5G, Broadband to Drive $75B Optical Transport Spend, Dell’Oro Says

Fiber deployment expansion to support 5G and increased fixed broadband speeds are set to drive $75 billion in spending over the next five years across the optical transport market, according to a new report from Dell’Oro Group. Most of that growth will come from an increased use of wavelength division multiplexing (WDM). This technology increases capacity of already deployed electronics and fiber by transmitting different channels at different wavelengths. It will support the extension of higher network speeds closer to end users for 5G and fixed broadband systems like Gfast, 10G passive optical networking (PON), and DOCSIS 3.1. Data center interconnect, which the report notes is a subset of WDM systems, will account for 18 percent of segment revenues by 2022. “We expect demand for optical equipment to continue rising,” said Jimmy Yu, vice president at Dell’Oro Group, in the report. “Although the shift away from legacy optical transport equipment will continue to weigh down the market’s top line revenue, we foresee a rising use of WDM systems as service providers continue to expand their fiber footprint and internet content providers continue to install more optical transport capacity between their global data centers.” Highlighting the market’s competitive environment, Infinera earlier this weekacquired privately held rival Coriant for $430 million. The deal falls on the heels of Infinera’s management citing increased competitive pricing pressure in the space. Infinera CEO Tom Fallon said the deal bolsters the company’s scale and competitive position in the market. This includes expectations for increased spending on network infrastructure to support 5Gnetworks and the move from closed to open network architectures. The move also consolidates a pair of players that IHS Markit recently referred to as “challengers” in the optical networking space. The two vendors were lumped into a group of challengers that included Fujitsu, ECI, ZTE, and ADVA. Those six vendors were graded as one step below “market leaders” Cisco, Ciena, Huawei, and Nokia.