Second Wave Of Global Deployments Of Wireless Fronthaul And FTTx Optics Analysed
According to the LightCounting market research company, mobile fronthaul has been a fast growing segment of the optical modules market, driven by the deployment of high capacity 4G mobile networks. Meantime, FTTx is a key enabler of today’s high-speed Internet, and advanced broadband networks are considered essential infrastructure to support future economic growth. In 2017, these two applications consumed 95 million optical devices, worth more than $1.3 billion in revenue to components makers.
Now the analyst house has released a new study that reveals that deployments of 5G and the growing popularity of mobile devices present a major challenge to wireline access.
The accompanying figure (source: Cisco, Ericsson, LightCounting, MIIT) shows just how dramatic the shift to mobile networks has been, with mobile traffic growing at rates 20 to 25 points higher than overall Internet traffic. And the data from China is even more dramatic, indicating tremendous traffic growth in 2015 to 2018, following deployment of LTE, and spurred by video streaming to phones, hugely popular Massively Multiplayer Online Games, and the widespread use of mobile payments, taxi reservations/tracking, etc.
LightCounting says that it expects that the growth rate of mobile data traffic in China will start to moderate, but it will take a long time for it to conform to Cisco’ estimates for the global average. The company is unclear about how Cisco’s VNI report accounts for such a high growth rate in China or whether it even takes China into account. In this new report, LightCounting certainly does, and has increased projections for sales of wireless fronthaul optics for deployments in China.
LightCounting notes that, on a global basis as of October 2018, 715 commercial LTE networks had been deployed in 200 countries, according to the Global Mobile Suppliers Association (GSA). Based on this, one could conclude that the ‘LTE party’ for equipment vendors is in its waning hours. However, capacity additions are made for several years after an operator reports “100% LTE coverage”, via the addition of LTE-Advanced (consisting of Carrier Aggregation, 4×4 or higher MIMO, and 256QAM modulation in the downlink). By October 2018, only 270 of the 715 LTE operators had deployed some form of LTE-A, and of those only 47 had installed all three advanced LTE technologies, according to the GSA. Upgrades to LTE-A will continue to drive deployment of additional fronthaul links, in addition to growing 5G deployment.
LightCounting’s forecast assumes that high-volume commercial deployment of 5G will begin in 2020. This is consistent with Ericsson’s recent forecast that 5G subscriptions will exceed 100 million for the first time in 2021, in both the North American and Asia Pacific regions. Deployment of fronthaul networks to support 5G will have to take place in advance of that ramp, and it is already starting.
Revised 5G fronthaul network architectures at China Mobile and other operators resulted in several changes to the LightCounting forecast for sales of optical transceivers employed in wireless fronthaul. The forecast now includes 2x25G DSFP and 100G modules, which will be used for aggregation of 25G signals.
LightCounting believes that the most significant change to the FTTx market is that China Mobile, China Telecom, and China Unicom are scaling down plans for deployments of 10G-PON for residential services in the next few years. Their initial interest in 10G-PON is mainly in support of small businesses, not residential customers. The latter are well served by GPON in most cases, although there will no doubt be some deployment of 10G-PON to provide Gigabit residential services to high-end consumer segments (luxury housing developments, gamers etc.). The market research company expects a more general deployment of 10G-PON for residential customers (in the XG-PON asymmetric version) to begin ramping later in the forecast period (2021to 2023).