Huawei Technologies Co., Ltd., ZTE Corporation, Alcatel-Lucent S.A., and Calix, Inc, reports Transparency Market Research (TMR) in a new study. These companies have consistently dominated the PON equipment scenario, thus creating a highly consolidated market.

Most of the key players are currently looking towards emerging economies for the implementation of better connectivity solutions. Other aspects they are promoting are cost reductions in deployment and the growth of access networks for better revenue generation avenues.

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TMR states that a lot of the player focus is also driven towards GPON equipment because the GPON structure presents several advantages over the EPON structure as well as multiprotocol transport support. EPON technology, however, still offers a more cost-effective solution for many regional players in emerging economies.

“Asia Pacific is currently a hotbed of activities in networking and connectivity,” states a TMR analyst. “China and India especially are showing a very high demand for passive optical networks. India for instance is planning to introduce OFC connectivity between all its villages. The spread of dark fiber across the Indian network is set to generate significant opportunities for regional and global players alike.”

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China is currently going through a very high adoption rate of electronic devices, thereby creating high volumes of data being transmitted across networks. This high volume data traffic is actually causing users to switch from their currently wireless modes to wired – specifically optically wired – networks.

A key restraint on the proliferation of PONs globally is the high cost associated with the operators’ side components. GPON, the more developed technology set, comes at a very high initial cost, but can prove to be beneficial and less expensive over time. Fiber trenching also requires a high capital investment and takes up a large chunk of a service provider’s total investment.

The global passive optical network (PON) equipment revenue generation is expected to progress at a highly positive CAGR of 20.7% within a forecast period from 2015 to 2023. The revenue is expected to reach US$163.50 bn by the end of 2023.

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WDM/WDDM is currently the largest PON equipment component and is expected to generate a revenue of US$78 bn by the end of 2023 while still retaining its market leadership. Both GPON and EPON structures are expected to grow at an extremely fast rate with GPON being the more preferred structure. It is expected to reach US$114.84 bn by the end of 2023.

Asia Pacific will consistently generate the highest demand for PON equipment between 2016 and 2023. By the end of 2023, it is expected to reach US$63.01 bn, marking itself as the region with the most opportunities.

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