5G Standalone network rollouts have reached a critical mass in market maturity with high population coverage in 40 countries, seeding the market for more subscribers to jump on the 5G Standalone networks, experiencing higher downlink and uplink speeds, and inherently lower latency provided by 5G SA, fueling the 5G MCN market.
The total MCN market low point in revenue was 2024, and the market is projected to reach a historic high in 2026, since the beginning of the 5G era in 2020. Besides more subscribers migrating to 5G SA networks, new applications are becoming more scalable with the advent of Common Network Programmable APIs. Enterprise applications are expected to rise, fueling demand for more MCN capacity, especially at the edge on enterprise premises.
Another factor that will boost growth is the growing use of agentic AI. As agents work in the background on behalf of subscribers 24/7, the demand for more MCN capacity will increase.
In addition, the Voice MCN market will reach new revenue highs in 2026. The low point for the Voice MCN market was 2023. Feeding the trend to higher revenues are more networks migrating from Circuit Switched Core to IMS Core. These are primarily located in countries where MNOs are modernizing their Voice Core in their 4G LTE networks. Recently, we have seen upgrades to 5G VoNR (Voice over New Radio), which utilize the IMS Core and a new generation of Cloud-Native IMS Cores, providing a more scalable and flexible network to support new services. Enhanced immersive and interactive voice calls are enabled in 5G VoNR networks, and the introduction of the IMS Data Channel will provide competitive features to over-the-top applications, utilizing the smartphone’s native dialer.
Even though the 4G MCN market will decline as more subscribers migrate to 5G SA, the rate of decline is decreasing, driven by subscriber growth in countries that do not yet have 5G SA. Some MNOs are sunsetting their 3G MCNs, which increases demand for 4G MCN capacity.
In summary, we expect continued revenue growth in MCNs in 2026 as more 5G SA networks come on line as more subscribers are added to existing 5G SA networks, the rise of more enterprise applications utilizing Common Network APIs, the growing use of Agentic AI, enhanced immersive and interactive calling for the Voice networks, and 4G network decline in growth rates are adding up to an all-time high in MCN revenues in 2026.
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In the most recent 3Q25 market study, the Optical Transport market posted a 15% year-over-year (Y/Y) gain, moving us to raise our full-year outlook for 2025 and 2026.
It was more than just the market’s growth rate that led us to raise our forecast; it was the bandwidth. What I mean is that network capacity demand or bandwidth was back on the rise after two years of stalling. Here is a chart on DWDM Long Haul capacity shipment growth on a Y/Y basis for the past 3 years. As shown, new installations on backbone networks grew at a rate below the historical average of 25% to 30% for 9 quarters. This changed in the middle of 2025, and growth rates are now back above 25%.
Data center interconnect (DCI) accounted for most of the bandwidth growth over the past year, driven by large deployments from cloud providers. This trend is expected to continue through 2026 and remain a key market driver. However, it will now expand beyond traditional DCI. The new outlook suggests that the largest cloud providers are nearing a performance ceiling in some geographies due to power grid limitations. The good news is that a solution exists: scaling across multiple data centers to create a larger virtual AI factory.
Hence, we believe that, beginning in 2026, cloud providers will expand their AI data centers across multiple buildings about 100 km apart, requiring 800 ZR+ optics and optical line systems (OLSs) to tap into different electricity grids to run their power-hungry GPU compute clusters.
The optical equipment of choice for building new DCI networks, including for scale-across, will likely remain Disaggregated WDM, which accounted for nearly 40% of total Optical Transport market revenue during the first nine months of 2025 (the other 60% of revenue was mainly from large integrated systems). Also, as many of you know, the idea of disaggregating the WDM network originated with cloud providers.
