In the world of communications and networking, the year 2020 marked a turning point for communications service providers, as well as consumers and subscribers around the globe. 2020 was the year that fiber cemented itself as the preferred access technology of the future for a majority of operators. The catalyst for this strategic shift was the impact COVID-19 had on residential broadband network utilization rates, along with the dramatic increase in premium broadband subscribers around the world.

According to many operators around the world with cable, DSL, and fiber broadband networks, upstream peak traffic growth throughout 2020 increased over 50%, while downstream peak traffic growth increased 30%. In the early days of lockdown, operators reported staggering 125% increases in peak upstream and downstream growth, which ultimately leveled off as software adjustments were made to network platforms, and new capacity in the form of line cards and upgraded CPE was added.

Although the world is gradually returning to normal, with teleworkers moving slowly back into their offices, there is simply no turning back now for broadband subscribers who either upgraded or switched to FTTH services. The near-symmetric speeds pushing 1Gbps and beyond, the resulting elimination of buffering for streaming video, and the near-flawless performance of online and VR gaming, and video conference calls are more than enough to warrant holding on to their premium broadband.

As a result, we expect global FTTH subscribers to continue to expand on a global basis, with the highest growth (by percentage) to come from Europe, North America, and CALA, where fiber penetration rates remain below 50% for most countries in each region (Figure 1).

Related blog: 5-Year Forecast—Broadband Spending to Remain Strong Through 2025

 

Fiber expansion will rely on a wide range of technologies

The fiber expansion in 2020, which saw total spending on PON equipment jump 8%, involved multiple technologies—from 1G EPON and 2.5G GPON to XG-PON and XGS-PON. While the clear trend among operators is to expand their fiber services using 10G technologies, there are still hundreds of operators who will continue to rely on 2.5G GPON as the workhorse for their fiber networks for years to come.

The diversity in PON technology choices specifically reflects the fact that fiber networks are no longer being considered for just residential applications. Instead, the same fiber networks that deliver residential services are now also being used for business and wholesale access. Additionally, the global expansion of 5G networks and continued small cell densification are opening up opportunities for 10G technologies to be used in both mid-haul and backhaul applications.

For operators considering a fiber deployment or network expansion, the key decision points used to be “how many homes can I pass?” and “what percentage of those homes will become subscribers?” While those remain critical metrics, the ROI equation for fiber networks has become increasingly easier given that the additional revenue potential from wholesale and business services, in addition to providing mid-haul and backhaul functions for a growing network of 5G small cells. The application and technology roadmap for PON networks and technologies has become much clearer, making it much easier for operators to justify the initial construction and buildout costs of their fiber networks.

Adding more incentive for operators to expand their PON networks has been the growing commercial availability of combo cards and optics, which can support 2.5G GPON, XG-PON, or XGS-PON from the same platform. These multi-technology options allow operators with existing PON deployments to begin the process of upgrading their networks to 10G on a gradual basis, without having to do a flash cut of entire service areas. Instead, operators can continue to deliver 2.5G GPON services to the bulk of their residential subscribers, while allocating XGS-PON wavelengths to business or high-end residential subscribers. Operators can then spread out the costs of more expensive 10G ONTs across a longer period of time.

More importantly, combo cards and optics don’t force operators to change any aspects of their existing ODN (Optical Distribution Network), allowing them to continue amortizing those initial construction and equipment costs over a longer period of time. From feeder and distribution cables to ducts, poles, and splitters, the co-existence of multiple PON technologies and re-use of the existing ODN is critical for operators around the world.

Related video: Cable and FTTH Subscriber Growth Pushes Q4 Broadband Access Equipment Spend Up 3 Percent Y/Y

 

Ensuring the fiber experience in the home, not just to the home

With more operators spending the time and money to roll out or expand their fiber networks and with competitive threats from other broadband providers not slowing down, operators are increasingly pushing fiber inside homes, not just to the front door. In cases where it is not feasible to run fiber throughout the home, operators are moving quickly to provide residential gateways that support WiFi 6 speeds and services and complementing those with additional mesh satellites when homes have WiFi dead spots.

