Home/Industrial Report/Global Optical Communications Market Dynamics – January 2023

Global Optical Communications Market Dynamics – January 2023

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(Last Updated On: April 24, 2023)

Chapter 1-  5G Deployment Status

1.1 Global 5G Deployment

1.2 Current Situation of Network Deployment of Foreign Operators

1.3 Network Deployment Status of Domestic Operators

1.4 5G Deployment

1.1 Global 5G Deployment

  • By December 2022, GSA has determined that 515 operators in 155 countries/regions are investing in 5G, compared with 481 operators at the end of 2021.
  • 243 operators in 96 countries/regions have launched one or more 5G services that meet 3GPP, an increase of 28.6% compared with 189 operators a year ago, and the deployment speed is slower than that in 2021. 112 operators launched the 5G SA network.
  • The global 5G development momentum continued to increase. By the end of December 2022, 5G networks will cover 36% of the global population, and 5G mobile phones will account for half of the global mobile phone sales.
1 Global 5G deployment

1.2 Current Situation of Network Deployment of Foreign Operators (1)

2 Current situation of network deployment of foreign operators 1
3 Current situation of network deployment of foreign operators 1

1.2 Current Situation of Network Deployment of Foreign Operators (2)

4 Current situation of network deployment of foreign operators 2
5 Current situation of network deployment of foreign operators 2 1

1.3 Network Deployment Status of Domestic Operators

  1. The total capital expenditure of China Mobile, China Telecom, and China Unicom in 2022 was 348.2 billion yuan, an increase of 2.62% or 8.877 billion yuan compared with 339.323 billion yuan in 2021. The growth of the overall capital expenditure of operators slowed down.
  2. In 2022, the investment scale of the three major operators in mobile networks dropped by 5.56% compared with 2021 or decreased by 9.677 billion yuan. 5G capital expenditure declined. In 2022, the 5G capital expenditure of the three major operators was 178.3 billion yuan, down 4.04% year on year. In 2022, the 5G capital investment of the three major operators accounted for about 51.2% of the annual capital expenditure budget.
  3. The construction of a 5G network has been steadily promoted. As of November 2022, the total number of 5G base stations reached 2.287 million, a net increase of 862000 compared with the end of the previous year, accounting for 21.1% of the total number of mobile base stations, and an increase of 6.8 percent points compared with the end of the previous year. 5G mobile phone users reached 542 million, a net increase of 187 million over the end of last year, accounting for 32.2% of mobile phone users
6 Network deployment status of domestic operators

1.4 5G Deployment

  • Nokia and O2 Telefónica achieved a breakthrough in 5G 2CC uplink carrier aggregation in commercial networks
  • Shenzhen Unicom and ZTE took the lead in completing the 5G mMTC function and performance field test
  • Ericsson provides the core technology for TIM’s 5G SA network
  • T-Mobile operator launched “Independent Ultra Capacity 5G” v Huawei completed the field test of 5G RedCap key technology: the downlink peak rate reached 142 Mbps, and the uplink peak rate reached 35 Mbps
  • Qualcomm Achieves 5G SA Performance Breakthrough in China and Accelerates Millimeter Wave Commercial Deployment
  • China Telecom (Macao) officially obtained the 5G public terrestrial mobile telecommunication network and service license (5G license) issued by the Macao SAR government on November 7, 2022, and is expected to provide 5G services to local customers in Macao in 2022
  • Ericsson set a record for data transmission speed in the 5G CBRS band
  • Orange, a French telecommunications group, launched Africa’s first 5G network in Botswana in November 2022
  • Nokia Bell completed 5G millimeter wave independent networking technology verification
  • Telkom SA deploys 5G FWA services
  • Thailand AIS: 5G-Advanced has become the next goal of operators, and hopes to move towards 5.5G in the next three years
  • Nokia, Ericsson, and Jio sign the 5G SA agreement

Omdia: 5G Main Market Progress in the Third Quarter of 2022

According to Omdia’s Tracking of 5G Operators in the Third Quarter of 2022, in the third quarter of 2022, telecom operators slowed down in launching 5G multi-access edge computing (MEC) services, while the number of 5G networks opened in the market increased slightly: from 184 in the second quarter to 192 at the end of the third quarter. The number of 5G SA services launched increased from 21 to 24, and the number of FWA services launched increased from 52 to 57. Although in the more mature 5G market, operators are promoting the expansion and upgrading of 5G, in the developing market, most operators are starting to launch commercial 5G networks

LR: US 5G is Expected to Cool Down in 2023

After several years of huge expenditures and customer growth, there are more and more signs that the large 5G service providers in the United States are preparing to enter a cooling period this year. Some financial analysts and operator executives have begun to imply that the mobile industry will not attract as many new customers this year as in 2021 and 2022. At the same time, some operators are also ready to tighten their wallets after years of huge network spending. Although these expenditures have improved 5G and the optical network, most of the work has been completed, and some operators are now looking forward to reducing their annual capital expenditure (CAPEX). Evercore’s financial analyst wrote: “We expect that the construction speed of telecommunication optical fiber will be slightly accelerated in 2023, with 5.8 million new homes covered, compared with 5.4 million in 2022. The expected growth is driven by the slightly accelerated construction speed of Frontier and Brightspeed and offset by the slower construction speed of Verizon and AT&T. By the end of 2023, we expect about 49 million American households (slightly more than 1/3) It will have fiber broadband products. ” However, analysts also said that they expected fixed wireless access (FWA) services to continue to dominate the home broadband market in 2023. T-Mobile and Verizon seized almost all the growth in this field in 2022, causing a sensation.

Chapter 2- Operator Investment and Network Construction

2.1 The Operation of the Three Major Operators in December

2.2 Carrier Collection Information

2.3 Dynamics of Domestic and Foreign Operators 

2.1 The Operation of the Three Major Operators in December

  • China Mobile’s mobile subscribers increased by 325,000 in December. The number of 5G package customers increased by 18.601 million. In terms of broadband, the number of users increased by 2.225 million, and the cumulative number of broadband users reached 272 million.
  • China Telecom’s net mobile subscribers increased by 100,000 in December, reaching a total of 391 million. Broadband users increased by 270,000, reaching 181 million in total. This month, China Telecom’s 5G users added a net of 5.02 million, reaching a total of 268 million.
  • China Unicom added 3.271 million 5G users in December, reaching a total of 213 million. The cumulative number of “big connection” users reached 862 million. The number of 5G industry virtual private network service customers reached 3,805. The number of IoT terminal connections also reached 386 million.
  • In terms of 5G users, the three major operators added 26.892 million new 5G package users in December, a decrease of 7.462 million compared with the previous month. The cumulative number of 5G package users totaled approximately 1.095 billion.
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2.2 Carrier Collection Information

  • China Mobile Invites Bids for Smart Home Gateway (GPON) BOSA Driver Chips in 2023 with a Budget of 45.765 Million RMB

China Mobile Communication Terminal Co., Ltd. released the announcement of the 2023 self-owned brand smart home gateway (GPON) BOSA driver chip project selection announcement. It plans to select 2 suppliers to complete the supply of its own brand smart home gateway (GPON) BOSA driver chip. The total budget is 45.765 million yuan (tax included). According to the announcement, the upper limit of the BOSA driver chip order framework is 15 million pieces (non-commitment quantity), and the supplier ranked first will be selected for 70% of the share, and the supplier ranked second will be selected for 30% of the share. The supplier Xu completed chip preparation, customs declaration, logistics, delivery, and other related services. The server for this project is 2023-2024.

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  • China Mobile Tietong’s 2022-2023 Centralized Procurement Results of Optical Fiber Fusion Splicers

The selection results of China Mobile Tietong’s 2022-2023 centralized procurement project for optical fiber fusion splicers are announced. Standard/package 1-Optical fiber fusion splicer (leather wire) is selected by Bohao Technology Co., Ltd., Beijing Dongfang Tianchang Technology Service Co., Ltd., Nanjing DP Optoelectronics Technology Co., Ltd., and China Electronics Cosi Technology (Anhui) Co., Ltd., Beijing Zhonghe Liantuo Information Technology Co., Ltd., Shanghai Guangwei Communication Technology Co., Ltd. The candidates for the standard/package 2-optical fiber fusion splicer (trunk type 1) are Nanjing Tianxingtong Electronic Technology Co., Ltd., Bohao Technology Co., Ltd., Qingdao Nuoke Communication Technology Co., Ltd., and Tianjin Ailuoke Communication Equipment Technology Co., Ltd. This project is divided into 5 procurement packages, and it is planned to purchase about 20,568 optical fiber fusion splicers, including 16,591 leather wire fusion splicers, 3,848 trunk line fusion splicers, and 129 ribbon fusion splicers.

