IHS Markit: uCPE sector will cross $1B threshold by 2022

The universal customer premises equipment (uCPE) market is poised for a significant growth spurt, according to a report by IHS Markit.

The uCPE market is projected to grow from $7.7 million in 2017 to $1.02 billion in 2022, which is a cumulative $1.9 billion market over the six years from 2017 to 2022, according to the report by IHS Markit's Michael Howard, executive research director, carrier networks.

Universal CPE is a jack-of-all-trades for service providers and their enterprise customers. IHS Markit defines a uCPE as a device providing a "pico cloud," including compute, storage and switching capable of executing virtualized network functions (VNFs) such as virtual firewalls, SD-WAN, virtual WAN, virtual application delivery controllers and optimization appliances.

Working in tandem with network functions virtualization (NFV), uCPE reduces the number of devices on a customer's footprint that are needed to provision services. By using generic network equipment, uCPE reduces costs associated with installation while also giving service providers the flexibility to deploy or update services at a faster pace than traditional hardware. The flexible nature of software running on standard compute allows multiple VNFs to run on a single uCPE, according to IHS Markit.

RELATED: Colt prepares new uCPE service for blast off

To date, AT&T, Orange Business Services, Colt Technology Services and Verizon are among the service providers that have deployed uCPE solutions, but the overall market is still at an early stage of adoption. IHS Markit estimates that fewer than 600 units of uCPE were shipped in 2016 with most of them being used for lab testing and a small fraction used in field trials. Last year was also lukewarm as an initial takeoff year with less than 7,000 uCPE units shipped.

IHS Markit's report said that uCPE without demarcation functions would comprise the largest share of the market throughout the forecast period, representing $820 million of $1.02 billion in 2022. uCPE with demarcation includes equipment such as Ethernet access devices (EADs), routers and certain software-defined wide area network (SD-WAN) products.

Going forward, IHS Markit expects a big ramp up for uCPE. Recent IHS Markit global carrier surveys on software-defined networking and NFV found 82% of the operators polled are deploying or plan to deploy VNFs on uCPE located at customer sites, with 97% doing so in central offices and 85% in data centers.