By extending service into homes, operators can now remotely monitor the performance of in-home WiFi networks while also offering subscribers additional services, such as parental controls, bandwidth-on-demand, as well as bandwidth boosts by device or by application. As more IoT devices and sensors are introduced in homes, the combination of gateway software platforms, such as OpenWRT, prpl, EasyMesh, and RDK-B plus WiFi 6 gives operators an advanced set of features and options to package for their subscribers so that they can better manage and monitor the performance of all these new IoT devices.

Specifically in the case of providing bandwidth-on-demand services, fiber networks provide the most flexibility for scaling upstream and downstream bandwidth based on individual subscriber requests. Cable networks are limited in how much upstream bandwidth can be allocated, unless they move to a full-duplex architecture, which is both costly and time-consuming.

In a growing number of cases, operators are eliminating any concerns they might have about in-home wiring and WiFi performance by offering to extend fiber directly to multiple locations within the home. China Telecom and China Mobile are expanding their in-home ONT projects to ensure near-gigabit speeds to all devices in the home. Though not all fiber providers around the world will follow these operators’ lead due to higher labor costs, there are more operators considering the move as it truly future-proofs their networks and services and further cements their relationship with subscribers.

 

Sharing best practices to move the industry forward

Over the last decade, operators have been benefitting from the lessons they’ve learned during their own fiber deployments and sharing those lessons with the industry. From securing right-of-way and building access to micro-trenching techniques to the optimal deployment of ODN infrastructure and components, the cost and complexity of deploying fiber networks have been significantly reduced. The sharing of best practices among operators has resulted in the identification of consistent problem areas that can add unnecessary costs or delays to a fiber network rollout. For example, a major portion of the time and cost of last-drop fiber deployments is around digging trenches and burying new ducts within those trenches. Over time, operators have learned to identify ducts or trenches that are already in place so they can re-use that existing infrastructure rather than starting from scratch. This situation is becoming more common as multiple operators roll out fiber to new small cell locations, business parks, or extend feeder fibers into neighborhoods for cable node splits.

Additionally, reducing labor costs and rollout delays by using pre-connectorized fiber is an industry best practice that has evolved over time. Using pre-connectorized fiber eliminates the need for on-site splicing and also expands the labor pool of technicians who can complete a subscriber connection.

As an increasing number of operators deploy fiber in different countries with various topography, regulatory restrictions, and labor pools, the industry as a whole will benefit, further providing operators with more knowledge and more incentive to take the plunge and deploy their own fiber networks.

 

Fiber Everywhere

The global trend toward the deployment and expansion of fiber networks has never been clearer. What began in a handful of countries just a decade ago has proliferated to hundreds of countries and thousands of network operators globally. Fueled by new applications, new subscriber requirements, and new competition, operators clearly see their networks of today and tomorrow relying on fiber. The road map for fiber technologies and use cases continues to expand, along with the knowledge and implementation of best practices. Those two trends alone will continue to provide operators with strong incentives to deploy fiber and future-proof their networks for decades to come.

Finally, network equipment vendors are expanding their product and service portfolios to become more comprehensive partners to fiber providers. From in-home networking equipment to ODN infrastructure and central office equipment, these suppliers are adding network design and consulting capabilities to help their service provider customers reduce the cost of deploying fiber networks and speed their time to market.

Related blog: Predictions 2021– Broadband Access and Home Networking Market

Subscriber and Bandwidth Growth Will Remain Key Catalysts

Global spending on broadband access equipment and CPE is expected to drop only 2% in 2020, a significant improvement from our July 2020 forecast, which anticipated spending dropping by 7% in 2020. The combination of significant residential subscriber growth and increased capacity utilization rates noted by global broadband providers nearly offset the negative impacts of trade tussles, component shortages, and labor limitations.

