Fiber Optic Networks Powering the World
January 20th, 2025 - R&M | Reichle & De-Massari AG
Push for broadband coverage
Every year, R&M’s expert teams dare to look ahead to the development of the markets and megatrends. Their insights are based on the company’s investigations and the evaluation of forecasts by leading market researchers. In particular, we inform our customers about the future of technologies and infrastructures in our traditional market segments. Find out here what R&M is observing in the world of public fiber optic networks in telecoms.
One thing is certain: Need and demand continue to grow as more and more broadband is required even in the most remote areas. Data traffic and the number of end devices are increasing explosively. This is why telecoms must continue to develop their networks to meet unprecedented demand sustainably. However, the requirements for connectivity and infrastructure solutions are changing.
Departure into a new era
It’s not just about more bandwidth. Public fiber optic networks are generally transforming due to the constantly growing demand for data transmission and connectivity. Fiber optic network expansion is at the heart of this change, especially in urban agglomerations where a high population density generates enormous amounts of data. There are still disparities and regional differences in fiber optic supply. Rural areas still require attention and consideration.
R&M repeatedly stresses: Today, fiber optic connections are as necessary as power and water.
The Internet of Things (IoT) is one of the driving forces. The rapid spread of IoT devices, which is expected to almost double by 2030, is leading to a huge increase in data traffic. At the same time, the use of augmented and virtual reality (AR/VR) is increasing. These technologies also require more access to fast networks, high transmission rates, and low latency.
Another factor is urbanization. People are migrating to metropolitan areas and taking advantage of the opportunities offered by digitalization. This is why the demand for network access is increasing. Urbanization also requires advanced fiber infrastructure for interactive, bidirectional communications to support smart city initiatives.
A reliable high-speed Internet is essential for productivity and collaboration in teleworking. The entire gaming and e-sports industry relies on fast, stable connections. Demand for high-quality video streaming with smooth, buffer-free playback is also increasing.
echnologies for the Future
Technological advances in fiber optic networks are critical to supporting this growth in demand. Passive optical networks (PON) and technologies such as wavelength division multiplexing (WDM), XGS-PON, and NG-PON2 provide higher data rates and scalability, while WDM-PON improves network capacity.
Fiber to the Antenna (FTTA) is crucial for the deployment of 5G, as it enables connections with high bandwidth and low latency between radio cells and data centers. Software-defined networking (SDN) and network functions virtualization (NFV) enable flexible network management and improve the efficiency of optical networks.
The fiber optic infrastructure supports high data rates and low latency for 5G, while fiber to the room (FTTR) ensures connectivity in smart homes. New technologies such as quantum key distribution (QKD) increase network security and AI/ML integration optimizes network performance. High-performance optical fibers such as multicore fibers (MCF) and hollow-core fibers further improve data transmission capacities.
Market challenges
Market research confirms the growth of the public grid market. An overview of some market data on fiber to the home (FTTH) and fiber to the building (FTTB):
- As of September 2023, 21 countries worldwide had achieved FTTH/B penetration rates of over 50 %. The United Arab Emirates (UAE) led the way with 99.3 %, followed by Singapore with 97.1 %.
- FTTH/B coverage in the EU39 region increased to 69.9 %, an increase of 6.5 % compared to 2022. In the EU27+UK, coverage reached 64.5 %, up from 55.1 % in 2022.*
- Grand View Research estimated the universal FTTH market value in 2022 at around USD 47 billion and predicted growth to reach USD 126.5 billion by 2030.** Data Intelo forecasts a market expansion from USD 51 billion in 2023 to USD 142 billion by 2032***.
The most important driving forces in the FTTH/B market include the demand for high-speed Internet, innovations in fiber optic technology and network architectures, and government investment in FTTH. Governments want to bridge the digital divide and promote economic development through investments and subsidies.
Other market challenges:
- The convergence of mobile, landline, and data transport networks is becoming a reality and requires seamless integration to ensure no area remains undersupplied.
- Tailor-made solutions for different regions – including for individual industries such as wind energy and rail transport – are crucial.
- The utilization of digital and mobile communications along railway lines is increasing, accompanied by advances in signaling techniques.
- For telecoms, it’s all about getting low-cost, scalable, fast-rollout solutions. For example, cables with a smaller diameter and 200-micrometer or 180-micrometer fibers, as well as micro blow-in cables with a high fiber count, are suitable. These solutions can help to reduce costs and the time to network provision. As a result, demand is developing strongly.
- Rapid technological progress means that existing infrastructure is outdated or insufficient. Telecoms therefore need to invest continuously. For example, the 5G infrastructure in the background requires fiber optic networks so that data can be transported between radio cells and data centers at the required speed.
- Fiber optic and IP-capable infrastructures enable new approaches to building automation.
- Data centers are constantly in need of more optical waveguide and connectivity – from the white space and meet-me rooms to the campus and interconnect section. This is because they have to keep up with increasing data traffic and cloud, AI, and blockchain applications.
- In rural areas, conventional underground fiber optic installations can be prohibitively expensive. Network expansion here is time-consuming. Aerial deployment – even with the utilization of existing masts and infrastructures – can accelerate FTTH development by around two and a half times. All this leads to a need for solutions that can be installed quickly, flexibly, and on a large scale in any environment.
Critical economy
These challenges also offer many opportunities for new business. Despite these opportunities, the market faces fluctuating economic conditions as well as competitive and price pressures on local and international markets. A shortage of trained specialists continues to lead to delays and higher costs.
The growing demand for bandwidth means telecoms are faced with the challenge of efficiently scaling existing fiber optic technologies and infrastructures****. At the same time, increasing competition and consolidation are impacting the market. Market saturation can occur in certain regions, which has an impact on profitability and innovative strength *****.
Protectionism and cost pressure are further impeding the required change. Modernization efforts remain insufficient, underlined by a renewed focus on outdated technologies such as DSL and copper. In regions with high FTTH penetration, competition is intensifying, potentially reducing profit margins for service providers. As a result of these developments, expenditure will be lower in the near future. However, we expect an improvement over the course of 2025.
Sustainability here too
In public networks – as in the rest of the economy – sustainability must be at the top of the agenda. Through the orientation toward sustainable goals and the use of fiber optic solutions, telecoms can cover the present demand and prepare for growth.
Ideally, energy-efficient, adaptable, and resilient FO-supported grids should be mandatory. Through the integration of modular and scalable solutions, the industry can modernize while supporting the digital needs of tomorrow. The convergence of mobile, landline, and other data transport routes presents a challenging scenario. The integration of different modalities for data transport requires compatibility. Telecoms also have to coordinate their infrastructures comprehensively. They have to navigate complex technological and regulatory landscapes. New market participants must overcome barriers such as interoperability, competition from established players, price competition, and investment requirements to compete effectively.
To read the entire article, visit R&M | Reichle & De-Massari AG