We recently published an update to our Service Provider (SP) Router and Carrier Ethernet Switch (CES) five-year market forecast report. Compared to our prior forecast in January, we made some significant adjustments to incorporate the impact of the COVID-19 pandemic. On the other hand, our view of emerging technology trends remains largely unchanged, and that demand will remain healthy over the coming years. Our forecast isn’t as rosy as our January outlook, but we still expect The SP Router and CES market to grow annually from 2021 and to top $15 billion by 2024.

The COVID-19 pandemic led to a major reset of our forecast assumptions and market growth profile for the next five years. For the short term through 2020, market growth will be suppressed due to supply and human resource constraints, as well as weakened macroeconomic conditions. Over the longer term, from 2021 through 2024, we expect the technology and use case drivers of our prior forecasts to remain largely intact and drive annual growth.

The good news is that the importance of technologies such as 400 Gbps, 5G, and Cloud networking remains unchanged or perhaps even more so in the face of tighter capital spending and infrastructure investments. These prioritized spending will lead to a faster decline in spending for less critical infrastructure and legacy technologies.

On the 400 Gbps technology front, the emergence of new products will be a big growth driver over the next five years. Network operators see 400G as a logical step to increasing network capacity at lower costs for hardware and operations. The ecosystem of 400G technologies, from silicon to optics is ramping and throughout 2020, a broad range of routers supporting 400G will become commercially available. Starting in 2021, large-scale deployments will contribute meaningful market. By 2024, we expect 400G to generate almost $3 billion in manufacturers’ revenue and to be widely deployed in all of the largest core networks in the world.

One phenomenon of the pandemic has been the acceleration of 5G radio deployments in 2020 as service providers see the opportunity to build differentiated networks and associated services. Along with the 5G radio deployments, many network operators are upgrading IP transport capacity in backhaul networks. Over the next five years, we expect to see multiple waves of backhaul network investments as operators deploy 5G at varying times and rates around the world. Initially, networks will be upgraded to support the faster data rates of 5G services. Over time, we anticipate a larger focus on implementing extensive and very granular network management, control, and automation capabilities that enable the vast array of services that service providers envision.

We hear so much about the adoption of Cloud services, but what is often overlooked is the massive IP networks used to interconnect the thousands of Cloud data centers and points of presence, to private networks, and the public Internet. Sales of Service Provider Core and Edge routers to Cloud operators are expected to grow at a higher rate compared to sales to Telecommunication Service Providers. The largest Cloud operators will be the early adopters of 400G as they upgrade from 100G in their backbone networks to accommodate the traffic growth to and from, and across their data centers.

In summary, we maintain a positive growth outlook for the SP Router and CES market over the next five years. Demand is coming from the tremendous growth of new and innovative services from Telecom and Cloud SPs that in turn drive the need to expand IP network capacity and functionality. The potential supply of many new products and technologies that meet the new network requirements is emerging from the entire technology ecosystem. We look forward to watching the industry’s progress!

If you need to access the full report to obtain revenue, units, pricing, relevant segmentation including regions and vertical markets, etc., please contact us at dgsales@delloro.com

About the Report:

The Dell’Oro Group Router & Carrier Ethernet Switch Five Year Forecast Report offers complete, in-depth coverage of the Service Provider Core and Edge Router, Carrier Ethernet Switch, and Enterprise Router markets for future current and historical time periods. 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.

 

 

Industry Standards Organizations and Service Provider Alliances Work Together to Promote MEC

We just published the July 2020 Multi-Access Edge Computing (MEC) market forecast report. The industry collaboration and the momentum being achieved, our July 2020 five-year MEC forecast (2019 to 2024) has doubled from our January 2020 forecast. The market is still expected to start slow but greatly accelerates in the second half of the forecast period. We expect the China market will be leading in the scale of MEC deployments and will represent the largest regional market. Here are some key takeaways from the report:

