Passive Optical Network (PON) Market Size, Share & COVID-19 Impact Analysis, By Type (EPON, GPON, Others (Next Generation PON)), By Component (Optical Line Terminal (OLT), Optical Network Terminal (ONT), Optical Distribution Network (ODN)), By Application (FTTX (FTTH, FTTB, FTTP), Mobile Backhaul), Regional Forecast, 2023-2030

The Passive Optical Network (PON) market size was valued at USD 12.27 billion in 2022 and is projected to grow from USD 13.76 billion in 2023 to USD 35.59 billion by 2030, exhibiting a CAGR of 14.5% during the forecast period. North America dominated the global market with a share of 47.27% in 2022.

A Passive Optical Network (PON) is a last-mile technology used by telecommunication companies and internet service providers to provide high-speed internet with low latency to end users. The product has also evolved from basic Ethernet (EPON) to Gigabyte (GPON) and the presently available Next-Gen PON. Generally, PON system architecture consists of major components such as an Optical Line Terminal (OLT), Optical Network Terminal (ONT), and Optical Distribution Network (ODN). Additionally, expanding internet accessibility and fiber network spreading globally have bolstered their application in (Fiber to the X location (FTTX)) and mobile Xhaul, which is growing the market progressively.  

The global market witnessed progressive growth during the pandemic due to growing internet penetration, focused policies, investments, and global infrastructure development by the governments. Furthermore, the adoption of PON equipment is a prime factor cementing the market’s growth during the forecast period. The growing demand for secure, fast, and reliable network connectivity endorses consumers' network PON equipment demand. However, substitute technologically advanced products and the presence of residual players and their diverse product offerings are possible factors causing hindrances to the market. At the same time, low ownership costs and high returns on PON devices have solidified the diverse applications of this technology in cyber security and data centers that enhance security data-level security to provide leveraging opportunities. In addition, the government's infrastructure-centric policies and network development investments are expected to progressively increase the market size of Passive Optical Network devices.

COVID-19 IMPACT

Rising FTTX Subscriber Count and Reviving Supply Strategies Bolstered Market amid the Pandemic

The global market witnessed steady growth during the COVID-19 pandemic. In contrast, many players in the industry have observed a rise in raw materials prices owing to supply constraints for materials such as silicon and copper that globally affected PON equipment's manufacturing condition and pricing. However, at the end of 2020, the market flourished owing to increased internet subscribers and demand for PON equipment in the telecom sector. At the same time, the fast-tracked movement of consumers switching from copper-based data services to new-age optical technology is cementing the application of PON equipment in the FTTx Deployment that includes (FTTH Fiber to the home, FTTB Fiber to the building, and FTTB Fiber to the node). Also, supporting growth factors such as rise in subscriber count of the FTTX Service provider and digital initiatives and programs by the government are expected to boost the sales of OEM players, resulting in the progressive expansion of the market share during the forecast period.

For instance, the latest Survey by RVA Consulting published by the fiber broadband association highlights a 20.10% growth of net promoter scores for implementing and promoting FTTH.

LATEST TRENDS

Implementation of PON Systems for Network Traffic Complexities to Boost the Market

In the digital era, growing internet connectivity in urban and rural areas has changed the market scenarios globally with PON solutions such as GPON, XG-PON, XGS-PON, and NG-PON. However, it emphasized work-from-home (WFH) in many prominent countries during the pandemic and online content availability on streaming platforms such as YouTube, OTT, and many more. These factors are the prime ones that have accelerated the trend toward higher bandwidth and high-speed requirements for business and home broadband. 5G infrastructure growth, growing internet penetration, and digitally connected smart products demand in rapidly developing countries such as India, Africa, and others are exponentially expanding the adoption of technologies such as PON owing to less availability of energy resources. These are the catalysts of the market that support the development of PON solutions and significantly increase PON devices demand.

For instance, according to a recent report published in July 2022 by the Organization for Economic Co-operation and Development (OECD), high-speed optical fiber subscriptions have risen to 14%, which now accounts for 30% of the fixed broadband connections in those countries.

DRIVING FACTORS

Growing Demand for Low Ownership Cost, Reliable Network, and High ROI to Drive the Market

PON network technology equipment enables data to travel faster due to the multiplex capabilities of PON equipment and symmetrical features that support upstream or downstream speed. Also, broadband connectivity prerequisites in leading home-connected products and services such as 4K/8K TV, cloud gaming, interactive video, smart home, distance education, and work from home. Thus, the continuous evolution of PON technology and growing FTTH service adoption for high net speed internet provides users with a quicker return on investments. Companies in this market are replacing or upgrading existing telecommunications networks and technology equipment to improve network speed, efficiency, and ownership cost. Additionally, internet service providers in the industry seek to expand service calls for continuous bandwidth and accelerate Gigabyte Passive Optical Network (GPON). This is expected to drive the stagnant optical network equipment market over the forecast period.