For those unfamiliar with what we call Disaggregated WDM, here is a description: Disaggregated WDM is a product and architecture that promotes the independence of the main elements in a WDM network—transponders and optical line systems. As transponder technology continuously improved and reduced in size, the natural progression was to sell these subsystems as optical pluggable modules for use in WDM systems, routers, and switches. Additional factors that characterize Disaggregated WDM include open interfaces to eliminate vendor lock-in and small form-factor chassis to better align with a pay-as-you-grow model. We track the Disaggregated WDM market in the following major categories:
Transponder Units: Compact form factor that mainly houses the embedded or pluggable WDM transponders and is used in long-haul and metro deployments.
Optical Line Systems: Small chassis that mainly houses the amplifier (EDFA and/or RAMAN), optical add/drop multiplexer (OADM), and mux/demux.
IPoDWDM ZR/ZR+: In an IPoDWDM architecture, the pluggable WDM transceiver is placed in a router or Ethernet switch rather than a Transponder Unit. We account for the ZR/ZR+ optical plug portion in Disaggregated WDM.
Alongside DCI, we expect the positive trend among communication service providers (CSPs) to continue into 2026. In the third quarter of 2025, non-DCI revenue for DWDM Long Haul rose 14% Y/Y, indicating that demand for network backbone capacity goes beyond just cloud providers and AI expansions. We believe this non-DCI growth is particularly significant because it suggests that CSPs’ inventory correction is complete and their network bandwidth is starting to grow again. This likely means that CSPs will purchase even more optical transport equipment in 2026.
We have an optimistic outlook for 2026 and believe that the Optical Transport market will build on the positive momentum in 2025. We are eagerly looking forward to witnessing this continued growth and development unfold in the coming months and years.
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Looking back on 2025, we got a few things wrong and a few things right. One thing we got right is that 2024 was indeed the year that the Router market resets itself to a new baseline for future market growth. The part we got wrong was the steepness of the decline in 2024 and the speed of the market’s rebound in 2025, especially for Core Routers.
We expected the customer inventory surplus to conclude by the first half of 2024, which it did, but we did not expect that it would take another two quarters for new orders to flow through into revenue for the system houses. So, the market dropped nearly 20% in 2024 (more than we were expecting). Both communication service providers (CSPs) and cloud providers pulled down purchases through 2024, adding to the pain. But then came AI.
Right at the bottom, at the reset point for the Router market, cloud providers were accelerating their investments in building AI data centers, and companies were beginning to push out Agentic AI, autonomous artificial intelligence systems that adapt and learn to take over tasks that require reasoning. The result was an accelerated investment cycle in all things AI. But, more importantly for the router market, the need to interconnect or transport data outside the confines of the data center wall was beginning. This was evident in the numbers we captured in the 3Q25 survey process: Core Router revenues grew over 40% year-over-year (Y/Y) in the first nine months of 2025. It is becoming a V-shaped recovery, driven by the need for more wide area network (WAN) capacity and data center interconnect (DCI). So, this brings us to 2026.
Our preliminary view for 2026 is that growth rates will remain high, and the market momentum from 2025 will continue.
Cloud providers will continue building new AI data centers and connecting them to the WAN or neighboring data centers.
Since electricity is a scarce resource, cloud providers will build data centers in new geographic regions. And in many cases, we believe that cloud providers will leverage CSPs to help build their new routes and networks, increasing future spending by network operators.
Enterprises, in preparation for deploying AI Agents, will build AI-ready infrastructure to improve access speeds to cloud data centers, including adding more connections between their on-premises storage sites and cloud-based AI compute resources.
Building on this momentum, we believe there is a good chance that the 2026 results will surpass our expectations. But it depends on the answers to these questions:
Scale-Across DCI: Cloud providers are interconnecting their AI GPU data centers with massive amounts of bandwidth to form large virtual data centers using data center switches and ZR+ optics. However, we are not sure whether all of these scale-across DCI builds will use data center switches or whether some will use routers. Hence, the question is, will routers with deep buffers and WAN protocols be chosen for scale-across DCI when span lengths are too long for data center switches?
AI-Ready Infrastructure: We believe the early adopters are upgrading their infrastructure to be ready for Agentic AI. Will this become mainstream in 2026 or 2027?