2.3 Dynamics of Domestic and Foreign Operators

  • Vodafone and Cityfiber Trial 2Gig Broadband in York

Cityfiber, the largest independent all-fiber platform in the UK, has successfully completed a trial of 2Gbps residential services in York with its launch partner Vodafone. Cityfiber recently upgraded its York network to XGS-PON access technology, enabling the trial, which will be rolled out as standard on its network from April 2023. The 2Gbps service paves the way for the future introduction of residential and business services at symmetrical speeds of up to 10Gbps throughout the region. Through close cooperation with Vodafone (Vodafone), some end users in York can enjoy symmetrical network speeds of up to 2Gbps, which is twice the fastest service speed widely provided by the City fiber network. Delivered using Vodafone Pro II broadband service, the new Vodafone Ultra Hub, and the Super WiFi6E Booster bundle, the new service highlights the future-proof technology customers can take advantage of.

  • AT&T Forms New Fiber Optic Joint Venture to Expand Cable Business

AT&T announced a joint venture with private equity firm BlackRock Alternatives to deploy fiber optic connections to as many as 1.5 million new locations. Importantly, the locations will be outside AT&T’s existing 21-state cable network coverage, and thus represent an expansion of the carrier’s cable ambitions. AT&T and BlackRock did not provide many details about the joint venture, including where in the United States the new connection might be deployed. The business will be run by former AT&T network executive Bill Hogg, who has agreed to return to lead the joint venture. Among the few details, analysts focused on the scale of the deployment: 1.5 million locations, about 15% of Frontier’s goal of 10 million locations by 2025. AT&T’s new joint venture with BlackRock is called Gigapower, LLC. According to Wells Fargo analysts, Gigapower’s planned 1.5 million fiber sites are significantly lower than the 4-5 million suggested in the Bloomberg report.

  • US CATV Operator Cox Announces Successful Launch of Mobile Service Across the US

American CATV operator Cox Communications is pleased to announce that it has successfully launched its mobile service Cox Mobile in the United States. This is the company’s new mobile service for its internet customers in all US markets. With unlimited calls and texts, without any term agreement, Cox Mobile customers can use two simple data plans – pay-as-you-go and unlimited data plans. Customers also have access to a network with unrivaled 5G reliability and the ability to stay connected to Cox Internet at home and use Cox’s more than 4 million online Wifi hotspots. “The convergence of wired and mobile communications has never been more important,” said Mark Greatrex, president of Cox Communications. “Customers view Cox as a reliable connectivity provider, so launching mobile phone service is a natural extension of our offering.” Cox has a track record in the wireless industry. a long history. The company built its own 3G CDMA wireless network in 2010 using 700MHz spectrum and Huawei equipment. During that time, it also sold mobile services through Sprint MVNO. However, it closed the business in 2012. With the rollout of mobile service, Cox joins other CATV operators including Comcast, Charter, Altice, and WideOpenWest (WOW) in combining cable service with mobile service.

  • China Unicom Joins Hands with FiberHome to Open the First C+L Demonstration Project in China

The first domestic 100G C+L demonstration project jointly completed by FiberHome and China Unicom was successfully launched in Hubei. As the first 100G C+L demonstration project in China, the successful opening of this project marks that my country’s backbone network WDM equipment has officially entered the C+L era. The demonstration project starts in Wuhan, passes through Xiantao, Qianjiang, Jingzhou, and Zhijiang, and ends in Yichang, with a total distance of 453 kilometers. Among them, China Unicom Research Institute is responsible for the overall scheme design of the system and meeting the requirements of transmission performance indicators, Hubei Unicom is responsible for the specific implementation of the project, and Fiberhome Communications is responsible for providing system equipment. The proposal of FiberHome’s FONST 6000 C+L solution relieved the huge pressure faced by optical communication infrastructure in terms of bandwidth expansion and single-wave speed increase and became a solid base capable of carrying massive information traffic. Fiberhome Communications will continue to explore and make breakthroughs to create greater value for customers and society, allowing all-optical bases to serve thousands of industries, and making high-speed interconnection of everything no longer only exist in the future.

  • Telekom Malaysia and ZTE Cooperate to Explore 50G PON Development Opportunities

Telekom Malaysia TM is exploring cooperation with ZTE (Malaysia) Sdn Bhd in optical network research, with a view to bringing 50Gbps bandwidth experience to Malaysia. A few days ago, TM R&D CEO Sharlene Thiagarajah signed a memorandum of understanding with ZTE Malaysia CEO Steven Ge. According to the memorandum, Telekom Malaysia and ZTE will jointly explore the capabilities of the next-generation passive optical network (PON) access technology 50G PON to support various application scenarios. At the same time, the two parties will study use cases that can provide ultra-broadband access for governments, enterprises, and consumers, and the need to support innovative services such as 5G, cloud virtual reality (VR), intelligent industrial manufacturing (high bandwidth, low latency, and jitter) Synchronized with the clock to enhance broadband user experience in Malaysia. Sharlene Thiagarajah, CEO of TN R&D, said: “TM is committed to conducting research on future technologies and innovating value-added smart ecosystems to improve the quality of user experience and ultimately bring positive impact to users’ lives. This aligns with TM Group’s commitment to people-oriented TechCo transformation.” Steven Ge, CEO of ZTE Malaysia, said: “As Gigabit home broadband services are widely used in Malaysia, the basic fixed network is in the time window of evolution from GPON to 10G PON. actually.”

  • Ministry of Industry and Information Technology: China’s Internet Bandwidth Has Reached 38T in 2022, and Gigabit Optical Networks Can Cover More than 500 Million Households

The Ministry of Industry and Information Technology stated that in 2022, the Ministry of Industry and Information Technology will achieve new results in promoting the high-quality development of the information and communication industry. The annual telecommunications business revenue was 1.58 trillion yuan, a year-on-year increase of 8%. Internet data center, cloud computing, Internet of Things, and other emerging business revenue increased by 32.4% year-on-year, driving the telecom business revenue to increase by 5.1 percentage points, becoming an important growth pole of the telecom business. A total of 2.312 million 5G base stations have been built in the construction of dual Gigabit networks, and the Gigabit optical network has the ability to cover more than 500 million households, realizing “Gigabit connections between cities” and “5G connections between counties and counties”. The total scale of data center racks in use across the country exceeds 6.5 million standard frames, and the full scale of computing power has grown at an average annual rate of more than 25% in the past five years. Five new national-level Internet backbone direct connection points have been built, the international export bandwidth of the Internet has reached 38Tbps, four new switching centers have been built, the formation of an all-round, multi-level, and three-dimensional network interconnection architecture has been accelerated, and the network service performance has reached the advanced international level. In fact, since 2010, my country’s international export bandwidth has maintained a growth rate of more than 20%. According to the “National Informatization Development Strategy Outline”, by 2025, the international Internet export bandwidth will reach 48Tbps. In terms of individual users, the number of apps exceeded 2.58 million, enriching various needs of users in consumption, entertainment, social networking, travel, etc., and promoting the formation of the world’s largest and most active digital service market.

  • Zayo Boosts European Infrastructure with Fiber Expansion

Zayo Group Holdings Limited, the world’s leading communication infrastructure platform, announced the deployment of a new 400G route connecting Paris and Marseille, including the market’s first network hardening of this critical route with next-generation optical fiber technology, providing enterprises with a simpler and more secure way to transport the rapidly growing high-bandwidth traffic from these ten global Internet hubs. Paris is the world’s fourth-largest center for internet connectivity, and Marseille, the crossroads of several major exchanges between terrestrial and subsea networks, is expected to rise from the world’s seventh-largest internet hub to the fifth-largest in the next three years. Marseille’s capacity needs are expected to quadruple by 2026 with the planned completion of six new undersea cables, including key gateways to Asia, Africa, and the Middle East. This has led to a rapidly growing demand for companies to transport from these hubs across Europe to other major business centers around the world. The new Paris-Marseille line from Zayo provides enterprises with a total expected capacity of 24TB per fiber pair, a key three-way frequency option, and 400G support to manage this capacity growth and ensure safe Elastic connection. In addition to capacity, Zayo is strengthening its network with new fiber technology, making Zayo the first operator to use next-generation fiber to link Paris to Marseille.

