LightTrends Newsletter

LightCounting’s Access Optics Report describes the market outlook for both Fiber-to-the-X (FTTx) optics and wireless fronthaul, midhaul, and backhaul network optics. A newly updated version was published today and is available for download by clients.

In aggregate, LightCounting estimates that the access optics market will reach 127 million devices shipped, and $1.77 billion in revenues in 2022 (Figure 1). FTTx devices will account for roughly three-quarters of shipments and 49% of revenues. Fronthaul transceivers account for 22% of unit shipments and 40% of total revenues.

Our access optics shipment forecast shows a similar weighting with PON and fronthaul grey optics being the largest and second largest categories, respectively. Annual shipments overall are expected to grow from 127 million in 2022 to over 140 million devices by the end of the forecast period.

Annual revenues for access optics are expected to total $1.4 to $1.6 billion through 2027, cycling down for a few years then growing again in 2025-2027 (Figure 1). Both wireless and FTTX are cyclic markets, driven by waves of deployment of successive generations of technology, and we expect 6G wireless and 25G/50G PON deployment to begin in the last few years of the forecast period.

Despite the advent of 25G and 50G PON late in the forecast period, the bulk of revenue in the next five years will come from the 10G-PON group (including XG-PON2, XGS-PON, and 10G-EPON).

China continues to play a dominant role in access markets

China has the world’s largest population, living in largely urban settings, with a central government willing to spend money on Internet access infrastructure, while the other high population countries have relied to a great extent on market forces to direct investment in fixed and mobile broadband. As a result, China has been and will remain the largest single-country market in terms of consumption of both wireless and fixed access optics for the next five years.

Figure 2 shows that China’s share of the world’s consumption of wireless and FTTx optics will remain above 50% through 2027, and that China will remain by far the largest single-country market.

A five-year forecast of China’s consumption of optical components, across all product groups, is the subject of LightCounting’s report titled “Market for Optics in China”. An updated edition of that report is scheduled for publication in January 2023.

Alternative access tech and ODNs also addressed in the report

Broadband access today is delivered over copper, coaxial cable, cellular radio, and optical technologies, but several alternatives exist that could supplant existing networks and operators with new ones, including LMDS and millimeter-wave, geostationary satellites, medium earth orbit satellite (MEOS), low earth orbit satellite (LEOS), stratospheric airborne platforms, and low altitude airborne platforms (drones).  LightCounting reviews all of these in its Access Optics report and provides an assessment of their impact on the existing access market over the next five years.   

For the first time, our Access Optics report includes a section on Optical Distribution Networks, specifically the passive optics in PON networks that provide the connection between OLT and ONU.  Though often overlooked or dismissed as simplistic and low value, ODNs have actually evolved through several stages or generations, which we describe in the report, with the current generation incorporating not only some creative optical enhancements but bringing digitalization and AI to bear to reduce the expense of installing, monitoring, and maintaining the critical networks. 

Principal changes to the forecast

Our estimate of the cumulative sales of access optics over the next 5 years is now $7.85 billion – up about 11% from our forecast published in April 2022. Among the changes made to the forecast in terms of revenue since April 2022 are an increase the forecast for 25G and 50G PON, partially offset by reduced shipments of XGS-PON, and an increase In revenues for grey fronthaul optics due to the increased traction in packet fronthaul, and a change in the mix between grey and WDM optics. WDM fronthaul product revenues as a group are slightly lower than in the April forecast.

The Access Optics Report is accompanied by a detailed 5-year product-level forecast for fronthaul grey and WDM transceivers, backhaul transceivers, and OLT and ONU/ONT optics for PON networks.

The full report and accompanying spreadsheet are now available for download via LightCounting’s client portal.