• Dell’Oro Group’s MEC report covers what is known as the Infrastructure Edge, on the upstream side of an access network. It does not cover the Device Edge, on the user side of the access network. Content Delivery Networks (CDNs) and virtual Radio Access Networks (vRAN) are also not included.
• 5G Service Providers are expected to be the primary connectivity providers for MEC Systems per the market defined. Cloud Service Providers will partner with 5G Service Providers to extend their services to 5G systems.
• Since the publication of the January 2020 MEC report, 3GPP and European Telecommunication Standards Institute (ETSI) have continued to update the MEC specifications.
  • ETSI published a new white paper in July 2020, “Harmonizing standards for edge computing – A synergized architecture leveraging ETSI ISG MEC and 3GPP specifications.” This white paper has outlined the collaboration between ETSI and 3GPP to prevent any fragmentation in the MEC ecosystem.
  • 3GPP has already drafted a specification incorporating the harmonization.
• GSMA has been rallying the Service Providers into working together under the umbrella of the Operator Platform for Edge Cloud Computing, a concept outlined in a January 2020 white paper.
  • In Phase 1, the Operator Platform Concept is focusing on federated multiple operator’s edge computing infrastructure to give application providers access to a global edge cloud to run innovative, distributed, and low latency services through a set of common application programmable interfaces (APIs).
  • Service Providers have created alliances to work on these issues such as the Bridge Alliance Global MEC Task Force and the 5G Future Forum.
  • In July 2020, fruits of these efforts were publicized between Deutsche Telekom and Telefónica who implemented a cross-border trial with the MobiledgeX’s aggregated platform that validates federated Telco Edge Cloud for differentiated XR gaming.
• 5G Automotive Association (5GAA) has partnered with ETSI now on two Plugtests. The 5GAA supports the idea that 5G will be the ultimate platform to enable Cooperative Intelligent Transportation Systems (C-ITS) and the provision of V2X (vehicle-to-everything) communications.

Click here to learn more about Dell’Oro Multi-Access Edge Computing Advanced Research Report. If you want to get a sample of the report, please contact us.

About the Report

Dell’Oro Group’s Advanced Research Report on Multi-Access Edge Computing offers an overview of the MEC market, including a five-year forecast. The report’s sections include: Definition and Scope, Market Drivers, Use Cases, System Architecture, Vendor Ecosystem, the U.S. MEC System Deployment Model, and MEC Revenue and Shipment Forecast for Servers and the Packet Core User Plane Function. The market is segmented by Public MEC and Private MEC, and offers a worldwide view of the total available market in units. To purchase this report, please contact us at dgsales@delloro.com.

 

Dell’Oro Group published an update to its research on Network Equipment (NE) Services. The following are some of the key takeaways from the report.

Network Equipment Services Market Returning to Growth

Following five consecutive years of market contraction, the NE Services market began to reverse direction, growing slightly in 2019 due to positive developments with Network Rollout Services and Consulting Services offsetting reduced demand for Managed Services. We expect the improved market sentiment in 2019 will extend through the forecast period, resulting in the market registering $46 billion in 2024.

Near Term Challenges with Managed Services

Managed Services is expected to weigh on the market in the near term as vendors continue to exit contracts that are unprofitable and non-strategic. However, we are optimistic about the role of managed services in the future as networks continue to increase in complexity and vendors deliver a greater amount of automation to proactively maintain networks, reducing the number of costly alarms.

Network Equipment Services is Evolving

While “plan, build, operate, and maintain/transfer” remains a critical aspect of the services market, it is not expected to be the dominating driver for services in the future. The reason for this change in drivers is that the next network generation is not just about installing the newest hardware, expanding network coverage, or reducing the number of network layers. While these will still be part of the next network solution, we believe that network complexity will dramatically increase in the future as service providers strive to incorporate SDN/NFV, IoT, 5G real time services, along with exploring new architectures such as Open RAN. As a result, we believe Service offerings in the future will increase in sophistication often incorporating a higher amount of software and consulting.

Vendor Landscape is Stabilizing

Following five years of dynamic share shifts, the top three vendors—Huawei, Ericsson, and Nokia—have held their market share for the past three years. Together these three vendors accounted for about 75 percent of the NE Services market in 2019.

Click here to learn more about the report coverage or contact us for a sample report, please contact us at dgsales@delloro.com.

 

About the Network Equipment Service Advanced Research Report:

Dell’Oro Group’s Network Equipment Services report covers the service offerings by select network equipment manufacturers (vendors) that supply service providers. The network equipment we are referring to includes such equipment as broadband access, optical transport, routers, and mobile radio infrastructure. Network Equipment Services are reported in three segments: Rollout Service, Managed Service, and Consulting Service.