In the first half of 2020, we heard from countless service providers that their projected capacity utilization rates for the entire year were reached by March or April. A second surge in consumption in the fall, driven by children returning back to school and attempts at re-opening economies forced many operators to add even more capacity. With much of the world still dealing with the impacts of the COVID-19 pandemic and with remote work and online education continuing well into 2021, we see no slowdown in broadband capacity utilization, forcing service providers to once again balance accommodating traffic growth with managing overall spending. Continuing RAN investments will force service providers to spend judiciously on their broadband networks. In certain cases, this will mean delaying longer-term strategic projects and focusing on addressing immediate capacity upgrades and onboarding a higher-than-average volume of new subscribers.

PON Equipment Spending Expected to Remain Solid

Our five-year CAGR for PON equipment has been increased to 3% from just under 1%. China, which has historically accounted for anywhere from 65-80% of total PON spending, has peaked in terms of total ONT units consumed on an annual basis. The Chinese FTTH market has matured, with broadband penetration in the country reportedly nearing 80%. Though subscriber growth is slowing, there is still a tremendous installed base of subscribers that will continue to require new ONTs.

Although China’s ONT volumes are coming down from the peak years of 2017 and 2018, additional growth is expected from the rest of the world—particularly North America and Western Europe. In North America, the FCC’s $20B RDOF (Rural Digital Opportunity Fund) program will help transition a significant number of rural areas to fiber over the next 5-7 years. In Western Europe, major operators including Orange, DT, BT OpenReach, and Proximus are all expanding their fiber rollouts and even moving quickly to XGS-PON for symmetric 10 G services.

Finally in Asia, India, Indonesia, and Malaysia, along with a 10 G upgrade cycle in Japan and South Korea should also help sustain the market.

Cable Infrastructure Spending Set for Growth

The glut of DOCSIS channel capacity that helped push down cable equipment revenue in 2018 and 2019 was actually beneficial to operators in 2020 as they were able to address significant increases in both upstream and downstream traffic during the pandemic with minimal increases in spending. In most cases, cable operators used the software tools available as part of DOCSIS 3.1 to ensure adequate bandwidth for all subscribers. In other cases, operators purchased additional DOCSIS licenses as part of accelerated node split programs to address systems with the greatest need.

Regardless, after two years of under-investing in infrastructure, the overall cable infrastructure market will see a steady increase in revenue throughout our forecast period, as mid- and high-split projects in North America and Western Europe, designed to increase upstream capacity, are accelerated. Investments in outside plant equipment, particularly new amplifiers and taps, will also continue as operators begin the multi-year process of preparing their networks for DOCSIS 4.0 and its ability to enable extended spectrum DOCSIS (ESD), low-latency DOCSIS, and full-duplex DOCSIS (FDD).

 

About the Report The Dell’Oro Group Broadband Access  and Home Networking 5-Year Forecast Report provides a complete overview of the Broadband Access market with tables covering manufacturers’ revenue, average selling prices, and port/unit shipments for Cable, DSL, and PON equipment. Covered equipment includes Converged Cable Access Platforms (CCAP), Distributed Access Architectures (DAA), DSL Access Multiplexers (DSLAMs), PON Optical Line Terminals (OLTs), Customer Premises Equipment ([CPE] for Cable, DSL, and PON), along with SOHO WLAN Equipment, including Mesh Routers. For more information about the report, please contact dgsales@delloro.com.

Broadband Spotlight Will Continue to Shine in 2021

At the close of each year, we analysts like to simultaneously look forward and look backward, reviewing the predictions we got right or wrong from the previous year and then putting forth our best bets for which technology trends will define our coverage areas in the coming year.

I just re-read my post from last year, which was full of optimism for WiFi 6, mesh networking, and zero-touch provisioning for home networking, as well as XGS-PON, mid-, and high-split upgrade projects on the infrastructure side of things. While most of those predictions came true, the context surrounding them could not have been any more unexpected.

