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The global fiber optics market size was valued at USD 4.48 billion in 2019 and is projected to reach USD 9.73 billion by 2027, exhibiting a CAGR of 10.3% during the forecast period. The growing need for reliable, high speed and scalable communication infrastructure network has led to the high adoption of optical fiber. It is ten times faster than standard cables and carries much more data than copper cables of the same diameter. For instance, Fiber to the Home (FTTH) deployments by AT&T Fiber and Verizon Fios delivers ultra-fast file uploads and can deliver 4K videos seamlessly. The companies are continuously making efforts to make innovations in fiber networks to decrease the optical distribution network (ODN) construction and operations and maintenance (O&M) costs.
These efforts, as well as features like high bandwidth connectivity of optical fiber, are expected to drive the emerging technologies like the Internet of Things (IoT) and 5G among others. Even though 5G is more into wireless connection, fiber connectivity is expected to play an important role in network infrastructure. Fiber connectivity can fulfill the aptitude of handling the vast amount of backhaul traffic generated in 5G.
However, the COVID-19 outbreak has greatly impacted the fiber optic industry. Owing to the lockdown imposed by most of the countries across the globe, manufacturing industries are enforced to shut down their units. These stringent guidelines have badly affected the production and demand for fiber optics components and created supply chain and market disruption. The market has many multifaceted supply-chain pathways, with assemblies fleeting from manufacturers and consumers through primary contractors, installation contractors, system integrators, subsystem manufacturers among others.
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Emergence of IoT and Cloud Computing to Drive the Need for Better Connectivity in Workplaces
The advent of IoT and cloud computing has driven the need for higher bandwidth and better connectivity in workplaces and commercial office buildings. Fiber optics is considered the ideal solution as it provides a reliable, and secure connection among IoT devices. The IoT devices can be at any point across the supply chain, at a worksite, in an assembly line, in a factory, or a warehouse. The fiber connectivity helps in data transmission among devices which further aids in processing the information. Moreover, in environments where it is difficult for wireless networks to operate, optical fiber components can be the best means for transmitting and handling data in such areas. For instance, in the oil and gas industry, optical fiber helps in sensing and monitoring large amounts of data such as asset locations, temperature, and oil reserve levels among other applications. As the data transmitted through the fiber is in the form of a light beam, it replaces the bulky equipment while reducing space, the weight of the material, and the cost incurred in logistics. This results in simplified data transmission, enhanced security parameters, and product automation.
Likewise, fiber connectivity is a great choice for cloud computing as it enables businesses to streamline their workflow. Currently, more and more companies have embraced cloud computing for data storage or customer relationship management (CRM) tools or in other business operations. The higher bandwidth and speed capabilities are the major reasons for the wide-scale adoption of an optical fiber by companies. The organizations looking for cloud providers are mostly opting for the ones that offer optic connectivity owing to its superior performance, unlimited speed, and enhanced security. Thus, the need for higher bandwidth and better connectivity in IoT and cloud computing is trending in the market.
Growing Preference for Fiber Optics in Smart City Projects to Fuel the Market Growth
In smart cities environment, interconnected and interrelated technologies play an important role in transferring, capturing, and translating data into meaningful information to develop and strengthen urban infrastructure. High-speed fiber connectivity helps in delivering a massive amount of data from one end to the other end through communications infrastructure. It plays a major role in autonomous drones to survey lands, surveillance systems for crime prevention, traffic management systems to prevent accidents, or tackle congestion and smart buildings to support sustainable living. For instance, one of the cities named ‘Fullerton’ in California, the U.S. is on the verge of becoming the first fiber city in the country. SiFi Networks, an optical fiber network developer, has been given the contract to provide open access network which would pass through every home and office in the city. Thus, the growing use of optical fiber is expected to reshape the smart cities, while boosting the global fiber optics market growth.
Adoption of Fiber-based Internet Connection by Businesses to Propel the Market Growth
In the fast-paced business world, the need for higher bandwidth and faster speed connections has become more prevalent. To meet these needs, businesses are switching from typical copper or wire internet cables to fiber-optic internet connection. Larger organizations are integrating optical fiber components with their voice over IP (VoIP) telephony to witness an impressive level of business communications. Also, the incorporation of fiber connectivity in the organization persuades a working environment with fast internet speed. High internet connection offered by finer connectivity makes it easier for businesses to access customer relationship management (CRM) tools and cloud-based services with minimum or no delays. Unlike copper wires, fiber cables are not susceptible to harsh weather conditions. It also eliminates unplanned downtimes that may cost users time and money. Besides robust internet connection, optical fiber provides higher bandwidth which helps companies to stream training videos in high definition, perform web conferences, and share files without experiencing delays. Thus, internet accessibility through fiber connectivity is quite a new tool for businesses, it is swiftly gaining traction in the industry.
Large Capital Expenditure is Hindering the Growth of the Market
The cost incurred while implementing fiber connectivity is very high for service providers. Therefore, most of the companies prefer old infrastructures such as digital subscriber line (DSL) and coaxial cables. However, owing to the fewer maintenance costs and benefits associated with optical fibers, most of the countries are planning to invest in the finer connectivity. However, complex laws are prohibiting countries from installing their fiber on the grounds which is putting them in competition with private businesses. As per BroadbandNow, in the U.S., even though fiber is considered as the fastest home internet option, its availability is still limited. The report stated that, by far March 2020, Chicago has only 21.0% fiber availability, while Dallas has about 61% availability, which is considered as highest compared to major cities in the U.S.
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Hardware Segment to Capture the Largest Market Share
Based on components, the market is categorized into hardware, software, and services. The hardware segment is further sub-segmented into optical fiber cables, connectors, adapters, attenuators, modules/enclosures, and others. Similarly, the services segment is further categorized into professional and testing services. Among these, the hardware segment holds the largest market share, whereas, the services segment is projected to be the fastest-growing segment during the forecast period.
