The Service Provider Router market—which includes Core, Edge, and Aggregation segments—held up reasonably well in 2020 despite the macroeconomic turmoil caused by the COVID-19 pandemic. Large-scale network operators, whether they be telecom, cable MSO, or cloud service providers, pulled back on some infrastructure investments, but on the whole, continued to add capacity to their networks to meet the expanding traffic loads. The worldwide SP Router market declined just one percent in 2020.

In our new 5-year forecast report, we are predicting that the worldwide SP Router market will resume growth in 2021 and continue to expand annually through 2025. To be clear, the SP Router market is a mature one, and our projected compounded annual growth rate (CAGR) in the low single-digits reflects the state of the market. Nonetheless, there are some clear opportunities for growth with emerging technologies and the evolution of network architectures. Our forecast highlights the emergence of 400 Gbps and evolution of 5G transport infrastructures:

Demand for 400 Gbps capable routers will start to ramp in 2021 and become the growth engine for high capacity network expansion for the foreseeable future. Adoption will be mainly for core network use cases, but with the need for high capacity IP transport being pushed to the edge of networks, 400 Gbps will see broader adoption than 100 Gbps in its initial stages.

Coinciding with the emergence of 400 Gbps routing technologies are disaggregated router solutions in which the network operating system software is sold independently from the hardware, and the availability of 400ZR optical modules with a potential reach of 120 kilometers. These technologies bring new dynamics to the market that potentially alter the competitive landscape.

The global transition to 5G radio access networks (RAN) technologies will generate long-term demand for IP transport network upgrades. Higher capacity products will be an important aspect of the upgrade cycle, but service providers will require entirely new levels of functionality, scalability, and operational efficiencies to deliver the high-value 5G services they envision. What this means to that IP and software functionality will be distributed even more broadly across the network infrastructure.

 

About the Report The Dell’Oro Group Service Provider Router and SD-WAN Five Year Forecast Report offers complete, in-depth coverage of the Service Provider Core and Edge Router, Aggregation Switch, SD-WAN, and Enterprise High-end/Access Router markets for future current and historical time period. The report includes qualitative analysis and detailed statistics for manufacture revenue by regions, customer types, and use cases, average selling prices, and unit and port shipments. For more information or want to get a copy of the report, please contact dgsales@delloro.com.

Dell’Oro Group published a January 2021 Mobile Core Network market five-year forecast report

The Mobile Core Network (MCN) market’s cumulative manufacturing revenues are expected to approach $60 B from 2021 to 2025. The first 5G Standalone (5G SA) networks launched in 2020 resulting in manufacturing revenues for the 5G Core market for the first time, including network functions for packet core, policy and subscriber data management. Initial revenues were primarily in mainland China, and are expected to accelerate thru the forecast period as all regions around the world begin building their 5G SA networks. The 4G Core will still be the dominant core, but declining in the later years of the forecast as the growth of 5G Core offsets the decline. The IMS Core market will still continue to rise throughout the forecast period as the migration to 5G accelerates the need for VoLTE, and eventually VoNR.

 

APAC and EMEA Regions to account for over 70% of the revenues

Regionally, APAC (Asia-Pacific) and EMEA (Europe, Middle East, and Africa) regions are expected to account for over 70% of the revenues during the forecast period. The cumulative revenues for the EMEA region will exceed the APAC region for the first time in a forecast period, due to the number of growing subscribers in EMEA. APAC dominates in the first half of the forecast period which is eventually taken over by EMEA in the second half of the forecast period.

Network Function Virtualization (NFV) continues to grow

The revenue mix of NFV is expected to grow significantly approaching 100% in 2025, reflecting the move to 5G Core functions. NFV functions are moving from cloud-ready to cloud-native network functions (CNFs). At the same time, networks are migrating toward containers on VM servers, especially for 5G Core—and eventually to bare metal servers—eliminating the virtualization layer, thereby reducing both cost and complexity.

Multi-Access Edge Computing (MEC) will enable new consumer and enterprise applications

MEC will improve latency in the network for both consumer and enterprise applications. Consumers will be served by Public MEC deployments, while enterprise applications will be served by Public MEC and Private MEC (on-premises) deployments. For a more in-depth look at MEC, see the Dell’Oro Group MEC Advanced Research Report.

 

About the Report Dell’Oro Group’s Mobile Core Network 5-Year Forecast Report offers a complete overview of the market for Wireless Packet Core, IMS Core, policy, and subscriber management with historical data, where applicable, to the present. The report provides a comprehensive overview of market trends by network function implementation (Non-NFV and NFV), covering revenue, licenses, average selling price, and regional forecasts for various network functions. To get a copy of the report, please contact us dgsales@delloro.com.

