Ovum: China's domination of global FTTx market to continue

Market research firm Ovum has released a new report that asserts China’s present status as the world’s dominant fiber-optic broadband market will continue not only this year but at least through 2016, thanks to a huge predicted growth in subscribers in the country and the strength of its vendors.

The report, “FTTx Market Review: China’s Dominance,” suggests that China’s FTTx subscribers will reach 100 million in 2016, which will represent more than 50 percent of the world’s subscribers.

According to Julie Kunstler, Ovum principal analyst and co-author of the report, “China is the biggest consumer of FTTx equipment right now and that is set to continue. A key driver of the enormous forecasted growth is the bandwidth and subscriber targets set by the Chinese government and service providers. In addition, the government is providing support for deployments in the form of credit and partnerships. Meanwhile, the significant greenfield construction projects that are under way in the country make the installation of FTTx networks easier.”

Not surprisingly, this will mean that Huawei and ZTE, the two Chinese systems vendors that Ovum ranked the world’s number one and two in 2010 by market share, will sit atop of the vendor rankings for several years as well. In fact, the companies’ strengths not only in China but abroad means “their competitors will find it almost impossible to unseat them,” in the words of an Ovum press release. For example, Ovum asserts that Huawei is the leading FTTx PON vendor not only in China but also in the Europe, Middle East, and Africa (EMEA) region.

“Chinese FTTx vendors Huawei, ZTE, and FiberHome make up three of the top five global vendors and are ranked first, second, and fourth, respectively,” Kunstler points out. “The rise of the Chinese suppliers is mainly due to lower growth rates in Japan and Korea, where high FTTx household penetration rates have been reached. In addition, Japanese and Korean vendors are not major exporters of FTTx equipment.

“Huawei and ZTE are strong exporters outside of China. In the fourth quarter of 2010, 50 percent of FTTx equipment revenues in EMEA corresponded to shipments by these two vendors. They have strong expertise in FTTx, given their large home market, and they will continue to be a formidable force around the globe,” Kunstler says.

“There will continue to be room for other players, but it will be difficult to unseat the top two,” she concludes.