Balancing Broadband Subscriber Growth with Supply Chain Constraints

Global home networking unit shipments are only expected to decline by 1% in 2020, dipping from 193.9 M worldwide to 192.1 M. Included devices are residential access points, residential WiFi routers, including mesh routers, as well as broadband CPE with integrated WiFi capabilities. Supply chain constraints and reductions in manufacturing capacity seen in the first quarter of the year, due to plant closings in China, Taiwan, Malaysia, and the Philippines, will quickly give way to shipments increases to support growth in new broadband subscribers as well as consumers upgrading their in-home WiFi devices to better handle telework and remote education requirements.

WiFi 6 unit shipments across all product categories are expected to increase to 1.5 M units this year, and then skyrocket in 2021 and beyond, as broadband service providers begin taking shipments of cable, fiber, and DSL gateways with integrated WiFi 6 capabilities. Until then, the bulk of WiFi 6 units will be premium WiFi routers and mesh systems sold via retail outlets.

WiFi 6 adoption combined with the increased rollout of higher-end broadband CPE, including GPON and XGS-PON ONTs, along with DOCSIS 3.1, VDSL, and G.fast units will result in an increase in overall home networking unit shipments through 2022. The adoption of mesh router systems in the North American and Western European markets will also help to drive overall growth, before a period of market saturation sets in beginning in 2023 and 2024. 802.11ac (WiFi 5) units will continue to hold the largest share of overall units through 2022. Beginning in 2023, WiFi 6 will dominate overall shipments. Transitions to new WiFI technologies take time, especially when considered on a global basis. Specifically, high-ARPU regions, such as North America and select markets of Western Europe and APAC make these transitions much faster than other regions, including China and CALA, where operators generally wait until volume shipments have ushered in unit price reductions that better match their ARPU profiles.

Mesh and WiFi 6 Ushering In a New Era of Home Networking

For many years now, the evolution of WiFi has been focused on improving two key technical attributes: speed and range. WiFi 6, however, is the first iteration to take a more holistic view of wireless technology that encompasses not only improvements in speed and range, but also network intelligence, analytics, and power efficiency. It is the first WiFI standard developed specifically for a world defined by the IoT and the consistent proliferation of connected devices.
WiFi 6 also can dramatically improve how service providers will be able to provision, manage, troubleshoot, and analyze their in-home networking services. It provides options for the remote, zero-touch provisioning of devices and services, as well as the automatic adjustment of WiFi channels to ensure peak performance. As subscribers become savvier about broadband and WiFi, and as they become more reliant on broadband to enable multiple services in their home, they will demand uninterrupted service. With WiFi 6, service providers will finally have the power to deliver on those expectations.

Perhaps the most important feature of WiFi 6 is OFDMA (Orthogonal Frequency Division Multiple Access.) OFDMA allows WiFi routers and access points to divide multiple channels—on either the 2.4GHz or 5GHz frequency band—into smaller allocations called resource units (RUs.) Each RU can then be divided into yet smaller channels, with that traffic earmarked simultaneously for multiple devices. Each of those devices can have dramatically different traffic profiles (e.g., a TV that is streaming an 8k movie and a connected thermostat communicating with a cloud-based analytics engine).

The net result is a reduction in latency for connected devices and an increase in the aggregate throughput across the wireless network. WiFi 6 adds both uplink and downlink OFDMA, meaning that routers and CPE can intelligently allocate different levels of transmitting and receiving power per connected device, depending on variables such as distance, noise, and other signal impediments.

As for mesh capabilities, consumer mesh routers have been growing at a fast pace over the last year, with total units expected 23 M this year. Operators are becoming smarter about identifying when mesh routers are required by means of delivering apps that allow new subscribers to describe their homes, the placement of their routers, and the types of devices throughout the home that might require closer proximity to a mesh base station or satellite. As such, they are either re-selling mesh routers or integrating mesh capabilities directly into their higher-end gateways.

To get a copy of  the Broadband Access and Home Networking Market July 2020 5-Year Forecast Report, please email us at dgsales@delloro.com.

About the Broadband Access and Home Networking 5-Year Forecast Report:

The Dell’Oro Group Broadband Access 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] by technology ADSL/ADSL2+, G.SHDSL, VDSL, VDSL Profile 35b, G.FAST), PON Optical Line Terminals (OLTs), Customer Premises Equipment ([CPE] for Cable, DSL, and PON), along with SOHO WLAN Equipment, including Mesh Routers.