Subscriber and Bandwidth Growth Will Remain Key Catalysts

Global spending on broadband access equipment and CPE is expected to drop only 2% in 2020, a significant improvement from our July 2020 forecast, which anticipated spending dropping by 7% in 2020. The combination of significant residential subscriber growth and increased capacity utilization rates noted by global broadband providers nearly offset the negative impacts of trade tussles, component shortages, and labor limitations.

In the first half of 2020, we heard from countless service providers that their projected capacity utilization rates for the entire year were reached by March or April. A second surge in consumption in the fall, driven by children returning back to school and attempts at re-opening economies forced many operators to add even more capacity. With much of the world still dealing with the impacts of the COVID-19 pandemic and with remote work and online education continuing well into 2021, we see no slowdown in broadband capacity utilization, forcing service providers to once again balance accommodating traffic growth with managing overall spending. Continuing RAN investments will force service providers to spend judiciously on their broadband networks. In certain cases, this will mean delaying longer-term strategic projects and focusing on addressing immediate capacity upgrades and onboarding a higher-than-average volume of new subscribers.

PON Equipment Spending Expected to Remain Solid

Our five-year CAGR for PON equipment has been increased to 3% from just under 1%. China, which has historically accounted for anywhere from 65-80% of total PON spending, has peaked in terms of total ONT units consumed on an annual basis. The Chinese FTTH market has matured, with broadband penetration in the country reportedly nearing 80%. Though subscriber growth is slowing, there is still a tremendous installed base of subscribers that will continue to require new ONTs.

Although China’s ONT volumes are coming down from the peak years of 2017 and 2018, additional growth is expected from the rest of the world—particularly North America and Western Europe. In North America, the FCC’s $20B RDOF (Rural Digital Opportunity Fund) program will help transition a significant number of rural areas to fiber over the next 5-7 years. In Western Europe, major operators including Orange, DT, BT OpenReach, and Proximus are all expanding their fiber rollouts and even moving quickly to XGS-PON for symmetric 10 G services.

Finally in Asia, India, Indonesia, and Malaysia, along with a 10 G upgrade cycle in Japan and South Korea should also help sustain the market.

Cable Infrastructure Spending Set for Growth

The glut of DOCSIS channel capacity that helped push down cable equipment revenue in 2018 and 2019 was actually beneficial to operators in 2020 as they were able to address significant increases in both upstream and downstream traffic during the pandemic with minimal increases in spending. In most cases, cable operators used the software tools available as part of DOCSIS 3.1 to ensure adequate bandwidth for all subscribers. In other cases, operators purchased additional DOCSIS licenses as part of accelerated node split programs to address systems with the greatest need.

Regardless, after two years of under-investing in infrastructure, the overall cable infrastructure market will see a steady increase in revenue throughout our forecast period, as mid- and high-split projects in North America and Western Europe, designed to increase upstream capacity, are accelerated. Investments in outside plant equipment, particularly new amplifiers and taps, will also continue as operators begin the multi-year process of preparing their networks for DOCSIS 4.0 and its ability to enable extended spectrum DOCSIS (ESD), low-latency DOCSIS, and full-duplex DOCSIS (FDD).

 

About the Report The Dell’Oro Group Broadband Access  and Home Networking 5-Year Forecast Report provides a complete overview of the Broadband Access market with tables covering manufacturers’ revenue, average selling prices, and port/unit shipments for Cable, DSL, and PON equipment. Covered equipment includes Converged Cable Access Platforms (CCAP), Distributed Access Architectures (DAA), DSL Access Multiplexers (DSLAMs), PON Optical Line Terminals (OLTs), Customer Premises Equipment ([CPE] for Cable, DSL, and PON), along with SOHO WLAN Equipment, including Mesh Routers. For more information about the report, please contact dgsales@delloro.com.

Dell’Oro Group published an update to the Optical Transport Five-Year Forecast report in January 2021

Although we continue to be concerned with the high level of uncertainties that exist due to the COVID-19 pandemic, we believe that the Optical Transport market will maintain its positive momentum for the next five years. This long term outlook is based, fundamentally, on the belief that bandwidth demand will continue to increase for many more years in the future as it has for the past decade—one that included the start of a pandemic.

This of course does not mean the Optical Transport market will grow unencumbered for the next five years. Because while bandwidth demand continues to grow, we anticipate the Optical Transport market will face challenges such as the three outlined here:

• When WDM technology reaches Shannon’s Limit, it will be increasingly difficult to drive down the average price-per-bit of bandwidth by increasing spectral efficiency. Yet, we forecast the average price-per-bit will decline at the same rate in the next five years as it did in the past five years.
• The entry of coherent 400 Gbps in a small form factor pluggable such as QSFP-DD opens the door for a change in architecture to IP-over-DWDM and away from traditional Optical Transport systems. Component manufacturers have already been trialing and sampling 400ZR pluggable optics in late 2020, and we think demand will be material by late 2021.
• In the past five-year period, much of the Optical Transport market growth was due to a couple high growth markets—China and data center interconnect (DCI). However, as history has proven many times, markets do not stay at a high growth rate forever. Will this be the case for China and DCI as well?