  • Amazon to Spend $35 Billion on New Data Center in Virginia

Amazon’s cloud computing unit will spend $35 billion building new data centers in Virginia by 2040, underscoring the company’s determination to stay ahead of rivals Microsoft Corp and Alphabet (Google ). The U.S. state of Virginia is the most important hub for Amazon Web Services, where dozens of data centers serve applications to customers in the eastern U.S. AWS, the largest cloud computing provider, saw an estimated $28.4 billion reduction in capital spending last year, analysts said. Amazon’s cloud computing unit will spend $35 billion building new data centers in Virginia by 2040, underscoring the company’s determination to stay ahead of rivals Microsoft Corp and Alphabet (Google ). The U.S. state of Virginia is the most important hub for Amazon Web Services, where dozens of data centers serve applications to customers in the eastern U.S. AWS, the largest cloud computing provider, saw an estimated $28.4 billion reduction in capital spending last year, analysts said.

Chapter 3- System Equipment Vendor Dynamics

3.1 Nokia Q422 Revenue 7.449 billion Euros Year-on-year Growth of 16%

3.2 Ericsson 2022 Full-year Revenue of SEK 271.5 billion Up 17 Percent Year-on-year

3.3 Southern Cross Partners with Ciena to Launch 400GbE Service

3.4 Beyond Technology and Infinera Partner for Successful Multi-terabit Network Deployment

3.1 Nokia Q422 Revenue 7.449 Billion Euros Year-on-year Growth of 16%

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Nokia’s revenue for the fourth quarter of 2022 was EUR 7,449 million, up 16 percent year-on-year. Net profit was EUR 3,152 million, compared to net income of EUR 680 million in the same quarter last year, an increase of 364 percent. The gross profit margin for the fourth quarter was 42.8 percent, compared to 39.5 percent in the same quarter last year. By region, Nokia generated revenues of EUR801 million in Asia Pacific in the fourth quarter of 2022, up 17 percent from EUR684 million in the same period last year; revenues of EUR2,351 million in Europe, up 28 percent; revenues of EUR356 million in Greater China, down 9 percent; revenues of EUR568 million in India, up 129 percent; revenues of EUR387 million in Latin America, up 19 percent; revenues of EUR595 million in the Middle East and Africa, up 7 percent; and revenues of EUR2,070 million in North America, down 3 percent. The Middle East and Africa region had revenues of €595 million, up 7 percent, while North America had revenues of €2.07 billion, down 3 percent. Looking ahead to 2023, demand remains strong despite the noted uncertainty in the economic outlook. Nokia expects to continue to grow this year, targeting full-year net sales of between EUR 24.9 billion and EUR 26.5 billion, which represents growth of 2 to 8 percent at constant exchange rates.

3.2 Ericsson 2022 Full-year Revenue of SEK 271.5 Billion Up 17 Percent Year-on-year

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In the fourth quarter of 2022, Ericsson generated revenue of SEK 86 billion, up 21 percent from SEK 71.3 billion in the same period last year. The gross margin for the fourth quarter was 41.4 percent, compared to 43.2 percent in the same period last year. Net income was SEK 6.2 billion, compared with SEK 10.1 billion in the same period last year. full-year 2022 Ericsson revenues reached SEK 271.5 billion, up 17 percent year-on-year; sales adjusted for comparable units and currency (organic sales) increased 3 percent year-on-year. The gross margin was 41.7 percent.

We remain fully committed to our strategy and confident in the long term,” said Borje Ekholm, President and CEO of Ericsson. Our strategy remains rooted in driving sustainable growth and maximizing value for all stakeholders. We believe we have the right team and strategy in place to extend Ericsson’s leadership in mobile networks and to deliver on the profitability of our cloud software and services and high-growth enterprise wireless businesses, and we remain optimistic about the long-term prospects for our business.

  • ZTE and China Telecom Complete Industry’s First Commercial M-OTN/OSU Device-Based Live Network Trial

ZTE, together with China Telecom, completed the industry’s first live network trial based on commercial M-OTN/OSU equipment in Anhui Province, realizing the verification of basic OSU interoperability within ZTE’s domain and between ZTE and other CPE manufacturers, and opening the first friendly customer Ethernet leased line service carried by OSU, verifying the advancement of OSU small particle technology and the maturity of the corresponding products. With the arrival of the 5G era, thousands of industries are facing the development demand of digital transformation, which drives the development of OTN traditional leased line services toward multi-level differentiated quality leased lines. In this regard, China Telecom, together with mainstream equipment manufacturers, operators, and research institutes, proposed and developed the M-OTN/OSU metro optical transport network standard, which has the advantages of low service delay, flexible and fast bandwidth adjustment, and a large number of connection pipes compared with the original SDH and OTN technologies, and can better support private line services such as financial and government services. In the standard development process of China Telecom’s M-OTN/OSU, ZTE Corporation deeply participated and took the lead in CCSA to develop the industry standard of the “Optical Service Unit (OSU)-based Optical Transport Network (OTN) Equipment Test Method”, which provides a solid theoretical guarantee for the large-scale deployment of M-OTN/OSU.

ZTE together with China Telecom

At the same time, ZTE Corporation, together with China Telecom and domestic and foreign vendors, submitted dozens of technical proposals on M-OTN/OSU to ITU-T, describing the application scenarios, network architecture, and technical feasibility of M-OTN/OSU. At the same time, ZTE Corporation has been actively developing equipment and has introduced M-OTN equipment covering the core, convergence, and access levels of the metro area, which can meet the service construction needs of all scenarios.

3.3 Southern Cross Partners with Ciena to Launch 400GbE Service

Southern Cross Cables, Australia’s specialist international capacity provider, has announced the availability of 400GbE commercial services over Southern Cross NEXT cable between Australia, New Zealand, and the U.S. Mr. Laurie Miller, CEO of Southern Cross, said the introduction of Australasia’s first international 400GbE service and the world’s longest single-system data center to data center 400GbE service is a game changer for customers. The introduction of the first international 400GbE service in Australasia and the longest single-system data center-to-data center 400GbE service in the world is a game changer for customers. With the Southern Cross NEXT cable system, the new technology and capabilities are designed to support the growing demand for bandwidth driven by cloud adoption and digitization. We are now pleased to offer 400GbE Layer 1 services, the first of several innovative initiatives leveraging the Southern Cross ecosystem and the new NEXT cable. Southern Cross’ 400GbE services run on Ciena’s 6500 packet-optical platforms, powered by wavogic 5 Extreme coherent optics and managed by a Management, Control, and Planning (MCP) domain controller. To accommodate growing and changing network traffic demands, Southern Cross’ ecosystem also integrates with Ciena’s 5400 and 8700 platforms, providing the ability to deploy services from 100Mbs to 400GbE connectivity on applicable wavelengths.

  • Unity Submarine Cable System Expands Capacity with Infinera’s ICE6 800G Solution

Infinera announced that Infinera’s ICE6 800G coherent optical solution has been deployed to modernize and add capacity to the trans-Pacific Unity submarine cable system, which spans 9,620 kilometers and provides operators with a direct fiber optic route connecting Japan and the United States. By upgrading to Infinera’s ICE6 solution, the cable system doubles capacity and provides operators with the highest capacity at the lowest cost per bit. ), Google, KDDI Corp., Telstra, and SingtelBy upgrading its network to ICE6, the alliance will be able to increase the lifetime of fiber optic cables by nearly 25 percent and deliver up to 7.4 Tb/s per fiber pair. With Infinera ice6-powered GX Series solutions, operators can maximize the use of submarine fiber optic cables and minimize cost per bit while maximizing spectral efficiency and fiber capacity. This level of performance is achieved by leveraging Infinera’s unique and innovative solution features, including Nyquist subcarrier, forward error correction gain sharing, and photonic integrated circuit-based technologies.