RESTRAINING FACTORS

Substantially Advanced Products and Residual Player’s Presence are Hindrances to the Market

End-users in the network industry seek equipment that consumes less energy due to strict energy policies and rising tariff prices. At the same time, established players in the market have complex product offerings, and unclarified bandwidth are a few factors that divert consumers toward new players. Contenders in the market offer easy optical products that satisfactorily fulfill consumer needs that help them to acquire a consistent Passive Optical Network market share. Such diverse product offerings of contenders and new player emergence in the optical network equipment segment cause hindrances during the forecast period.

For instance, in December 2022, India’s Sterlite, previously known as STL, a major player in the industry, extended from simple optical equipment offerings into diverse OLTs for broadband access. It has already started developing technologically-advanced detachable products that apply a "pluggable" OLT product developed by Tibet.

SEGMENTATION

By Type Analysis

Increasing Data Centers, High-Speed Connectivity, and Flexibility to Grow the Adoption of Next-Gen PON

The market is segmented into EPON, GPON, and others (Next-Gen PON) as per type. As per our report, the others (Next-Gen PON) segment is growing at the highest CAGR, which is 15.2%, and is dominant in the type segment. EPON equipment is the first-gen device in the industry that offers speeds up to 500 Mbps to 1Gbps, which has now evolved to GPON and Next-Gen PON. However, the current GPON equipment can provide a high rate of 2.5Gbps. Additionally, the growing adoption of PON technology in data centers for high speed and security concerns are prime influencers contributing to the market share extensively.

By Component Analysis

Network Focus Investments by Governments for Infrastructure and R&D to Fuel the Market Growth

The market is classified into Optical Line Terminal (OLT), Optical Network Terminal (ONT), and Optical Distribution Network (ODN) as per component. As per the report, OLT equipment devices are reported to grow with the highest CAGR of 15.1% during the forecast period due to expanding network infrastructure and data center development. However, ODN equipment is observed to grow steadily in the market in line with the demand for OLT and ONT equipment. Thus, ONT in the passive optical equipment market observes major growth due to driving factors such as investment and infrastructure development to expand the market share progressively.

By Application Analysis

Exponential Network Subscribers and Emphasized Work from Home to Boost FTTX Application

PON devices are broadly used in various applications, which are further segregated into mobile backhaul and Fiber to the X (FTTX), where X denotes the user’s choice of location. It can be either home (FTTH), premise (FTTP), or even a building (FTTB).

As per our analysis, demand for PON equipment increased steadily, owing to the rapid boost of digitization that has raised mobile and home applications. Due to consumer internet dependencies and continual usage, technology solutions such as optical Fiber to the X have surfaced during the pandemic. They are expected to dominate the optical fiber and broadband industry with the highest CAGR of 14.8% over the forecast period. Furthermore, additional offerings by the industry players under FTTX to easily differentiate the consumer has made the product portfolio easier to handle and customize. Additionally, government initiatives to expand digitalization and internet penetration to far remote locations have boosted the application of mobile backhaul technology. Thus, the demand for premise network solutions and emphasized work from home by the information technology industry is strengthening the demand for Passive Optical Network equipment in the market.

REGIONAL INSIGHTS

The report covers an in-depth scope and deep-dive analysis of five main regions, North America, Europe, Latin America, Asia Pacific, and the Middle East & Africa.

According to our report, Asia Pacific is projected to hold the largest share owing to focused government initiatives and policies on extending digital capabilities and advancements in countries such as China, India, and Japan. At the same time, the prime player’s presence is estimated to secure decent growth with growing demand for FTTX solutions and ONT products in commercial and residential spaces and data center premises. Furthermore, digital infrastructure development and exponentially growing network subscriptions for technologies such as Next-Gen PON and GPON will support the stagnant optical network equipment market during the forecast period.

As per our analysis, China is dominant in the Asia Pacific region as per mass population count, availing internet access and growing technology upgrades in the country for advanced capabilities in domains such as manufacturing, supply chain, information technology, and many more. Also, the growing telecom industry and internet service provider user acquisitions have helped the progress of PON equipment. The rising youth population and growing internet penetration in developing countries, such as India and Japan, are building a strong share of PON devices in the industry. Additionally, the expansion of 5G technology across India and other Asia Pacific regions and strong government policies and investments have uplifted the adoption of Next-Gen PON technology. This technologically advanced equipment and PON solutions are expected to expand the global market size of PON equipment.

Passive Optical Network devices demand in North America is proposed to grow progressively during the forecast period, where increasing demand for equipment such as OLT intensifies internet speed on both upstream and downstream is dominating the market. Furthermore, market insights reveal that end-users invest largely in the R&D of PON device development. Also, increasing investments and government programs to develop optical network infrastructure support PON device sales. While the adoption of Fiber to the Home solution (FTTH) in the U.S. has escalated the demand for PON equipment. Additionally, government investments to expand the telecom industry's significance are complimentary boosters progressively uplifting the Passive Optical Network market growth.

For instance, in December 2022, Axion reported that the U.S. government is planning an investment of USD 1.5 billion to advance telecom infrastructure with the help of companies such as Nokia Telecommunications Company, Telefonaktiebolaget LM Ericsson, and Samsung Electronics Co Ltd.