In the world of broadband access and home networking, the COVID-19 pandemic has changed everything. Before the pandemic, fixed broadband network traffic was growing annually at a pretty predictable clip. But with the transition to teleworking and virtual education combined with a significant increase in video traffic related to streaming and online gaming, overall traffic and bandwidth surged by anywhere from 50-150% in just a matter of weeks. More importantly, the surge wasn’t just limited to peak busy-hour traffic. It extended throughout the entire day, putting a strain even on oversubscribed networks that forced network operators to reach quickly into their toolboxes to accommodate the consistent demand.

Cable operators responded to the increased traffic demands by segmenting their existing nodes and pulling forward mid- and high-split upgrade projects to increase upstream bandwidth. Those efforts will continue in 2021, resulting in continued increases in upstream channel license purchases. In particular, cable operators are expected to ramp up their purchases of OFDM-A licenses (Orthogonal Frequency-Division Multiple Access) for their DOCSIS 3.1 networks. OFDMA improves spectral efficiencies for upstream traffic, providing significantly more upstream bandwidth for subscribers without necessarily having to move to a full high-split architecture.

Sticking with cable, 2021 will see a steady increase in operators adopting distributed access architectures (DAA), including both remote PHY and remote MACPHY products. As operators continue to look across their existing node base, they are going to run into situations where they have already segmented their nodes as much as they can. These nodes are the first ones that will be swapped out with DAA nodes or augmented by R-PHY shelves in order to continue to meet growing capacity demands among those service groups. Those R-PHY deployments will also result in a corresponding increase in vCCAP server and license purchases this coming year.

2021 will also see an increase in the deployment of vCCAP platforms for cap and grow applications not directly tied to DAA deployments. There are plenty of projects underway with multiple vendors to cap investments in traditional CCAP platforms to either reduce headend rack space or power consumption or, more practically, because operators have maxed out the switch fabric or line card capacity of their current platforms.

Fiber Expansion Will Continue

The switch from copper to fiber among the world’s largest telcos really became clear in 2020. That trend will accelerate in 2021, in particular, because of the investments made this year in new optical line terminal (OLT) ports. Operators throughout North America, EMEA, and CALA switched more of their capex towards expanding their fiber networks than sustaining their DSL networks. This was clear at Telmex, BT OpenReach, and others. Major projects at Deutsche Telekom, Orange, Proximus, and elsewhere will drive not only more fiber expansion but 10 Gbps deployments using XGS-PON.

Fiber access networks are on the verge of a major tipping point, driven by the simultaneous catalysts of the shift to next-generation fiber technology and the shift to openness, disaggregation, and automation. The world’s largest broadband providers are quickly realizing that the need for increased throughput is matched by the need for a highly-scalable network that can respond quickly to the changing requirements of the service provider, their subscribers, and their vendor and application partners. The need to provision and deliver new services in a matter of hours, as opposed to weeks or months, holds just as much priority as the ability to deliver up to 10Gbps of PON capacity. Although service providers might have completely different business drivers for the move to open, programmable networks, there is no question that the combination of data center architectural principles and 10G PON technology is fueling a forthcoming wave of next-generation fiber network upgrades.

The service providers that adopt the combination of 10Gbps PON and openness will be best prepared to accomplish three major goals:

1. Deliver the advanced, 10Gbps capacity, and multi-gigabit services subscribers will expect and require using a cloud-native infrastructure that treats bandwidth and the delivered applications as workflows;
2. Anticipate and whether rapid increases in traffic demand with a highly-targeted and elastic infrastructure that can be activated without a forklift upgrade;
3. Develop an access network infrastructure that can process multiple workloads beyond broadband access, including hosted services that can be offered on a wholesale basis, as well as fixed-mobile convergence applications.