  • Telefonica and Nokia Partner to Test 25G PON Technology

Nokia announced that Telefonica has successfully trialed 25G PON technology. The trial, the first in Spain to demonstrate symmetrical speeds of 20 Gbps, demonstrates that state-of-the-art 25G PON can co-exist with Telefonica’s existing GPON solutions. With this trial, Telefonica, which has deployed nearly 60 million FTTH homes across multiple business units, has validated that current GPON and XGS-PON broadband technologies can coexist seamlessly with 25G PON on the same fiber.25G PON offers a huge symmetrical bandwidth capacity that will support new use cases and bandwidth demands. Telefonica is the first operator in Spain to offer gigabit connectivity, but we won’t stop there,” said Gonzalo Garzon, head of fixed access at Telefonica. Consumer demand for bandwidth never stops, and exciting applications, such as VR gaming, will continue to evolve to make the most of the available bandwidth. New FTTH technology offers us the opportunity to do more than just connect at home. With its dramatic increase in capacity, we will be able to offer new business services on the same network.”Our Quillion chipset, the 25G PON proof of concept with Telefónica, shows that the huge bandwidth capacity can easily be added to their existing network, coexisting with their existing PON technology,” said Bjorn Capens, vice president of Fixed Networks Europe at Nokia. This means that customers on the same fiber line can use GPON, XGS-PON, or 25G GPON services, making it easier to manage upgrade cycles.”

3.4 Beyond Technology and Infinera Partner for Successful Multi-terabit Network Deployment

Beyond Technology, a global player in technology transformation, Infinera successfully deployed a 3.6 terabit network for a leading Middle Eastern network operator to support the surge in global and local demand for the 2022 FIFA World Cup. Leveraging Infinera’s industry-leading ICE6 800G technology and installed in record time ahead of the world’s largest sporting event to support one of the world’s largest streaming platforms, ensuring fast, seamless, high-quality, and uninterrupted connectivity for sports fans around the world, Beyond Technology provided one of the largest telecom companies in the Middle East, North Africa, and Asia Pacific with Beyond Technology provided this capacity enhancement to one of the largest telecom companies in the Middle East, North Africa, and Asia Pacific to address the significant growth in demand and provide a seamless streaming experience for end users. Qatar, with a population of approximately 3 million, hosted nearly 1.5 million visitors during the four-week sporting event. In addition to providing global streaming services, the upgrade ensures that the network can support local streaming for up to 500,000 people per day. Beyond Technology, a Gold Partner in Infinera’s PartnerPlus program selected Infinera’s ICE6 800G technology for this critical project. ICE6 technology builds on Infinera’s legacy of providing innovative optical solutions that deliver meaningful value to our customers,” said Nick Walden, senior vice president of global sales. our customers to deliver a high-quality streaming experience to World Cup fans.”

  • Juniper Networks and NEC Partner to Deliver Wi-Fi Network for Powerco

Juniper Networks, a leader in secure artificial intelligence-powered networks, and NEC Corporation announced that they have been selected by Powerco, New Zealand’s second-largest gas and electricity distributor, to design and deploy an innovative new Wi-Fi network at its sites across the country. Powerco provides electricity and natural gas to more than 1.1 million customers and is connected to the grid through 28,441 kilometers of wire and cable and more than 6,100 kilometers of natural gas pipelines. Given the mission-critical and essential services Powerco provides, there is a need to ensure not only strong connectivity but also the health, safety, and security of employees while operating its vast utility grid. After experiencing several issues with its legacy Wi-Fi network, Powerco began considering replacing its existing wireless provider, which would allow them to begin a Wi-Fi 6 upgrade as part of a larger technology refresh. The company turned to Juniper Networks and its global strategic partner NEC, both long-time partners. Juniper Networks has been Powerco’s network backbone provider and was named a 2022 Gartner Magic Quadrant Leader for enterprise wired and wireless LAN infrastructure.NEC’s partnership with Powerco includes technical consulting and design for a multi-domain network that meets its needs. Now, through solution trials, Juniper and NEC have successfully demonstrated how their artificial intelligence-powered wireless network can optimize the Wi-Fi experience for Powerco’s national operations.

Chapter 4- Merger and Reorganization

4.1 Microsoft Acquires Startup Fungible to Support Data Center Infrastructure

4.2 Tsinghua Unigroup: Acquiring 49% Equity of H3C to Realize 100% Shareholding

4.3 Other Acquisitions and Mergers

4.1 Microsoft Acquires Startup Fungible to Support Data Center Infrastructure

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  • Acquirer: Microsoft.
  • Acquired Party: Fungible, a Data Processing Unit (DPU) startup.
  • Transaction Amount: not yet announced. But it followed previous reports that Microsoft would buy the startup for $190 million, according to DataCenter Knowledge.
  • DataCenter Knowledge’s Jeffrey Schwartz said: “With the rise of data-centric applications, demand for DPUs (microprocessors that run in servers and data center infrastructure) is expected to accelerate.”DPUs, also known as “Smart NIC”, process data significantly faster than the CPU.
  • Pradeep Sindhu, former CEO of Juniper, and Bertrand Serlet, former senior vice president of engineering at Apple, founded Fungible in 2016 with funding from SoftBank’s Vision Fund and Northwest Ventures raised more than $300 million in funding.
  • Microsoft plans to bring Fungible engineers into its data center infrastructure engineering team.

4.2 Tsinghua Unigroup: Acquiring 49% Equity of H3C to Realize 100% Shareholding

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  • Purchaser: Tsinghua Unigroup.
  • Acquired Party: H3C.
  • Transaction Amount: not yet disclosed.
  • Purpose of the Acquisition: Tsinghua Unigroup announced that: HPE Cayman and Izar Holding Co will sell a total of 49% of the shares held by H3C to the company’s wholly-owned subsidiary Tsinghua Unigroup International. After the completion of this transaction, Tsinghua Unigroup will hold 100% of H3C’s equity.
  • According to Tsinghua Unigroup’s announcement: In May 2016, Tsinghua Unigroup International Information Technology Co., Ltd. (hereinafter referred to as “Tsinghua Unigroup”), a wholly-owned subsidiary of Tsinghua Unigroup incorporated in Hong Kong, completed the acquisition of H3C.
  • With the acquisition of 51% of the controlling stake, H3C became a holding subsidiary of Tsinghua Unigroup. As of the disclosure date of this announcement, Tsinghua Unigroup holds a 51% controlling stake in H3C through Tsinghua Unigroup International; Hewlett Packard Enterprise Company through its wholly-owned subsidiaries H3C Holdings Limited (“HPE Cayman”) and Izar Holding Co hold 48% and 1% equity of H3C respectively.
  • Simultaneously with the delivery of the above-mentioned controlling stake, Tsinghua Unigroup signed the Shareholder Agreement with HPE Cayman and H3C on May 1, 2016. On December 6, 2017, HPE Cayman transferred 1% of H3C’s equity to its wholly-owned subsidiary Izar Holding Co; after the equity transfer was completed, Izar Holding Co became a shareholder of H3C and was bound by the “Shareholder Agreement” .
  • According to the “Shareholder Agreement”, during the period from May 1, 2019 to April 30, 2022, HPE Cayman or the HPE entity that holds the equity of H3C may send a notice to Tsinghua Unigroup International or the company to sell It holds all or part of the equity in H3C.
  • After deliberation and approval at the tenth meeting of the eighth board of directors of Tsinghua Unigroup and the second extraordinary general meeting in 2022, and at the sixteenth meeting of the eighth board of directors of Tsinghua Unigroup and the third extraordinary general meeting of shareholders in 2022, in order to continue to promote Through cooperation and negotiation between the two parties, Tsinghua Unigroup International, HPE Cayman, Izar Holding Co, H3C, and Tsinghua Unigroup Co., Ltd. signed a letter of agreement on the extension of the exercise period of the sell option, and amended the “Shareholder Agreement” to include the above-mentioned sell option. The exercise period of the option is extended to December 31, 2022.