The Europe market is growing steadily as the government emphasizes greener equipment solutions owing to rising electricity prices and environmental concerns. Increasing demand for OLT devices to avail uninterrupted data services and low latency by end-users for video chatting, video streaming, telephonic signals, and telecommunication channels positively supported the market’s growth. Additionally, end users’ rising disposable income and consumer spending on FTTH connectivity adoption of PON devices among the premises fuel the market growth.

For instance, in December 2022, the latest FTTH Council Europe report highlights that the number of users that opted for fiber-to-the-home (FTTH) services and fiber-to-the-building (FTTB) has grown from 172 million to 182.6 million homes by the year 2020.

The Latin America market will observe substantial growth during the forecast period. The growing internet penetration rate across zones such as Mexico, Brazil, Argentina, and others is fueling the demand for PON devices. In our market analysis, the EPON segment is growing substantially due to factors such as demand for high-speed internet services, technological advancements, and investments focusing on greener, sustainable network solutions to boost passive optical infrastructure development. Additionally, users seek advanced optical network terminals to acquire a prominent market share in the forecast period for easier network amplification and reduced latency.

For instance, in November 2021, according to a report by the Mobile Economy Latin America, the mobile subscribers count in the Latin America region is estimated to be 485 million by 2025, from 450 million in 2021.

The Middle East & Africa to showcase moderate growth owing to the increasing adoption of Passive Optical Network devices for smooth internet connectivity and advanced security. The equipment provides easy web installation and advanced user capabilities to switch multiple ports with low latency: region-specific digitalization and growth of digital significance through Next-Gen PON equipment to grow internet connectivity and penetration. OLT equipment and demand increased prominently in the pandemic for fluent internet connectivity and applications in the FTTH segment, which is expected to dominate the market for Passive Optical Network devices.

For instance, according to Fiber Broadband Association (FBA) and FTTH Council compiled data, United Arab Emirates UAE is ruling the global FTTH/B subscriptions with 97%, followed by Qatar’s 84%. 

KEY INDUSTRY PLAYERS

Active Upgrades and Key Players’ Acquisition Strategies Helped Acquire a Consistent Market Share

Key industry players have observed its deficit presence in the global passive optical-related equipment market and a sudden demand for a reliable and consistent network solution. The global market of Passive Optical Network is fairly consolidated, with the strong presence of the top 10 key players holding the market’s largest share. Also, expanding the portfolio of small emerging players in the sector to grow their company and offerings among consumers is helping to acquire larger consumer responses and consistent market share during the forecast period.

• September 2022: Vecima Networks Inc., a leading network solution provider, has expanded its product portfolio by launching its Entra EXS1610 All-PON 10G solution. The EXS1610 supports widely deployed products of PON standards, which include EPON, GPON, 10G-EPON, and XGS-PON.


• February 2022: MR Organization Limited (MRO), an Ahmedabad-based PON equipment and rotatory machinery parts manufacturer company, acquired the U.K.-based Standard Air Limited part supplier of PON equipment.

LIST OF KEY COMPANIES PROFILED:

• ADTRAN, Inc. (U.S.)


• Calix, Inc. (U.S.)


• Ciena Corporation (U.S.)


• CISCO SYSTEMS, INC. (U.S.)


• Huawei Investment & Holding Co., Ltd. (China)


• Infinera Corporation (U.S.)


• Nokia Corporation (Finland)


• Telefonaktiebolaget LM Ericsson (Sweden)


• TP-Link Corporation Limited. (China)


• ZTE Corporation (China)

KEY INDUSTRY DEVELOPMENTS:

• October 2022: ZTE introduced the telecommunication industry's one-of-a-kind Combo PON solution products that apply both XG-PON and GPON for the FTTX. This solution has become popular among service providers due to its quality, compatibility, and ease of use.


• July 2022: In collaboration with Cambodia’s leading internet service provider SINET, Nokia deployed its next-gen XGS-PON solution to address the ultra-high-speed internet demand from enterprises.


• July 2022: Cityfibre, a leading British telecom company, has agreed with Calix Inc. and Nokia to upgrade its existing GPON solution to the 10Gbps XGS-PON Technology. The aim was to build an open-access network that could easily connect up to 8 million premises in 285 cities.


• June 2022: Metronet, an independently owned, U.S. largest fiber network optic provider, has announced the deployment of Nokia’s latest next-gen PON technology. The company aims to deliver 10Gbps speed in eight new markets with larger than planned communities.


• September 2021: Orange España, a leading mobile network operator in Spain, has raised its internet speed with the commercial deployment of its new service that uses the XGS-PON technology to provide higher rates to individuals and companies.

REPORT COVERAGE

The research report covers a detailed depth analysis of the type, component, and application of the product. It provides information about leading players in the market and their business overview, product offerings, investments (R&D and expansions), revenue analysis, types, and leading applications of the product. Besides, it offers insights into the competitive landscape, SWOT analysis, and current market trends and highlights key drivers and restraints. In addition to the abovementioned factors, the report encompasses several factors contributing to the market's growth in recent years.

Report Scope & Segmentation