Dell’Oro Group predicts that broadband equipment spending could exceed $120 billion between 2022 to 2027. In its latest report, the market research firm says that the sales of PON equipment used for fiber-to-the-home installations, cable broadband access equipment, and fixed wireless CPE will mark a 0.2% Compounded Annual Growth Rate (CAGR) in five years.
The spending is attributed to service providers expanding their fiber and DOCSIS 3.1/4.0 technologies as part of their plan to improve the reliability and sustainability of their broadband networks.
The report says that 2023 would see spending come back to normal after heavy spending in recent years.
“After three consecutive years of tremendous broadband network expansions and upgrades, 2023 is expected to show a return to normalized levels of spending,” said Jeff Heynen, Vice President of Broadband Access and Home Networking research at Dell’Oro Group. “After 2023, spending is expected to increase through 2026 and 2027, driven by 25 Gbps and 50 Gbps PON, Fixed Wireless CPE, as well as DAA and DOCSIS 4.0 deployments.”
The Group says that the labor markets remain challenged and fiber network operators such as AT&T, Altice USA have toned down their expansion plans and passed home connection targets.
“To close out 2022 we did see a significant uptake in equipment purchases, and what happened there was supply chains appeased. A lot of orders that had been on the books for a long time have been fulfilled.”
Besides, network equipment vendors also have kept a large inventory accumulated with additional equipment purchases all leading to the normal spending in 2023.
Highlights from the Broadband Access & Home Networking 5-Year July 2023 Forecast Report:
- Revenue from the PON equipment is predicted to grow from $11.8 B in 2022 to $13.3 B in 2027 due to the large XGS-PON deployments in North America, EMEA, and CALA.
- Similarly, revenue for Cable Distributed Access Equipment is also reported likely to reach $1.6 B by 2027, as operators speed up their DOCSIS 4.0 and fiber deployments.
- Fixed Wireless CPE revenue is expected to touch $2.7 B at the end of 2027, thanks in large to the shipments of 5G sub-6GHz and 5G Millimeter Wave (mmWave) units.
- Revenue from Residential Wi-Fi Routers could also exceed $5.2 B in 2027, with a large volume of Wi-Fi 7 unit shipments.
The slowdown is reported to be more acute in North America due to the subsidized broadband growth in recent years.
On the other hand, mobile network operators such as T-Mobile and Verizon “are seeing fixed wireless as a way to secure broadband subscribers away from cable operators. The U.S. market is really dynamic in terms of how services can be marketed.”