4.3 Other Acquisitions and Mergers

  • Archtop Fiber Acquires Hancock Telephone Company to Expand New York Area Network

Archtop Fiber, a provider of multi-gig, 100% fiber-optic Internet and phone service to residential and business customers in the Northeastern United States, recently announced a partnership with Hancock

Telephone Corporation, Hancock Telephone Corporation, a family-controlled telecommunications provider headquartered in Hancock, New York, has signed a stock purchase agreement. Through this strategic agreement, Archtop Fiber will provide broadband and telephony services to customers in the Delaware County of New York and Northeast Pennsylvania service area and beyond, bringing new technology-focused jobs and business opportunities to the region . Following on from the recently announced acquisition of New York-based GTel, Archtop’s acquisition of Hancock Telephone will continue to advance the company’s mission to provide the fastest, most reliable, green, and affordable Internet service in the Northeast. The company also continues to execute cooperation agreements with municipalities in the region. Jeff DeMond, founder and CEO of Archtop Fiber, said: “Hancock Telephone is known for its rich history, innovative spirit and outstanding service quality, and we are deeply honored to carry on the legacy of Hancock Telephone. As a veteran of the telecommunications industry With an expert team of professionals, we are proud to serve the Hancock community and bring more jobs and business opportunities to all who live and work here. We will continue to innovate in the region, drawing on our decades of experience and expanding digital growth.”

  • Tata Communications Acquires the Switch

Tata Communications, a global digital ecosystem enabler, announces that it has entered into a definitive agreement, through its wholly-owned international subsidiary, Tata Communications (Netherlands) B.V., to acquire TheSwitch Enterprises LLC. The company is headquartered in New York, The Switch is the world’s leading provider of end-to-end live video production and transmission services, covering top sports venues in North America. With this transaction, Tata Communications will gain a strong foothold in America’s media and entertainment market, expand its portfolio into live video production and become a unique player in an end-to-end media ecosystem across the entire content development value chain globally position. Under the terms of the agreement, Tata Communications has agreed to acquire 100% of Switch Enterprises, LLC and some of its international assets for approximately US$58.8 million (Rs. 48.63 crores) in a cash (customary closing adjustment) transaction. Completion of the transaction is subject to regulatory approvals. With the merger of the two companies, Tata Communications will provide support to The Switch’s global customers in over 190 countries and territories, while The Switch will bring state-of-the-art live production capabilities to help organizations produce faster and more efficiently High-quality, more immersive content. Announcing the acquisition, Tri Pham, Chief Strategy Officer, Tata Communications, said: “Our combination of Switch’s strong presence in North America and Tata Communications’ global presence will create a powerful force in the global media ecosystem, helping Businesses leverage emerging digital consumption models to drive innovation and disruption. Additionally, the Switch production infrastructure-as-a-service model will enable Tata Communications customers to accelerate the adoption of remote production at any event anywhere in the world.”

  • Fiber Optic Provider ImOn to Acquire FiberComm

ImOn Communications, LLC (ImOn), a leading provider of fiber optic broadband services in Eastern Iowa since 2007, announced that it has entered into a definitive agreement to acquire FiberComm, pending regulatory approval. For over 20 years, FiberComm has provided high-quality Internet and voice services to businesses in the Sioux City market. ImOn CEO Patrice Carroll said: “ImOn and FiberComm share a vision to provide reliable, high-quality service and responsive, caring customer support in their respective markets. We look forward to working with the excellent team at FiberComm in Iowa The western part of the state establishes ImOn’s service footprint and provides fiber broadband services to residents and businesses in the Sioux City area.” FiberComm CEO Al Aymar said: “The FiberComm team is excited about the opportunity ImOn brings to Sioux City. Residents in our community and businesses will benefit greatly from fast, reliable fiber-to-the-field broadband service and superior customer service.” ImOn remains committed to completing its network expansion to Cedar Rapids, Marion, Hawata, Iowa All homes and businesses in Coralville and Dubuque. The acquisition of FiberComm will be ImOn’s first expansion outside of eastern Iowa. The deal is expected to close in 2023, subject to regulatory approval.

  • Everest Acquires CTG Wireless Tower Portfolio

Everest Infrastructure Partners completed the acquisition of Communications Tower Group (“CTG”)’s wireless communications tower portfolio. The tower assets represent prime locations in 10 states in the Southeast and Midwest regions of the United States. We are very pleased to be working with CTG CEO and Founder Ricardo Loor and the entire management team to acquire these high-quality tower assets and development pipeline. “Operator leasing activity at these sites has been strong and given the momentum in colocation and new tower development, we expect that to continue,” said Mike Mackey, president of Everest. “This acquisition of these tower assets from CTG and development pipeline, we achieved 50% growth in our U.S. portfolio by 2022, more than the previous two years combined, and positioned Everest as one of the major owners of wireless infrastructure assets. We are committed to the respective The team is very proud, especially our in-house deal team, who worked to close this deal over the holidays to ensure a successful deal in 2022.

Chapter 5- Market Data and Analysis

5.1 LC: Service Providers Prioritize DWDM Deployment in Metro and Access Networks

5.2 Cignal AI: 3Q22 400GbE Optical Module Shipments Increased by 50%

5.3 Ookla: Global Fixed Broadband Speeds Are Growing Faster Than Mobile

5.4 Dell’Oro: 400Gbps Upgrade in 2023 Will Drive the SP Router Market

5.1 LC: Service Providers Prioritize DWDM Deployment in Metro and Access Networks

  • In the past 20-30 years, DWDM has become the dominant technology of optical networks. It enables Communication Service Providers (CSPs) to increase the bandwidth of their network infrastructure while optimizing the cost of deploying and operating optical transport equipment. CSP’s current priorities are focused on deploying DWDM in metro and access networks, where traffic demands are growing the fastest. They are looking for ways to use ROADMs and OXCs to increase network flexibility, while also deploying higher-speed transmission systems. Over the past 2-3 years, network management automation has become their top priority. It is critical to reducing operating costs and delivering new services.
  • Network flexibility and automation are top priorities for service providers in China, Europe, Japan, and North America. Metro and access networks will require substantial upgrades to keep up with traffic growth.
  • CSPs will continue to rely on higher data rate systems to improve the cost and power efficiency of their future DWDM systems. It is also important to deploy high-fiber-count cables and use the C+L frequency band. The use of multicore fibers will be limited to subsea systems.
  • LC expects that a separate optical transport layer will remain the most critical component of a CSP’s DWDM network, while the deployment of IPoDWDM (IP over DWDM) will be limited to a few selected cases.
  • The findings for this report are based on more than 20 interviews conducted by the LightCounting team with leading telecom CSPs and cloud computing companies in China, Europe, Japan, and North America over the past six months.
report 12

  • The Global Optical Waveguide Industry will be Worth $9.5 Billion in 2028

* According to a new report from MarketsandMarkets, the global optical waveguide (Optical Waveguide) market size is estimated at USD 6.6 billion in 2023. It is expected to reach USD 9.5 billion by 2028, at a compound annual growth rate (CAGR) of 7.3% during the forecast period. The growth of this market is driven by factors such as surging demand for high bandwidth, increasing deployment of 5G telecom networks, and rising number of data centers across the globe.

* From 2023 to 2028, the data center and high-performance computing (HPC) segment is expected to have the highest CAGR in the optical waveguide segment. The growth of this segment can be attributed to the surge in colocation data centers across the globe. According to the data center map, as of January 2023, there are approximately 4,969 colocation data center facilities in 130 countries around the world. Optical waveguide solutions such as optical transceivers, connectors, optical fibers, and active optical cables provide high-speed data transmission, quality, and performance advantages in data center networks. It helps in transmitting data over long distances; also provides immunity to electromagnetic interference, which helps in the accurate transmission of data between two points. These advantages drive the optical waveguide market over the forecast period.

* From 2023 to 2028, the Asia-Pacific region will hold the largest optical waveguide market share. The presence of several photonics start-ups in the region supports the growth of the optical waveguide market. There are many photonics start-ups in the Asia-Pacific region, such as Shanghai Bio-Sensing, Sensing Photonics, Turing Quantum, Everbright Huaxin, Zhejiang Light Technology(?), Xizhi Technology, and Xinyun Optoelectronics. These players have been working to expand the development and production of photonics solutions in the market. Furthermore, the establishment of new photonics manufacturing facilities in the region will boost market growth. For example, in December 2022, Everbright Huaxin announced an investment of US$143 million to establish a research, development, and production facility for compound semiconductors in Suzhou, China. The new facility will produce compound chips such as gallium arsenide (GaAs), gallium nitride (GaN), and indium phosphide (InP). These production expansion facilities will augment the market growth over the forecast period.