Hardware components like cables, connectors, adapters among others offer higher bandwidth and can transmit data over larger distances. These components are also very less vulnerable to electromagnetic interference. These features of fiber connectivity make it ideal for high performance and long-distance data networking and telecommunications.
The fiber testing services are conducted by technicians, installers, project managers, contractors, and engineers to understand and correctly measure the performance of fiber infrastructures. Some of the testings are fiber end-face inspection, fiber continuity test, optical loss measurement, optical power measurement among others. However, optical fiber testing requires an understanding of principles that are slightly different from analog wire testing.
Telecommunication Segment to Dominate the Market throughout the Forecast Period
Based on application, the market is segmented into telecommunication, smart cities, power utilities, aerospace and defense, industrial automation and control, renewable energy, and others. Among these, telecommunication is expected to dominate the market during the forecast period. The smart cities segment is expected to exhibit the highest CAGR in the near future.
Fiber technology is expected to play a vital role in the growth of the global telecommunications industry. In telecommunication infrastructure, low attenuation characteristics and high bandwidth capabilities offered by optical fiber make it ideal for gigabit transmission. The fiber connectivity is also used in SONAR and seismic waves as wiring in submarine, aircraft, and automobiles, and in various industrial settings. Similarly, financial institutes and large corporations have started using fiber connections to secure their systems as security features of optical fiber is a major benefit for them.
The smart cities environment makes use of interconnected technologies and infrastructure to communicate and analyze data. The use of fiber in smart cities provides the communications and network infrastructure to transfer huge volumes of data to cloud-based systems.
Asia Pacific Fiber Optics Market Size, 2019 (USD Billion)
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Geographically, the global fiber optics market is studied for five major regions, namely North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America. They are further categorized into countries.
Among these regions, Asia Pacific captures the highest share, whereas Europe is projected to be the fastest-growing region during the forecast period.
In recent years, China accounted for the highest demand for optical fiber cables. The telecom operators in China have installed fiber in almost every telecom application right from intercity, intra-city to mobile cellular systems. Chinese government authorities and companies are embracing fiber optical systems in an electric power grid, pipelines, highways, railways, airports, data centers, among others. Further, the emergence of 5G is expected to increase the demand for fiber in the coming years in China and other Asian countries.
In North America, the need for a higher capacity network has encouraged companies to opt for optical fiber networks for both fixed telephony and mobile services. As per the study conducted by Fiber Broadband Association and RVA in 2018, fiber has been deployed in around 41 million homes in the U.S. and connects 18.6 million homes. Moreover, the U.S. has seen a 17.0% increase in fiber deployment at homes since 2017. In Europe, increasing the need for high bandwidth for communication and data services has increased the demand for this technology. The FTTH Council Europe is continuously accelerating the availability of fiber-based high-speed networks to businesses and consumers.
The Middle East and Africa and Latin America are expected to show significant growth in the coming years. In Latin America, telecom operators are pioneering to set up a development path towards full-fiber networks. The major operators are racing towards to increase FTTH investment and push forward their full-fiber strategies.
CommScope Follows Collaboration and Partnership Strategy to Sustain in the Market
CommScope design and manufactures a wide-ranging portfolio of fiber-optic cables in the form of a loose tube, central tube, single-mode, and multimode fiber. The fiber-optic cables are classified into three groups namely, outside plant cables, indoor/outdoor cables, and premise cables. The outside plant cables are used for outdoor applications like underground, aerial, and direct burial. Likewise, indoor/outdoor cables are designed in such a way that it can pass from the outside to the inside intact, without the need to switch from one cable type to another. The premise cables have the capability to handle the pressures of indoor applications. To retain its position in the market, the company has started collaborating with other companies to extend its product portfolio.
Companies like ADTRAN, Inc., Adtell Integration, and Broadcom Inc. Among Others Aims at Offering Cost-Effective and Specialized Custom Solutions
The key companies in the market are focusing on strengthening their customer base by designing unique and advance solutions and engaging in collaboration and partnership activities. Since the need varies from business to business, these players mainly aim at providing customized and cost-effective solutions, adhering to stringent requirements. Even though it is a newer technology compared to traditional, many businesses have gained higher returns on their investment in fiber. Its reliability and speed of transfer are the major factors attracting businesses to invest in fiber technology.
An Infographic Representation of Fiber optics Market
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The report offers qualitative and quantitative insights on fiber optics and the detailed analysis of market size & growth rate for all possible segments in the market.
Along with this, the report provides an elaborative analysis of market dynamics, emerging trends, and competitive landscape. Key insights offered in the report are the adoption of fiber optics by individual segments, recent industry developments such as partnerships, mergers & acquisitions, consolidated SWOT analysis of key players, Porter’s five forces analysis, business strategies of leading market players, macro and micro-economic indicators, and key industry trends.
Value (USD billion)
As per our (Fortune Business Insights) study, the global market is predicted to reach USD 9.73 billion by 2027 with a CAGR of 10.3% (2020 -2027).
In 2019, the market value stood at USD 4.48 billion.
The market is projected to grow at a CAGR of 10.3% during the forecast period (2020-2027).
The fiber optic adapters are expected to show the highest CAGR owing to its wide use in these connections.
The Asia Pacific dominated the market owing to the presence of a large number of these cables providers in China
The testing services segment leads the market owing to its use to correctly measure the performance of fiber infrastructure
The smart cities segment is the fastest-growing segment in the market as fiber optic helps in transferring huge amounts of data to cloud-based systems.
The huge cost incurred while implementing new fiber-optic lines to refrain the market growth
Adoption of fiber optic internet connection by businesses is driving the growth of the market.
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