Wireline access strong, major players remain major

Julie Kunstler / Ovum
19 May 2015

Wireline broadband access equipment revenues were strong in 2014, reaching $6b, an increase of 7% over 2013. Revenues in 4Q14 approached $1.7b, an increase of 6% sequentially and 16% year-on-year. The FTTx PON segment drove wireline broadband revenues - PON revenues for 2014 exceeded $3.2b, a 25% increase over 2013. In 4Q14, PON revenues were $941m, a 14% increase sequentially and a significant 38% increase year-on-year.

DSL revenues for the year exceeded $1.9b, a 4% increase over 2013. CMTS revenues for 2014 declined 29% compared to 2013, coming in under $900m.

Wireline broadband access equipment revenues are expected to remain strong in 2015, with the FTTx PON equipment segment reaching record levels, primarily due to FTTH network deployments by China’s CSPs (communications service providers). Within DSL, vectored-enabled VDSL shipments will continue to grow. The CMTS segment is the largest unknown.

The Ovum view

Wireline access is strong and will remain so. There are numerous factors supporting strong wireline access equipment shipments and PON in particular. In some countries, competition is pushing CSPs to offer higher-bandwidth wireline networks along with support for video streaming of 4K content, multi-player online gaming applications, and cloud-based storage backup. Some CSPs want to own the subscriber, in the mobile world and at home, thereby increasing ARPU and customer stickiness. China Mobile is executing such a strategy.

CSPs are using wireline access networks for nonresidential markets. CSPs are expanding their usage of wireline broadband access networks to support business subscribers and MBH (mobile data backhaul). Google Fiber and AT&T are extending usage of their respective FTTH networks to businesses. Some CSPs are buying fixed networks to support internal MBH needs.

The 1G symmetrical craze will continue in certain regions. There will continue to be 1G symmetrical network announcements in North America and in selected countries around the world. CSPs are learning that a community approach can lead to high take-up rates, thereby accelerating ROI. Other CSPs see the 1G threshold as a strong competitive advantage, particularly when competing against cable operators.

Vectoring and G.fast deployment announcements will continue. The wireline access toolbox is full. Today, CSPs have a wide choice regarding copper, fiber, and coax technology and equipment upgrades; they can deploy solutions to support future customer requirements while taking advantage of existing network infrastructure and meeting governmental regulations.

Cable operators face complex network-upgrade decisions. HFC networks were designed for broadcast video; they are inherently slow in the upstream. Cable operators facing competition must decide on network-upgrade paths. Some are adopting fiber-based solutions, such as PON, for business services, MBH, and selected high-end residential service areas. Other cable operators are waiting for widespread availability of DOCSIS 3.1.

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