Fronthaul: Fronthaul with routers had many false starts in the past decade. Hence, we are still cautious about its prospects before 6G. However, recently, there has been increased activity around eCPRI (enhanced Common Public Radio Interface) for fronthaul. So, will router fronthaul build-outs occur before 6G?
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The Microwave Transmission market has gone through some ups and downs, but at a high level, it has been relatively stable and less volatile than the other network equipment markets I track.
Past: 2024
For the full year 2024, the Microwave Transmission market declined by only 3%. While this was a decline, it was minor compared to the double-digit declines in the other markets, where customers pulled back new orders as they digested the excess equipment purchased during the pandemic. In fact, the Microwave Transmission market decline in 2024 was slightly better than we anticipated at the start of the year. The reasons for the market contraction were as follows:
Sharp decline in E-band equipment purchases in India, following a massive deployment cycle the previous year.
Procurement delays and order flow disruptions that followed the acquisition of Siklu and NEC’s microwave business (Ceragon acquired Siklu, and Aviat acquired NEC’s microwave business).
Slowdown in rolling out 5G networks as operators began to question its return on investment (ROI).
Weaker macroeconomic conditions, including:
slower GDP growth in many countries
lower currency exchange rates against the U.S. dollar, and
higher borrowing costs.
Present: 2025
We just concluded data collection through 3Q25, and so far, the Microwave Transmission market is poised to post a very small increase driven by sales in emerging markets and a stable North American market. However, within the year, things were rocky: strong growth in the first half was followed by weakness in the second half, leading us to reevaluate the year repeatedly.
Two things are helping the market this year:
Mobile backhaul deployments in emerging markets are increasing. Although many operators are cautious about the ROI, they are still deploying 5G and mobile backhaul, albeit at a slower, steadier pace.
A stable level of demand in North America, which I had always thought would decline. It is actually one of the most fascinating things for me. I have tracked Microwave at Dell’Oro Group since 2008, and everyone (myself included) thought the revenue in this region would shrink with the shift to fiber. This chart shows the microwave revenue in North America between 2009 and 2025. I think the past 15 years have proved us all wrong about North America and that microwave backhaul use would decline.
Unfortunately, offsetting this growth is the weaker Verticals market, which we think is due to lower government funding and delays in project starts.
Future: 2026
We envision the Microwave Transmission market returning to a more normal state in 2026, driven by growth in both mobile backhaul and the Vertical markets.
One major assumption is that we expect demand for mobile network capacity to return to high double-digit growth rates. The demand for bandwidth slowed due to the pandemic, the shift to remote work, weak economic conditions, and reduced travel. However, this all reversed, and we expect network demand to revert to historical growth rates as the world pushes for normalcy. Additionally, integrating AI applications like ChatGPT on mobile devices may increase network usage more than before.
The Microwave Transmission market will not have the high growth rates of the other markets I track, but it won’t have the steep declines either. It is expected to have steady growth in 2026. Operators, especially those in emerging markets still expanding their 5G footprint, are expected to continue adding new cell sites and capacity to their backhaul networks for a few more years. We also believe the Vertical markets may return to growth in 2026, helped a little by rural broadband expansion, which is economically more feasible with wireless links that do not require months of trench digging to bury fiber.
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More stability is expected in 2026. After two steep years of declines that erased roughly $8–9 B of RAN revenue between 2021 and 2024, preliminary findings indicate that market conditions continued to stabilize in the third quarter. This supports the flat-growth thesis we have been communicating for some time and reflects both the maturation of the 5G network and the limited RAN upside beyond traditional consumer-driven MBB, including FWA, private wireless, and premium MBB.
Reflecting on the year and the expectations outlined for 2025, it appears that the high-level message that RAN conditions are improving is mostly correct, though with some regional caveats. Europe, the Middle East, and Africa (EMEA) is performing better than initially expected, in part due to currency exchange rate fluctuations. At the same time, 5G activity in India is coming in below expectations, partly due to coverage delays with the smaller carriers.