WiFi 6 Will Dominate the Home Networking Market

One of the biggest trends we will be talking about is a fundamental shift in how consumers and service providers think about home networking. There is a confluence of technologies all reaching the market at the same time that will positively impact the capabilities and management of home networks:

• WiFi 6: For many years now, the evolution of WiFi has been focused on improving two key technical attributes: speed and range. WiFi 6, however, is the first iteration to take a more holistic view of wireless technology that encompasses not only improvements in speed and range, but also network intelligence, analytics, and power efficiency. WiFi 6 also has the capacity to dramatically improve how service providers will be able to provision, manage, troubleshoot, and analyze their in-home networking services. It provides options for the remote, zero-touch provisioning of devices and services, as well as the automatic adjustment of WiFi channels to ensure peak performance
• 6GHz Spectrum and WiFi 6E: With so many new connected devices competing for available channels and bandwidth on both the 2.4GHz and 5GHz frequency bands, the WiFi Alliance is introducing WiFi 6E, which uses the unlicensed 6GHz band. In 2020, we expect that many countries will provide access to the 6GHz band, which will mean a huge chunk of unused spectrum for the growing number of residential and enterprise WiFi devices. More importantly for cellular operators rolling out 5G networks, the 6GHz spectrum band will allow them to provide seamless handoffs to mobile devices in homes and offices where their networks might have difficulty penetrating walls and treated windows. There has been much discussion around the pending boom in AR (Augmented Reality) and VR (Virtual Reality) applications for a number of years now. With the availability of the 6GHz spectrum, those applications can in theory be delivered without fear of latency due to channel contention. 6GHz will provide 14 additional 80MHz channels and 7 160MHz channels which will be needed for these intense, high-bandwidth applications.
• Simplified Control: If you were to compare the UIs of home gateways and routers from just two years ago to those available today, you’d be hard-pressed to find an area that has seen a more positive evolution. But 2020 will see even more transformation in an effort to give subscribers total and intuitive control over their broadband subscriptions. One of the areas we expect to see the most growth is in voice control of broadband services. Google’s Nest WiFi mesh systems now include voice control and allow users to verbally turn on a guest network, reboot the system, and initiate parental controls and speed tests. Quietly before the end of 2019, Amazon announced Alexa-enabled voice control of its own eero routers, as well as those from ARRIS/Commscope, Asus, Belkin, Netgear, and TP-LINK. The feature is called Alexa WiFi Access and we expect to see this service integrated across a wider range of devices throughout the year, including being integrated into service provider-supplied gateways, particularly from US cable operators.

These technology developments, coupled with a ratcheting up of the competition between service providers and consumer electronics companies for home network dominance will result in consumers receiving substantially better control of their own WiFi networks in 2021.

 

At this year’s virtual Cable-Tec Expo, four prominent themes have emerged throughout the online panels and technical presentations:

1. 1. Cable broadband networks have performed incredibly well during the COVID-19 pandemic, with minimal outages and minimal complaints from customers.
   2. Despite the reliability, there is a clear and pressing need to dramatically improve upstream bandwidth.
   3. Cable operators’ future is one of business, infrastructure, and service convergence, with their DOCSIS networks serving as the platform for fixed-mobile convergence on a large scale.
   4. Convergence at all levels will be driven in part by the evolution of a common control and management plane across all networks and services.

I’ve dealt with the first two topics earlier this year in multiple blog posts and articles. Those two themes will certainly continue to evolve and have an impact on cable operator spending and strategic priorities for their access networks for the next year.

With this blog, I do want to spend some time considering the overall impact of convergence on cable operators’ long-term strategic plans, especially when it comes to their desire to become both fixed and mobile network operators.

The FCC’s auction of 3.5GHz CBRS licenses, which concluded in August, yielded few surprises when it came to the leading purchasers of the spectrum. Verizon and Dish Network led all bidders in terms of money spent, with Comcast, Charter, and Cox rounding out the top 5. Other major cable bidders included Mediacom, Midcontinent Communications, Shentel, and Cable One.

Comcast and Charter have been signaling for some time that they intend to build CBRS-based mobile networks in their existing cable footprints in an effort to reduce the amount of money they pay Verizon and other MVNO partners to use their networks. Their MVNO operations were always intended as a way to build a subscriber base and a brand in advance of owning their own wireless networks, even if that meant consistent EBITDA losses.

Cox, which had entered the wireless space a decade ago, only to exit after disappointing results, has signaled its intention to re-enter the wireless market through the purchase of a significant number of CBRS licenses across its cable footprint.

