Metro/access fiber optic component consumption to reach $9.1 billion by 2004, forecasts ElectroniCast

Mar. 14, 2001--There will be a major increase in the bandwidth requirements of communication to homes and to small businesses based in primarily residential areas, plus fiber connections to business subscribers, according to the Metro/Access Fiber Optic Network Services, Equipment and Components Forecast Service report by the ElectroniCast Corporation.

There will be a major increase in the bandwidth requirements of communication to homes and to small businesses based in primarily residential areas, plus fiber connections to "downtown" business subscribers, according to the Metro/Access Fiber Optic Network Services, Equipment and Components Forecast Service report by the ElectroniCast Corporation. The total metro/access consumption of equipment and components is the sum of residential services demand plus business/government communication demand.

According to the forecast, the revenue from providing all types of residential broadband services to North American subscribers will advance from $48.1 billion in 1999 to $95.1 billion in 2004 and $174.8 billion in 2009. This is in addition to narrow band residential communication services revenue, which will advance from $52.4 billion to $130 billion across the forecast period. The revenue stream will reach a combined annual rate of over $300 billion by 2009, and will support major expansions in network equipment and related component revenue.

The communications industry has seen major advances over the past decade in cable television network capacity, expanding wireless/cellular communications, along with regulatory changes in the privatization of government-owned telecommunications. As a result, there will be major increases in the bandwidth requirements for business communications to homes and small businesses based primarily in residential areas. "The development and explosive expansion of the Internet is providing greatly expanded residential (and business) services use and revenue," ElectroniCast Chairman and Founder Jeff D. Montgomery said.

Residential Broadband Defined

Broadband residential service is now defined by most potential service providers as anything faster than conventional voice circuits; over 28.8 Kbps, and includes ISDN, ASDL/HDSL, NTSC analog video and numerous other formats "The highest currently offered residential broadband equipment being promoted delivers OC-1 (52 Mbps) to each subscriber. Over the next 5 years, however, OC-3 (155 Mbps) will be offered to residential subscribers in most regions, and even higher data rates (OC-12 and OC-48) will begin to be available," Montgomery said.

Over the next decade, residential service will continue to be dominated by video entertainment, however it will decrease to 57 percent of broadband revenue by 2009. Significant growth will occur in Internet access revenue, which will gain a 19 percent share of broadband service revenue by 2009. The fastest growth, however, will be achieved by videophone services. Telephony (voice) service (including telecom network, wireless/cellular, cable TV and other transport of voice) will decline steadily over the next decade, as a percentage of total residential service revenue.

There will be a major increase in the bandwidth requirements of business communications over the 1999-2009 span. Business/government demand for communication bandwidth over the next decade will generate the volume of communication equipment production which will help drive down the cost of network fiber optic equipment and components for metro/access broadband residential broadband communication. The total metro/access consumption of fiber optic equipment and components is the sum of residential demand plus business/government demand.

The Communications Revolution Affects Many Levels

The advancements in business broadband communications over the next decade will affect all levels in the communication "food chain". The communication levels affected include:

* Broadband services that will be provided to business and government subscribers

* Evolution in subscriber service providers -- the number and focus of providers offering services to the subscriber; the range of services offered by a provider, and the geographical scope of providers

* Multiplication of network architecture choices for providing broadband services to business/government subscribers

* The expanding variety of equipment required to deploy the various network architectures

* The advancement in optoelectronic, optical and other components required to produce and deploy the network equipment.

Many Cost Elements in Service Expansion

This study forecasts the consumption of equipment and modules/components in the future rapid expansion of delivery of broadband services to business and government offices. This excludes numerous related costs that must be absorbed by service providers, including:

* Software network management; operations and maintenance

* Installation and test labor and related costs

* Test equipment; built in and portable

* Central office equipment, which serves mainly residential customers, but secondarily serves business subscribers (mainly voice grade)

These pyramiding costs mean few, if any, service providers can successfully offer all types of services to all categories of customers across North America.

The North American consumption of equipment, component and fiber optic installation apparatus in fiber-to-the-office applications is estimated at $2.83 billion in 1999, and will climb to $7.71 billion by 2004. Impressive growth will then continue averaging 24 percent per year reaching $22.8 billion by 2009. The North American consumption of fiber optics related components in FTTO equipment deployment would climb from $900 million to $10.4 billion over the ten-year forecast period. The strongest growth will be in installation apparatus, multiplying from $113 million to $2.2 billion, 1999-2009.

The North American consumption of fiber optic components in fiber-to-the-office network deployment is estimated at $900 million in 1999, and will accelerate to $3.05 billion by 2004. Rapid growth will then continue, at an average 28 percent per year, to reach $10.4 billion by 2009. The leading value share will be held by fiber optic cable, with an 81 percent value share in 1999, falling to 62 percent by 2004 and then shrinking further to 52 percent or $5.4 billion by 2009. The most impressive growth will be by DWDM components, reaching $2.45 billion by 2009.

The North American consumption of fiber optic based access equipment in fiber-to-the-office network segments is estimated at $2.83 billion in 1999, and will rise to $7.71 billion by 2004. Impressive growth will then continue, at an average 24 percent per year, reaching $22.8 billion by 2009. The leading equipment category will be switching systems, with a 32 percent value share in 1999, rising to 45 percent by 2004 and then expanding slightly to 48 percent or $11.1 billion by 2009.

About ElectroniCast:

Founded in 1981, ElectroniCast forecasts the fiber optic, optoelectronic, and photonic industries. This includes technology forecasting, markets and applications forecasting, strategic planning, competitive analysis, and marketing/sales consultation. The Metro/Access Fiber Optic Components and Equipment Forecast Service is available for a fee of US $18,000. For more information, visit www.electronicast.com.

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