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Cable Technology Feature Article

November 22, 2013

Broadband Access Equipment Revenues Dip 22 Percent Year over Year

By Gary Kim, Contributing Editor

Global 3Q13 fixed network broadband access equipment revenues grew 3 percent sequentially, but were down 22 percent compared to the third quarter of 2012, according to researchers at Ovum (News - Alert).

Ovum also sees fourth quarter revenues, up to this point, decelerating below $6 billion for the first time since 2009. The slowing equipment sales logically flow from a maturation of existing fixed network broadband access markets.

At some point, the access networks themselves are fully prepared to serve potential customers, while the incremental capital expense comes mostly from customer premises equipment, some of which can be reused or reconditioned, lessening the need to stock wholly new CPE.

Both of those trends obviously will lessen demand for additional purchases either of network capital or customer equipment that is capitalized by the service providers.

At least in part, the revenue declines also represent the impact of declining prices.

Passive optical network optical line terminal OLT ports and very high bit-rate digital subscriber line port shipments grew sequentially and year-over-year, Ovum says, perhaps indicating a shift of investment in fiber to customer and cable operator services, and away from copper-based DSL.

Globally, quarterly access equipment revenues remain below the early 2011 peak when China’s large PON deployments began and before significant equipment price declines for PON equipment.

Network investments tend to run in cycles, so the maturation of major fixed network broadband network builds in China, for example, are bound to slow as the construction reaches completion.

PON shipments continue in Asia, Europe, the Middle East, Africa and South and Central America, but there are no massive large-scale deployments.

But Ovum thinks spending in China could heat up again. And there are other network investments awaiting. For example, 10G EPON deployments are at an early stage in Asia-Pacific and North America.

VDSL and VDSL2 shipments remain strong, boosting total DSL revenues, as demand for higher speeds will driver VDSL and VDSL2 shipments.

While cable modem termination system revenues were down sequentially, Cisco (News - Alert) posted significant sequential and year-over-year shipment growth. Cisco posted a 17 percent sequential quarterly gain within declining CMTS revenues.

Based on revenue, Huawei (News - Alert) remains in first place with 28 percent market share, followed by Alcatel-Lucent with 18 percent and ZTE with 13 percent.

Edited by Alisen Downey

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