Finally, Cable One has taken an interesting approach, acquiring CBRS licenses but also making investments in two fixed wireless ISPs (WISPs) to provide coverage in rural and less dense areas surrounding its cable footprint.

Though they have no intention, at this point, of becoming national carriers, cable operators can certainly become competitive in their current markets, offering bundles of fixed and mobile services with the goal of reducing churn and stealing away some market share from their telco rivals.

Let’s not forget that the largest cable operators already have a very dense network of millions of Wi-Fi hotspots either through their own doing (Comcast’s Xfinity) or through their CableWiFi Alliance. Additionally, most cable operators have been deploying advanced Wi-Fi gateways in residential and small enterprise locations that typically reserve a single SSID for either open CableWiFi or Xfinity Wi-Fi subscriber access. These hotspots can very easily be turned into 5G small cells, expanding and amplifying mobile network access for their subscribers.

The dense network of hotspots and access points that the largest MSOs already have in place combined with the licensed CBRS spectrum that they have acquired should give them access to 150MHz of spectrum that they can reuse across a larger number of subscribers per individual access point.

But that type of spectrum reuse will only be possible with a vast and far-reaching deployment of CBRS small cells. In fact, according to a fascinating paper by Cisco’s John Chapman presented at Cable-Tec Expo, it “can take 200 CBRS small cells to cover an area equivalent to the area covered by one LTE macrocell.”[1]

Though the deployment of such a huge number of small cells seems daunting and costly at first, Chapman goes on in his paper to show that existing and future DOCSIS networks are completely up to the task. Firstly, a large percentage of small cells deployed by cable operators will be strand-mounted, drawing power from the existing HFC plant. Those strand-mount small cells will be deployed in conjunction with small cells located in residences to expand coverage and capacity, such that cable operators could expect to see a small cell count of anywhere from 1 to 80 per optical node, depending on the density of the area being covered, the average span length, and the number of mobile subscribers being served.

Cable operators are very accustomed to thinking about their networks as a shared resource among households and subscribers and then adding capacity when utilization rates remain consistently above 70% for any particular service group. As MSOs have been pushing fiber deeper into their networks, reducing the average number of amplifiers per node, and deploying DAA nodes in an effort to improve MER (Modulation Error Ratios,) they have prepared themselves for an access network that can handle the variable requirements of both fixed and mobile traffic.

Chapman points out in his paper, DAA nodes and CBRS small cells are essentially performing the same function: They are both RF gateways that convert RF traffic to IP over Ethernet. As cable operators continue to add capacity to their networks by pushing fiber deeper and reclaiming spectrum used for broadcast video (which they have been actively doing during the COVID-19 pandemic,) there is more than enough bandwidth to backhaul fixed and mobile broadband traffic over their existing DOCSIS infrastructure. Furthermore, with the introduction of low latency DOCSIS and the new LLX (Low Latency Xhaul) protocol, the overall DOCSIS network can deliver the 2ms of latency mandated by today’s 5g services.

Finally, today’s virtual CCAP platforms are already evolving to provide flexible data and control plane functions across cable operators’ converging fixed and mobile networks. Services like DOCSIS, 1588 and SyncE, BNG, as well as PON, can all be containerized and isolated either physically or logically, depending on the operator’s preference. The virtual CCAP becomes the centerpiece for the control and management of a diverse collection of media gateways located in the outside plant, including DAA nodes, CBRS small cells, PON OLTs, Wi-Fi access points, and cable modems.

Cable’s path to convergence is clearer now than it ever has been, from a business and service perspective to an infrastructure perspective. Chapman summarizes his paper with two (of a number) of points:

• Today’s cable operators are tomorrow’s mobile operators
• Behind every great wireless network is a great wireline network

I am in complete agreement with him and would add that the efforts being made by vendors to realize this at the control and management planes suggest that they agree, as well.

[1] John T. Chapman, “Small Cell Traffic Engineering: How Many Small Cells are Needed for Proper Coverage,” SCTE Cable-Tec Expo, October 2020.