But even with these market challenges, we are optimistic about the future of Optical Transport and believe that the market for optical gear will rise for many more years. In this latest January 2021 publication, we are forecasting that the cumulative Optical Transport market revenue will be nearly $85 billion for the years that include 2021 through 2025.

Our growth projections are driven by the anticipated need for WDM systems in both metro and long-haul applications, which combined is expected to comprise nearly 98 percent of the total Optical Transport equipment market.

Within the WDM market, we expect the continuous drive to higher wavelength speeds to occur. Hence, while 100 Gbps coherent wavelengths contributed the majority of revenue before, we forecast the largest contributor will be 200 Gbps in the near term period, and then 400 Gbps in the outer forecast period. In all, we are forecasting 200+ Gbps wavelength shipments to grow at a five-year CAGR of 30 percent.

 

About the Report The Dell’Oro Group Optical Transport 5-Year Forecast Report offers a complete overview of the Optical Transport industry with tables covering manufacturers’ revenue, average selling prices, unit shipments, wavelength shipments (by speed up to 1.2 Tbps). The report tracks DWDM long haul, WDM metro, multiservice multiplexers (SONET/SDH), optical switch, optical packet platforms, data center interconnect (metro and long haul), and disaggregated WDM. Click here to learn more about the report or contact us at dgsales@delloro.com.

Dell’Oro Group published an update to the Microwave Transmission & Mobile Backhaul Transport Five-Year Forecast report in January 2021

The following are key takeaways from the newly released report:

• • We remain concerned about the COVID-19 pandemic, and believe it will continue to influence the mobile backhaul and microwave transmission markets this year, as it did throughout 2020. If additional lockdowns do occur, we expect that similar to last year supply-chain issues will cause a slowdown in deployments. Also, as a result of the pandemic’s damage on the 2020 world economy, we remain concerned that a second recession could occur in 2021 or 2022, depending on government economic policies this year. That said, we are optimistic that as COVID-19 vaccines are distributed, service providers will find the confidence to invest in their networks.

• • For the cumulative five-year forecast period that includes 2021 through 2025, we predict the Mobile Backhaul Transport market revenue, consisting of fiber/copper and wireless systems, to be $25 billion. During this period, the cumulative Microwave Transmission market revenue, driven mostly by mobile backhaul, is expected to be just over $16 billion.

• • We expect the rollout of 5G to be the main driver of market growth for both the Mobile Backhaul Transport and Microwave Transmission markets. We estimate that 67 percent of Mobile Backhaul Transport revenue and nearly half of Microwave Transmission revenue will be generated from equipment deployed in 5G networks by 2025. In addition to backhaul, we believe 5G will increase the use of Fronthaul.

• • With each generation of mobile radio technology, the use of Fiber/Copper Systems for Mobile Backhaul Transport has increased, and naturally, we predict this share will continue to rise with 5G deployments. Therefore, we forecast Fiber/Copper System shipments to exceed those of Wireless Systems throughout the forecast period. However, the increasing use of Fiber/Copper as a share of link shipments will likely plateau at approximately 70 percent since many operators will still rely on Wireless Systems such as point-to-point Microwave Transmission.

• • The Microwave Transmission market is forecast to grow at a low single-digit percentage rate for the next five years. We predict that Packet Microwave will be the only microwave transmission technology segment that grows over the next five years, driven by rising demand for full outdoor units and E/V Band systems. We forecast Packet Microwave revenue to grow at a 10 percent CAGR.

• • E/V Band system sales have been relatively modest but steadily rising in use. Due to higher capacity requirements for 5G and spectrum constraints on lower frequency bands, we expect growing demand for E/V Band systems. Therefore, we forecast annual E/V Band shipments to more than triple by 2025.

About the Report The Dell’Oro Group Microwave Transmission and Mobile Backhaul 5-Year Forecast Report offers complete, in-depth coverage of the market with tables covering manufacturers’ revenue, ports/radio transceivers shipped, and average selling prices by capacities (low, high and E/V Band). The report tracks point-to-point TDM, Packet, Hybrid Microwave as well as full indoor and full outdoor unit configurations, Mobile fronthaul and backhaul, 5G backhaul, and Fiber/copper and wireless. To purchase this report, please contact dgsales@delloro.com.