It's an interesting study. The firm found that the WDM market grew 10% year-over-year and, during the second quarter, recorded revenues of $2.6 billion, which is a record. It was the eighteenth consecutive quarter of growth for WDM. Twelve of those quarterly gains were in double digits.
The market is divided into long-haul and metro sectors. According to Dell'Oro, the long haul portion grew by 18% year over year and the metro by 4%.
Dell'Oro Vice President Jimmy Yu, the author of the report, said cable operators were among the carriers assessed in the report, but that they were not broken out separately. In general, though, he was able to provide some insight into where the industry is compared to the telephone companies.
The cable industry is in the group that enabled the WDM sector to continue its winning ways. "Looking at the second quarter vs. the second quarter a year ago, in North America there was a little bit of weaker results among tier 1 telcos," he said. "Spending outside of that group boosted year-over-year growth. MSOs are one big component of the non-telecom operator group."
Another nascent trend that Yu identified is that the metro networks are gaining strength compared to long-haul networks. Clearly, that one is yet to firmly take root - long haul easily outdistanced metro in the recent report - but Yu sees a change coming. "I think the long haul will continue to grow, but not at the same high growth rate," he said. "Spending will go more to the metro."
Barry Zipp, the industry marketing director for Ciena (NASDAQ: CIEN), agreed with the high level findings of the Dell'Oro report. He said the vendor is seeing an increasing migration of 100 Gbps equipment from the backbone to the regional and metro networks.
MSOs, he said, are responding to the same pressures as other service providers and are investing accordingly. "Large players need to continually expand their network," he said. "It is primarily driven by the onslaught of video traffic. There is [cable operators'] own and even more so the over-the-top players, particularly Netflix."
The forecast, said Zipp, is that things will continue along the same lines that they have been moving to date. "I don't think [the growth] is going to change any time soon," Zipp said. "There is a lot of HD traffic now, and we are starting to see the start of 4K/UltraHD, which places additional demand. I know it has to keep the cable companies up at night wondering, 'How can we architect the networks to handle the increased loads?'"
Gaylord Hart, the Director of CATV marketing for Infinera (NASDAQ: INFN), said the transition from 10 Gbps to 100 Gbps WDM waves is largely complete in cable backbone networks. Denser metro rings are moving in the same direction, he said. In the long haul, the move to 100 Gbps enables capacity to reach 8 terabits per second (Tbps) - 80 waves of 100 Gbps (with spacing of 50 GHz). Hart also said that use of DWM for PONs is being considered by operators for green field and areas under intense pressure from Google Fiber.
Zipp added that the telecommunications industry is beginning to look at more creative ways of solving its bandwidth issues than continually moving up in wavelengths. More creativity - and the ability to offer 200 Gbps or 400 Gbps services in particularly dense and demanding environments - along with innovative approaches such as CCAP in the cases of cable operators - can enable telecommunications companies to squeeze as much capacity as possible out of current infrastructure before upgrading.
That begs the bigger question, however: Whether it is accomplished by greater use of WDM or by creative uses of ancillary tools, telecommunications networks will need to carry ever-increasing loads of data. "We think traffic is just constantly moving upwards," Zipp said.