Smart grids in China a big opportunity for PON technology, says Ovum

Global analyst firm Ovum says in a new report that demand for PON systems to enable smart grids in China could be worth $1.5 billion to $2 billion to FTTx PON component and equipment vendors. That’s because the State Grid Corporation of China (SGCC) could decide to provide communications services with the same infrastructure, according to The Merger of China’s Smart Grid and PON – A Potential Perfect Storm.

Global analyst firm Ovum says in a new report that demand for PON systems to enable smart grids in China could be worth $1.5 billion to $2 billion to FTTx PON optical component and equipment vendors. That’s because the State Grid Corporation of China (SGCC) could decide to provide communications services with the same infrastructure, according to The Merger of China’s Smart Grid and PON – A Potential Perfect Storm.

The SGCC has yet to formally announce such plans. Nevertheless, technology vendors should pay close attention, Ovum asserts. “We believe that the ultimate goal of a fiber-based smart grid is to support advanced communications services,” explains Julie Kunstler, principal analyst of components at Ovum. “Building a fiber-based smart grid communications network creates a very large market opportunity for PON vendors.

“This potential market is important, as Ovum forecasts declining PON OLT port shipments beginning in 2013, following major FTTx network buildouts in China,” she adds.

Ovum notes that several PON communications equipment vendors already have developed products that meet smart grid requirements as well as support triple-play communications services provision. The deployment in China of a PON-based smart grid would benefit such OLT equipment vendors as Huawei, ZTE, Alcatel-Lucent, and FiberHome. Vendors of ONTs and such components as fiber splitters, optical transceivers, BOSAs, PON MAC chips, and optical interface chips also would benefit. “A PON-based smart grid deployment would also benefit the fiber cabling manufacturers, such as Yangtze Optical Fibre and Cable (YOFC), Corning, and Prysmian,” Kunstler adds.

Kunstler cautions that even if SGCC moves as expected, winning business will not be child’s play. Price pressures will likely be “brutal,” as an Ovum press release put it, and therefore vendors will have to squeeze every penny out of their bills material. Meanwhile, good relationships with in-country smart meter companies, PON equipment vendors, and the relevant governmental agencies, also will be important in winning business.

For more information on FTTx equipment and suppliers, visit the Lightwave Buyer’s Guide.

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