The global optical waveguide industry will be worth 95 billion in 2028

5.2 Cignal AI: 3Q22 400GbE Optical Module Shipments Increased by 50%

Cignal AI’s latest optical device report, Datacom Optical Devices revenue posted solid growth in the third quarter of 2022 after two-quarters of decline, driven by 400GbE optical modules. The analyst firm said Asahion and Coherent High Intensity (formerly II-VI) drove growth by expanding shipments of products for Hyperscale applications. For telecom device suppliers, the leading supplier continued to be Lumentum, whose revenue grew 6 percent year-over-year.

Scott Wilkinson, principal analyst for optical devices at Cignal AI, said, “The quarter was highlighted by 400Gbps performance in both the data center and external segments as 400GbE data center optics shipments recovered from weakness and 400ZR/ZR+ drove telecom bandwidth growth for DCI applications. Looking ahead to the fourth quarter and 2023, demand for telecom devices will continue to recover, while near-term growth in datacom optics will slow as inventories are digested.”

  • More Key Findings from the 3Q22 Optical Devices Report:

1. 400GbE optical module shipments returned to high growth levels, up 50% year-over-year, but lower demand from hyperscalers led to a downward revision of the forecast.

2. 400GbE-DR shipments recovered to nearly half of the total 400G shipments in Q3 2022 after a slowdown in Amazon orders led to a decline in 400GbE-DR shipments.

3. Growth in Gen60C coherent modules (400ZR/ZR+ and variants) slowed as major customers drained their inventories. Specifically, CFP2 versions grew sharply as sales from traditional telecom equipment vendors climbed.

4. Shipments of 100Gbps and 200Gbps (Gen30) coherent modules declined significantly, primarily due to lower sales from Chinese equipment vendors.

5. Coherent is the main beneficiary of the growth in consumer 3D sensing revenue, accounting for two-thirds of sales in this segment.

Cignal AI 3Q22 400GbE optical module shipments up 50
  •  GSA: 96 Countries/ Regions Worldwide have Commercialized 5G By the End of 2022

GSA 96 countriesregions worldwide have commercialized 5G by the end of 2022

* The latest data from GSA shows that 817 operators worldwide had commercially launched public LTE networks to provide broadband fixed wireless access and/or mobile services by the end of December 2022. Of these, 432 operators have launched public LTE fixed wireless access services (excluding operators offering only MiFi or Software Dog services) and 787 operators are offering public mobile LTE services.

* For LTE, GSA determined that: 165 operators are actively using (deployed or launched) TDD spectrum for LTE services; 603 operators are actively using (deployed or launched) FDD spectrum for LTE services; 371 operators are investing in one or more LTE-Advanced technologies, and 351 operators have commercialized the service.

* In terms of 5G services, GSA has identified: 515 operators in 155 countries investing in 5G networks in the form of testing, piloting, licensing, planning, and actual deployment; of these, 243 operators in 96 countries have commercialized 3GPP-compatible 5G services (mobile or fixed wireless access); 112 operators are investing in public standalone 5G in the form of evaluation, testing, piloting, planning, deployment or already commercial; of these, 35 operators have deployed or commercialized standalone 5G in public networks.

  • CIR: The Next-generation Optical Transceiver Market will Grow to $15.9 Billion in 2028

CIR has released a new report on the next-generation optical transceiver market — 《Next Generation Transceivers Market: 2022-2028》. The report predicts that as speeds of 800G and above become mainstream, Next-generation transceiver revenue to grow from $850 million in 2023 to $15.9 billion in 2028 Yuan. Lawrence Gasman, president of CIR and author of the report, said: “We are entering an exciting new era. The next generation of transceivers is no longer just a few simple Transmitters and receivers for electronic devices. Transceivers will become smart modules to simplify networking architecture for more flexible network configuration. ”

* Data rate requirements for optical transceivers will grow rapidly. Internet and 5G/6G users will increase, and latency-sensitive traffic from AI, machine learning (ML), Internet of Things (IoT), and virtual reality will start to surge. Transceiver manufacturers are addressing the bandwidth challenge by introducing coherent transceivers throughout the network, even in the access segment (coherent PON). Coherent transceivers will generate nearly $4 billion in revenue by 2028, the report said. Nonetheless, transceivers will eventually move to more radical technologies such as co-packaged optics (CPO), as well as a range of new transceiver designs for edge data centers.

* The PON transceiver market will begin to evolve. The market will need new transceivers to support “Combo” PON and “Coherent PON”, two PON networks that can carry traffic from multiple PON infrastructures flow. Next-generation PON transceivers will generate $300 million in revenue by 2028.

* The transceiver supply chain will be greatly simplified in the next few years. With the integration of various links in the supply chain, the two-tier pricing structure of transceivers is unlikely to continue to exist. The role of distributors is expected to decline, while original equipment manufacturers (OEMs) will play an increasingly important role in transceiver manufacturing. The latter trend will help counter the growing role of China as a source of transceivers of unreliability.

CIR The next generation Optical Transceiver Market will Grow to 159 Billion in 2028

5.3 Ookla: Global Fixed Broadband Speeds are Growing Faster Than Mobile

* A new report from Ookla shows that global fixed broadband speeds are growing faster than mobile moving speeds. But overall, as countries continue to invest in fiber and 5G, Internet speeds are improving.

* In the fixed service, download speeds for broadband services have increased by over the past year 28%. In contrast, according to the Speedtest Global Index (Speedtest Global Index), from November 2021 to November 2022, mobile speed increased by almost 17%.

* In terms of upload speed, Ookla’s data shows that fixed growth is also faster. in the past Over the year, mobile upload speeds increased by at least 9%, while fixed broadband upload speeds increased to 30% less increase.

* In terms of latency, both fixed and mobile vary very little. Ookla notes that delays are becoming An increasingly important metric over the past year, with the delay in moving from 2021 to 29 milliseconds in 2022, down to 28 milliseconds in 2022, while fixed broadband latency remains at 10 milliseconds.

* While most of the countries in the top 10 fastest fixed internet speeds in 2021 are on the 2022 list, there have been some notable changes, such as download speeds in Chile over the past yearSpeed jumped from 173.08Mbit/s to 216.46Mbit/s. This increase makes Chile the number one, almost on par with China (214.58Mbit/s) and Singapore (214.23 Mbit/s). China Compared with Singapore’s download speed, it also increased last year.

The United States jumped from eighth place in 2021 to sixth place in 2022, with an average download speed of 189.48Mbit/s in 2022. The UK does not break into the top 10 for fixed broadband every year. Spain ranks ninth in 2021 but drops out of the top ten in 2022 to make room for the United Arab Emirates (UAE), which joins the ranking with a median download speed of 186.76Mbit/s. In the mobile space, Qatar jumped to the top spot with a median download speed of 176.18Mbit/s (from 98.1Mbit/s in November 2021). It was followed by the United Arab Emirates at 139.41Mbit/s. Denmark (113.44Mbit/s), Macau, China (106.38Mbit/s), and Brunei (102.36Mbit/s) replace Saudi Arabia, Cyprus, and Kuwait in 2022. Neither the US nor the UK appears in the top 10 list for mobile speed.

Ookla Global Fixed Broadband Speeds Growing Faster Than Mobile

  • 2021-2027 Asia Pacific Optical Components Market Forecast

* ResearchAndMarkets released the “Asia-Pacific Optical Components Market Analysis Report: 2021-2027”. The analyst firm expects the Asia-Pacific optical components market to grow at a CAGR of 8.5% during the forecast period (2021-2027), driven by industrialization development and infrastructure upgrades.

* Communications applications are expanding rapidly, each with characteristics that require increased speed and bandwidth. Some examples of advanced technologies include FTTH and FTTB. Amazon Prime and Netflix require a minimum speed of 20-25Mb per second to provide full HD quality video through these streaming platforms.

* Network designs such as FTTB and FTTH are essential for internet connectivity, providing high bandwidth for video technologies, which is expected to support market growth. The delivery of video, audio, and media content over the internet without the need for a subscription to a cable pay TV service or traditional satellite TV is known as OTT.

* In Addition, OTT follows the same strategy as video technology in terms of growth. With the increasing number of smart devices, a new generation of high-bandwidth applications will basically require higher and faster bandwidth connections, including FTTN, FTTH and FTTC that use optical cables to transmit data.