The results are mixed across the emerging RAN segments. Private wireless growth is in line with expectations. Preliminary findings from the recently updated Private Wireless report suggest that the positive momentum driving the roughly 40% increase in 2024 extended into 1H25, with worldwide private wireless RAN revenue accelerating rapidly in the first half. And even though Open RAN is stabilizing, growth is still landing at the low end of the 5% to 10% target for the year, in line with market conditions in the U.S. and Japan and the pace of adoption in Europe.
Looking ahead to 2026, we expect more of the same with stable overall investments dominated by regional MBB variations. At the same time, growth prospects will remain favorable with select RAN segments, including 5G, AI RAN, Open RAN, Cloud RAN, and Private Wireless.
Stable RAN in 2026
We have not made any material changes to the short-term outlook and continue to expect both wireless capex and RAN to remain mostly stable in 2026. Although the underlying drivers shaping the RAN market—slower 5G coverage expansion and mobile data traffic growth/capacity investments, ongoing monetization challenges, and limited upside from growth vehicles—are unlikely to change, regional variations should even out next year as growth in North America and APAC outside of China helps to offset weaker investments in China. While there is still uncertainty around the optimal steady-state capital intensity levels in the post-peak 5G phase, we remain cautiously optimistic that growth prospects in markets with steep peak-to-trough setbacks will remain more favorable in 2026.
Suppliers are cautiously optimistic that the improved momentum around 5G SA and premium MBB could improve RAN growth prospects as operators move beyond the coverage/capacity-driven capex and focus more on performance improvements to enable differentiated services while also addressing different UL/DL ratios.
While the networks need to evolve to support changing end-user trends and evolving performance-driven models, we are not forecasting any performance differentiation-driven capex boost in 2026.
Source: Ericsson 3Q25 Network Update
5G is still growing
5G has made significant progress, but further investment is needed to improve coverage, capacity, and overall performance. According to Ericsson’s latest Mobility Report, 5G now reaches roughly 60% of the global population. We estimate that the installed base of 5G macro gNBs represents only about half of the eventual end-state target when accounting for all frequency variants. At the same time, year-over-year comparisons are becoming more challenging, which will weigh on growth prospects. Even so, global 5G RAN growth is expected to remain healthy in 2026, expanding at a modest pace across both macro and small-cell deployments. The overall RAN market, however, is expected to remain stable, as sharply declining 4G investments offset the gains in 5G.
Private Wireless Campus Network to top $1 B
The overall private wireless market remains on track to outpace public RAN growth, increasing by roughly 20% in 2025, supported by both wide-area and local deployments. Looking ahead, private wireless adoption is expected to continue advancing at a healthy pace. Although the overall private wireless RAN growth rate is projected to moderate slightly in 2026—rising 10% to 20%—private wireless campus network RAN revenue is forecast to surpass $1 B. This outlook is underpinned by 1) increased availability of local and shared spectrum, 2) growing enterprise awareness of private cellular benefits, and 3) improved TCO and simplified solutions.
RAN Concentration to remain stable/increase
RAN is becoming more concentrated and divided. Preliminary findings suggest the top five RAN suppliers accounted for 96% of the 1Q25-3Q25 RAN market, up from 95% in 2024. The rise in concentration reflects the status of the smaller suppliers and the share developments among the top suppliers. Given current contract swap visibility and the lack of progress with the smaller suppliers to change the status quo in greenfield settings, the base case is for RAN concentration to remain stable, with a possible increase in 2026.
In summary, the RAN market is adjusting to a post–5G peak-rollout environment characterized by slower data traffic growth and few catalysts likely to alter the flat-growth outlook. Global RAN projections remain essentially unchanged, with the market expected to hold steady in 2026. Beneath the flat topline, however, several segments—including private wireless, 5G, Open RAN, Cloud RAN, AI RAN, and small cells—are still poised for growth. In other words, while overall revenue growth will be muted, 2026 should nevertheless be an eventful year.
