May 4, 2006 Nashua, NH -- The amount of fiber-optic cable installed worldwide jumped 15% in 2005 compared with 2004 installations, according to a recent report from KMI Research. According to the report, North America led this surge with a 36% increase in installations, followed by Western Europe with a 22% increase. The annualized growth rate through 2010 will be 10%; growth figures are based on kilometers of cabled fiber installed each year.
"We saw 5% growth in 2004," observes Patrick Fay, senior analyst at KMI and the report's principal author. "That was welcome news after two years of declines, but the production levels achieved in 2005 and in the first quarter of 2006 have fiber and cable producers turning up unused capacity and will have them scrutinizing capacity requirements in the next few years."
Based on research into long-distance backbone projects, local access networks, and other applications, the report says that the fiber-optic cable market will average double-digit growth in unit quantities through the next five years. Within three years, the amount of fiber installed is forecasted to surpass the peak level that was reached in 2001, when the telecom and fiber-optics markets began to collapse.
According to the report, the U.S. and China will account for almost 50% of demand from 2006 through 2010. In the U.S., Verizon is the most important contributor; last year, Verizon increased its installations of cabled fiber by more than 3 million km and accounted for 40% of the U.S. market, finds the study. The firm says that China Mobile is another major customer, installing millions of fiber km in recent years to connect its switches together and to increase base station density for 3G services.
The firm reports that three operatorsâ��AT&T, China Mobile, and Verizonâ��accounted for 55% of the change in worldwide demand from 2004 to 2005, and will account for more than 20% of the growth in 2006. The report finds that local telecom operators in Western Europe also are ramping up larger regional, metropolitan, and fiber-in-the-loop projects; as a result, Western Europe is seen increasing its share of the worldwide market from 16% in 2006, to 22% in 2010.
Investigating the market's resurgence, the report asks whether the market might be vulnerable to another sudden collapse, and concludes that it isn't "because the carriers are funding the networks differently." According to the report, during the telecom boom of 1997 to 2001, the massive investments in large-scale network projects were heavily funded by the capital markets. However, the report finds that near-term fiber-related investments in the local loop are more closely tied to new broadband service revenues, and that levels of carrier capex, as percentages of gross revenues, are more consistent with investment levels before the bubble.
Another question the report asks is how much the growing demand will use up the industry's excess capacity. The report analyzes demand relative to capacity and concludes that optical fiber could be in tight supply unless new capacity is brought online between 2008 and 2010. However, one implication of this development, notes the firm, is that the recent trend of rapid fiber and cable price decreases will stop "and even slightly reverse."
The annual "Worldwide Optical Fiber and Cable Markets" report analyzes fiber and cable markets by country, region, application, producer, fiber type, price, and other segmentations, presenting forecasts in unit quantities and market value in terms of millions of dollars. For more information, visit http://kmi.pennnet.com.