* The continuous development of industrialization, coupled with the upgrading of infrastructure, provides opportunities for the deployment of optical components for different applications in the Asia-Pacific region. In addition, the increasing application of optical communication in the healthcare industry is likely to support the growth of the optical device market in countries such as India, China, and Japan.

* The analyst firm believes that the main factor behind the growing demand for optical components in the Asia-Pacific region is the increasing number of broadband subscriptions in the region, which offers sustainable growth opportunities.

* In addition, according to a geographic analysis by Internet World Stats, in May 2020, 37.1% of Internet users in Asia were in China and 24.3% were in India. According to World Bank statistics in 2020, Southeast Asia has the highest Internet penetration rate, with 66% of the total population of Southeast Asia using the Internet.

* Data shows that in 2020, the Chinese market will dominate the optical device market in the Asia-Pacific region, and it is expected to continue to dominate by 2027, achieving a market value of US$2.8369 billion by 2027. The Japanese optical device market is expected to grow at a CAGR of 7.8% during 2021-2027. Moreover, the Indian optical components market is expected to grow at a compound annual growth rate (CAGR) of 9.1% during the period 2021-2027.

  • Synergy: Hyperscale and Enterprise Spending Growth in 2022, Telecom Still Subdued

In Synergy’s stats, capex by telcos and hyperscalers is focused on network and data center hardware and software. To make the data more comparable, corporate IT infrastructure spending is focused on data centers, networking, and collaboration tools, excluding corporate spending on communications and IT services, equipment, and business software. There are 19 hyperscale operators that qualify for Synergy, ranked by capex, with the largest including Amazon, Google, Meta, Microsoft, Apple, Alibaba, and ByteDance. Telecommunications companies include fixed and mobile operators, ranked by capital spending, with the largest including China Mobile, Deutsche Telekom, Verizon, AT&T, NTT, and China Telecom. The 2022 figures are based on actual figures for the first three quarters and Synergy’s forecast for the fourth quarter. Hyperscalers’ share of total spending has continued to rise steadily over the past few years as continued growth in cloud and other digital services has driven higher spending levels. Telecom spending remains severely constrained as revenue streams have not grown significantly. Business spending has also rebounded over the past two years after a softer period in 2019 and 2020. The main drivers of growth in enterprise spending are continued long-term growth in hosting and cloud collaboration solutions, increased spending on cyber security, and a post-pandemic rebound in enterprise data centers and switches. In some areas, rising average selling prices (ASPs) also played a role, as higher costs due to supply chain issues were passed on to customers.

New data from Synergy Research Group shows that both hyperscale operator capex and enterprise spending on IT infrastructure will increase by 9% in 2022, while telco capex will fall by 4%. In 2022, infrastructure spending across these three sectors will reach $700 billion, with hyperscalers accounting for 29% (compared to just 13% in 2016). The enterprise sector’s share has hovered around 29% over the period, while the telecom sector’s share has fallen from 58% to 42%. Since 2016, hyperscale operator capex has grown by an average of 20% per year, while enterprise IT spending has grown by an average of 6% per year, and telco capex has remained flat. Overall, since 2016, the combined spending of the three segments has increased by an average of 6% per year.

Synergy Hyperscale and enterprise spending growth in 2022 telecom still subdued

  • Dell’Oro: 2023 Data Center Switch Market Outlook

2022 is a record year for data center switch sales. Dell’Oro expects another year of strong double-digit growth and record revenue for the market in 2023. 200/400Gbps shipments will double, driven by the accelerated adoption of Chinese cloud service providers (SPs) and other layers of 2/3 cloud SPs and the continued deployment of hyperscalers. Supply constraints accelerate the need for silicon diversity. The latest entrants to the commercial silicon market, such as Cisco, Intel (Barefoot), and Marvell (Innovium), have already started taking orders from hyperscaler customers. Xsight Labs is another startup trying to capture a piece of hyperscaler networking spending. We are just beginning to scratch the surface when it comes to the innovation, disruption, and opportunities AI workloads will bring to the market. Despite concerns about the macroeconomic situation and challenging year-over-year comparisons, we expect data center switch sales to grow by double digits and reach an all-time high in 2023. Much of this growth will be driven by the cloud segment, especially hyperscaler, whose spending is typically less affected by the short-term macro environment. At the same time, we expect business spending to slow, as it has during previous market downturns. In addition to differences in spending by different customer groups, we also expect differences in market performance in the first half and second half of this year. In the first half of this year, we expect two factors to drive revenue growth. One is the large backlog from 2022 and the other is that we hope to see an improvement in the supply situation, which will help fill the backlog. As for the second half of 2023, improving supply combined with macroeconomic headwinds should break the panic-buying behavior that has led to outstanding booking growth rates in the market so far. So we’re expecting a sharp slowdown in orders followed by a slowdown in revenue as most of the backlog will be completed in the first half of the year.

  • Dell’Oro: 2023 Market Outlook for Broadband Access and Home Networking

In 2022, the global broadband access and home network market revenue will increase by about 12% annually to exceed US$18 billion. In 2023, the market is likely to slow significantly, but will still maintain a growth rate of 5-7%, which shows that operators and state and national governments continue to focus on expanding and improving broadband network capacity. Here are Dell’Oro’s predictions for the new year: 1. Replacement of DSL will accelerate; amidst all the hype about building out fiber optic networks, one of the biggest drivers of these investments goes unspoken, perhaps because it’s just The assumption — that is that a significant portion of the PON equipment revenue growth is directly at the expense of spending on DSLAM ports and corresponding CPEs. While this substitution is obvious, the number of revenues shifted from DSL to PON equipment over the past two years helps to understand how much of the PON equipment revenue growth is due to the Greenfield expansion and how much is due to overbuilding and the actual decommissioning of copper and DSL assets. 2. Subsidies offset rising infrastructure costs — but subscriber growth will slow; there are now signs that interest rate hikes in the world’s largest economy are having their intended effect of lowering red-hot inflation. The flip side, of course, is that economists expect overall growth to slow this year, and a growing number of companies that have expanded significantly during the pandemic are responding by laying off workers. 3. Consensus is formed on Cable architecture, but obstacles still exist; with Charter and Comcast now firmly choosing DAA architecture based on virtual CMTS and remote PHY platforms, the supplier industry can breathe a sigh of relief. The focus can now shift to supplying the short-term project, namely a mid-and-high-split band plan upgrade using existing DOCSIS 3.1 technology to increase upstream bandwidth, while also providing for the upcoming 1.2GHz or 1.8GHz spectrum upgrade plan to prepare for the deployment of full-duplex or spread-spectrum DOCSIS 4.0 later this year.

5.4 Dell’Oro: 400Gbps Upgrade in 2023 Will Drive the SP Router Market

Ivaylo Peev, who leads the Service Provider Router and Switch Research Program at Dell’Oro, shares his thoughts on the service provider router market in 2023. The service provider (SP) router market, like other infrastructure segments, is driven and pulled by technological change and the maelstrom of the global macroeconomic environment. After returning to growth in 2021, the SP router market will continue to perform strongly in 2022 despite a challenging macroeconomic environment. Global SP router revenue growth of 3% in 2022 is in line with our expectations. Through 2023, we expect growth to continue, albeit at a slightly slower annual rate of 2%. We expect macroeconomic conditions to worsen in 2023, so we believe global demand for SP routers will weaken as businesses realign budgets, reduce operating expenses, and shift spending to protect their bottom line.

  • 400Gbps Technology Drives Router Demand

In 2022, we observe a significant shift in market demand towards routers supporting 400Gbps, driven by global IP backbone upgrades. 400Gbps router port shipments are growing at a triple-digit year-over-year growth rate, and we expect this momentum to continue in 2023.

IP backbone/Internet backbone upgrades are driving the highest demand for 400Gbps routers. The Internet backbone includes cloud and telecom SP networks and transports traffic from mobile and broadband service networks as well as cloud infrastructure. We expect that within the next five years, most 400Gbps router ports will be deployed in IP backbone networks. In 2022, network capacity will increase, spurred by 5G RAN, IoT, broadband subscription growth, and cloud-based applications such as video, music streaming, and gaming platforms.

