Broadband equipment market to eclipse $120B by 2027 – Dell’Oro

Despite a slowdown in broadband equipment spending in 2023, Dell’Oro Group predicts the market will pick up in the next few years, surpassing $120 billion in cumulative spending between 2022 and 2027.

Dell’Oro Group VP Jeff Heynen said the 2023 slowdown follows three years of “really phenomenal growth,” largely driven by Covid-19. Labor markets are “still being challenged” and a number of fiber operators (AT&T, Altice USA, Frontier) have reduced their expansion plans and homes passed targets.

“To close out 2022 we did see a significant uptake in equipment purchases, and what happened there was supply chains eased,” Heynen told Fierce. “A lot of orders that had been on the books for a long time have been fulfilled.”

So, now service providers are “working through that inventory they had built up” while reducing additional equipment purchases.

According to Dell’Oro’s July 2023 Broadband Access & Home Networking five-year forecast, PON equipment revenue will see the largest revenue growth, reaching $13.3 billion by 2027.

Residential Wi-Fi routers will likely surpass $5.2 billion by 2027, followed by fixed wireless customer premises equipment ($2.7 billion) and cable distributed access equipment ($1.6 billion).

Dell’Oro indicated the PON market will be fueled by XGS-PON deployments in North America as well as the EMEA and Caribbean and Latin America (CALA) regions.

Heynen thinks the 2023 slowdown will be “more acute” in North America than in other regions, given the subsidized broadband growth over the last few years. Not only is the industry seeing “the tail end of some of the RDOF [Rural Digital Opportunity Fund] projects,” but the process for the Broadband Equity, Access and Deployment (BEAD) program is just beginning.

“Which isn’t going to flow through to manufacturers until you know, late 2024, really into 2025,” he said. “I think in the interim, XGS-PON in the European market is certainly going to catch up. We’re also seeing considerable growth in XGS-PON deployments now in China.”

Fixed wireless front

In Dell’Oro’s five-year forecast published in January, Heynen expected fixed wireless subscriber growth, particularly in North America, would “start to moderate” beginning in 2024, due to factors like “capacity issues and fiber expansion.”

But Heynen upped his revenue predictions for the fixed wireless CPE market – which he previously tipped would hit $2.2 billion in five years – and now predicts subscriber growth to continue into 2025.

“Part of that is because of the net reduction in homes passed for fiber,” he said. “In the meantime, fixed wireless will be able to cover more ground while the operators who are building out fiber kind of extend their overall deployment plans.”

Further, operators like 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.”