Tuesday, December 20, 2011
Broadband equipment sales peaked in 2011
In 2011, spending on broadband aggregation equipment, including FTTH systems, DSL and PON infrastructure may have reached a point of unsustainable growth, according to a recent Infonetics Research report.
The study found revenues in this sector rose so substantially in 2011 that spending levels will likely plateau or decrease in the coming years. However, this may still be good news for FTTH deployments, as investments in DSL are expected to take a major hit because more operators are moving toward optical network deployment, said Jeff Heynen, directing analyst for broadband access and video at Infonetics Research.
Hynen explained that PON spending in China and DSL investments in South and Central America fueled the unusually high revenues experienced in 2011. He said that this year's investment peak will be followed by a valley of slower growth, and possibly decline, through 2015. However, this decline will primarily exist outside of the optical network realm, as spending on DLS and other older technologies will see the greatest recession.
"Spending in China and North America will slow after this year, and the focus of operators will shift from DSL to fiber. DSL as an access technology will never disappear, but overbuilding with fiber (as Verizon and others have done) with the ultimate goal of removing copper will continue to grow among the world's largest operators,," Heynen predicted.
Essentially, Infonetics Research found that network aggregation equipment sales will drop significantly moving forward because so many network upgrades were made in the past year that new investments will be slow. However, the bulk of the investments came in the form of major spending in DSL and PON infrastructure, leaving plenty of room for future FTTH deployment. That spending, however, will not be good enough to match the industry's total revenue when all three technologies were doing well through most of 2011.
Verizon's recent FTTH plans illustrate this trend. The company has been working to install a large number of FTTH systems, and is close to meeting its quota. At the recent UBS Warburg conference, Verizon president and CEO Lowell McAdam explained the company plans to complete its current plans for FTTH deployment, but will likely not expand substantially until innovation in FTTH for multi-family dwelling occurs.
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