Quantity demand keeps rising. The growth of this market is driven by service providers opting to upgrade their networks to take advantage of 400Gbps technology and expand their networks to meet increasing traffic demands. 5G RAN (Radio Access Network) deployment is driving the rapid expansion of mobile networks with a dual effect. First, mobile service providers need to expand their mobile transport networks, for which 400Gbps routers are being deployed. Second, 5G technology can achieve higher mobile Internet connectivity.

connection speed, which will encourage mobile network users to consume data-intensive media content, thereby driving up traffic on the SP network. The core router market will see a slight decline in growth in 2022. We think SPs have delayed core router purchases as they wait for the latest ASICs to hit the market. We expect growth in this segment to improve in 2023 when some of the top five core router suppliers launch their latest ASICs. In 2022, edge routers and aggregation switches

The machine market grew strongly due to the increasing adoption of edge routers and line cards based on the latest ASICs that support 400Gbps connections. Continuous investments in 5G RAN by telecom SPs, expansion of mobile transmission capacity, and increasing deployment of residential broadband are contributing to the growth of the edge and aggregation switch market. In 2023, we expect slower growth in this segment as we expect a slowdown in mobile backhaul and RAN buildout in China.

  • China’s IP Mobile Backhaul Upgrade Slows Down

IP mobile backhaul market growth outside of China in 2022, as we forecast. According to our preliminary estimates, North America and EMEA will grow in the single digits, and Asia Pacific, excluding China, will grow in the double digits. The Chinese market will decline slightly in 2022 but still accounts for about one-third of the global market. The decline in the expansion of China Mobile’s backhaul market in 2022 is due to the slowdown in 5G RAN construction, and the mobile backbone network and IP transmission network of the two largest SPs in China are about to be completed. By 2023, we expect the decline in China’s IP mobile backhaul market to intensify as investment shifts to SP core networks and metro networks. Outside of China, we also expect the mobile backhaul market to grow at a slower pace than in 2022.

  • Dell’Oro Raises Five-year Forecast for Open RAN Market

Open RAN has come a long way in just a few years, driving Open RAN revenues to grow faster than initially expected, according to a recent report from Dell’Oro Group. These trends continue in 2022, and in this latest report, Dell’Oro raised its Open RAN expectations to reflect a higher baseline as O-RAN progress in North America was stronger than expected. The group predicts that Open RAN will account for 15% to 20% of global RAN by 2027. “We’ve been talking to early adopters for a while, and most of them are still concerned about the performance and cost of Open RAN compared to proprietary RAN,” said Stefan Pongratz, vice president and analyst at Dell’Oro Group. January 2023 Other highlights of the Open RAN research report: Asia Pacific and North America are expected to be the key growth drivers throughout the forecast period. Open RAN forecasts have been revised upwards for North America, while forecasts have been revised downwards for the Middle East and Africa, the Caribbean, Latin America, and parts of Asia Pacific. Despite a slow start, European Open RAN revenue is expected to exceed $1 billion by 2027. While Open RAN is not limited to a specific technology, RF output power, spectrum band, or deployment configuration, Open RAN macro is expected to account for the lion’s share of O-RAN capex, accounting for approximately 90% of revenue throughout the forecast period. Risks remain broadly balanced. On the one hand, Open RAN continues to move in the right direction. At the same time, preliminary data suggest that Open RAN has had little impact on overall RAN vendor dynamics.

  • Dell’Oro: Global Mobile Backhaul Market to Reach $5.3 Billion by 2025

According to a recent forecast report by Dell’Oro Group, the mobile backhaul transport market will grow over the next three years to reach $5.3 billion by 2025 due to the expansion of 5G network deployments in regions that prefer wireless backhaul. Therefore, the demand for microwave transmission equipment is expected to continue to grow. Jimmy Yu, vice president of Dell’Oro Group, said: “Demand for wireless backhaul is on the rise. In the early stages of the 5G deployment cycle, service providers mainly adopted fiber-based backhaul technology, which has driven the continuous growth of fiber-optic backhaul revenue for five years. Looking ahead, we expect more 5G deployments to occur in areas without fiber access and in countries that have traditionally preferred wireless backhaul systems, which will drive further growth in microwave transmission equipment in the future.” Microwave Transmission and Mobile Backhaul, January 2023 Other highlights of the five-year forecast report: 1. In 2020, the microwave transmission market ended the market contraction caused by the decline of 4G deployment. In 2021, the next growth cycle driven by 5G begins, and the market is expected to grow at an average annual rate of 4% until 2025. 2. Approximately 75% of the microwave transmission market will be driven by mobile backhaul. The remainder will come from verticals such as enterprise, utilities, and government. 3. Since 5G has higher requirements for backhaul capacity, the market demand for E/V band systems is expected to be higher, and the sector will grow by about 20% per year in the next five years.

  • Dell’Oro: The CAGR of the Global Optical Transmission Equipment Market will be 3% In the Next Five Years

According to a recent forecast report from Dell’Oro, the demand for global optical transmission equipment is expected to grow at a compounded annual growth rate (CAGR) of 3% over the next five years, reaching 17 billion dollars by 2027. The cumulative revenue for these five years periods is expected to be 81 billion dollars. Jimmy Yu, Vice President of Dell’Oro Group, stated: “Before entering a stable growth period of 3%, there will be fluctuations in the market’s yearly growth rate in the short term. There is still a great deal of uncertainty in the market this year due to the economic background, and economists predict that North America and Europe are likely to experience a recession. However, at the same time, most optical system equipment manufacturers report that orders have reached record levels entering 2023. We expect that a large part of these orders will turn into revenue when component supplies improve this year.” Other highlights of the five-year forecast for optical transmission include an expected growth in the global optical transmission market in 2023 due to improved component supplies, a predicted lower growth rate for the WDM metropolitan market over the next five years due to increased use of IP-over-DWDM, a predicted 5% compounded annual growth rate for the DWDM long-haul market over the next five years, an expected 11% compounded annual growth rate for coherent wavelength shipments of WDM systems, reaching 1.2 million by 2027, and a dominant installation of 400Gbps wavelengths during the forecast period.

  • Dell’Oro: The Global Mobile Core Network Market Will Exceed $50 Billion in 2027

According to a recent report released by Dell’Oro Group, the global market for mobile core networks (MCN) and multi-access edge computing (MEC) is expected to exceed 50 billion dollars by 2027. As of the end of 2022, Dell’Oro identified 39 mobile network operators (MNOs) who have already launched commercial 5G services. The report projects that the number of MNOs will continue to grow over the next five years, which will drive growth in the MCN and MEC market. The report also notes that the 5G market will continue to evolve, with an increasing focus on low-latency, high-bandwidth applications such as the Internet of Things (IoT), enhanced mobile broadband (eMBB), and mission-critical communications (MCC).

Conclusion

  • In terms of 5G users, the three major operators added 26.892 million new 5G package users in December, a decrease of 7.462 million compared with the previous month. The cumulative number of 5G package users totaled approximately 1.095 billion.
  • Ericsson and Nokia announced their results for the fourth quarter of the fiscal year 2022, showing growth. They remain optimistic about their performance in 2023 and are expected to continue to grow in 2023.
  • Microsoft acquires startup Fungible to support data center infrastructure. Microsoft plans to bring Fungible’s engineers into its data center infrastructure engineering team.
  • Huawei released the new FTTR all-optical small and micro-enterprise Starlight B30 series. Ekinops announces the new PM_400FR05-C2A pluggable module for the Ekinops360 WDM optical transmission system. The new line card is Ekinops’ first coherent module based on a 400G pluggable line interface, and it offers a lower-cost, lower-power coherent solution compared to high-performance embedded optics. Coherent has launched a 905nm pulsed triple-junction edge-emitting laser for industrial LiDAR. At the same time, Coherent has also introduced diffractive optical elements for high-power industrial lasers.
  • Cignal AI’s latest optical device report, after two-quarters of decline in datacom optical device revenue, achieved solid growth driven by 400GbE optical modules in the third quarter of 2022. InnoLight and Coherent (formerly II-VI) drove growth by expanding shipments of products for hyperscale applications, the analyst firm said. Among telecom component suppliers, the leading supplier remained Lumentum, whose revenue grew 6% year-over-year. The CIR report predicts that next-generation transceiver revenue will grow from $850 million in 2023 to $15.9 billion in 2028 as speeds of 800G and beyond become mainstream.

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