 

In yet another sign of a re-shuffling of the deck among cable equipment vendors, Vecima Networks announced an agreement to acquire the Nokia DOCSIS DAA and EPON/DPoE product portfolio. The agreement comes on the heels of ATX Networks’ acquisition of Cisco’s cable amplifier business and continues the trend we have seen of larger equipment vendors divesting business units to smaller companies focused squarely on global cable operators.

For the original Gainspeed team, this also marks their second transaction, after Nokia acquired the start-up back in 2016 with the hope of extending market share gains made in the routing segment to cable access networks. Likely, the return to a smaller, exclusively cable-focused business will pay dividends for the group that was—and remains—at the forefront of remote MACPHY and flexible MAC architectures.

Meanwhile, for Nokia, this puts an end to the pursuit of DOCSIS access business, though the company is likely to continue selling its own GPON and XGS-PON platforms into the cable vertical, as some operators have expressed an interest in these options, as opposed to deploying 10G EPON or DPoE (DOCSIS Provisioning over EPON).

Though the Nokia/Gainspeed combination had netted some customer wins and trials, there was obvious concern about just how long it would take for the business unit to generate meaningful and sustained revenue. As we have noted before, 2019 was a difficult year for cable access equipment vendors, with total revenue dropping 36% from the year before. A glut of DOCSIS channel capacity, the lack of significant competitive threats, and indecision around DAA technologies and timing all contributed to the spending slowdown in 2019.

2020 isn’t expected to fare much better, with operators focused in the short-term on expanding capacity via existing CCAP platforms and node splits. Some new DAA projects have been shelved for the time being, though R-PHY deployments at Comcast, Cox, and others will continue. The uncertainty around when cable operators would return to their DAA projects, combined with general uncertainty around the macroeconomic environment, were likely the reasons behind Nokia’s divestment.

Vecima’s Gain

For Vecima, the acquisition of Nokia’s cable unit fills a few key product gaps. The company was already finding success with its Entra R-PHY node, having deployed with ANsome North American operators and interoperating with MAC cores from Harmonic, Cisco, and ARRIS. But the company did not have an R-MACPHY solution in its portfolio, though the company had been extremely active in the standards working groups for both R-MACPHY and FMA. It’s likely the company was working on an R-MACPHY solution in-house. Either way, the addition of the Gainspeed platforms certainly accelerates the general availability of a proven platform. That availability is critical for potential large customers such as Charter, J:COM, and Australia’s NBN, which are known to favor R-MACPHY as their DAA solution of choice.

Beyond R-MACPHY, the acquisition also gives Vecima a revenue stream from Nokia’s 10G EPON and DPoE deployments. Comcast, Charter, BrightHouse, J:COM, and others have all deployed this platform, either in a standard OLT form factor or as a hardened, remote OLT in a node. With Charter’s recent announcement that it would apply for RDOF (Rural Digital Opportunity Fund) grants, likely to expand its serving areas in rural areas of Nebraska, Utah, Iowa, and other states, there is a strong possibility that it will expand using the 10G EPON platform from either Vecima or Adtran, the only other vendor supporting complete DPoE OLT platforms and ongoing development.

With the addition of the Gainspeed platforms, Vecima can now offer customers a range of access technology options and architectures which, for operators such as Charter and J:COM, is critical as they look to redesign their access network architectures.

Vecima Brings IP Video Expertise to the Table

One of the recognized challenges for both DAA options is how to handle legacy, QAM-based video. Although major cable operators continue to lose multichannel video subscribers, there remains a significant installed base of subscribers who will maintain their subscriptions and will expect to receive service without interruption.

To maximize the signal quality and bandwidth improvements delivered by DAA, operators will deploy video platforms that allow them to convert existing QAM-based video to IP for transport purposes between the headend or hub site and optical nodes. Gainspeed had developed a video engine for specifically this purpose. But Vecima has already been guiding operators through the QAM-to-IP conversion process via its Entra Video QAM Manager and Legacy QAM Adapter products. The Entra video products have been designed to support RPDs and RMDs from multiple vendors, giving operators a way to onboard new nodes and shelves without having to be concerned that legacy video service would be disrupted. These products will be critical for potential customers as they look to deploy either R-PHY or R-MACPHY architectures.