Balancing Broadband Subscriber Growth with Supply Chain Constraints
Global home networking unit shipments are only expected to decline by 1% in 2020, dipping from 193.9 M worldwide to 192.1 M. Included devices are residential access points, residential WiFi routers, including mesh routers, as well as broadband CPE with integrated WiFi capabilities. Supply chain constraints and reductions in manufacturing capacity seen in the first quarter of the year, due to plant closings in China, Taiwan, Malaysia, and the Philippines, will quickly give way to shipments increases to support growth in new broadband subscribers as well as consumers upgrading their in-home WiFi devices to better handle telework and remote education requirements.
WiFi 6 unit shipments across all product categories are expected to increase to 1.5 M units this year, and then skyrocket in 2021 and beyond, as broadband service providers begin taking shipments of cable, fiber, and DSL gateways with integrated WiFi 6 capabilities. Until then, the bulk of WiFi 6 units will be premium WiFi routers and mesh systems sold via retail outlets.
WiFi 6 adoption combined with the increased rollout of higher-end broadband CPE, including GPON and XGS-PON ONTs, along with DOCSIS 3.1, VDSL, and G.fast units will result in an increase in overall home networking unit shipments through 2022. The adoption of mesh router systems in the North American and Western European markets will also help to drive overall growth, before a period of market saturation sets in beginning in 2023 and 2024. 802.11ac (WiFi 5) units will continue to hold the largest share of overall units through 2022. Beginning in 2023, WiFi 6 will dominate overall shipments. Transitions to new WiFI technologies take time, especially when considered on a global basis. Specifically, high-ARPU regions, such as North America and select markets of Western Europe and APAC make these transitions much faster than other regions, including China and CALA, where operators generally wait until volume shipments have ushered in unit price reductions that better match their ARPU profiles.
Mesh and WiFi 6 Ushering In a New Era of Home Networking
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. It is the first WiFI standard developed specifically for a world defined by the IoT and the consistent proliferation of connected devices.
WiFi 6 also can 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. As subscribers become savvier about broadband and WiFi, and as they become more reliant on broadband to enable multiple services in their home, they will demand uninterrupted service. With WiFi 6, service providers will finally have the power to deliver on those expectations.
Perhaps the most important feature of WiFi 6 is OFDMA (Orthogonal Frequency Division Multiple Access.) OFDMA allows WiFi routers and access points to divide multiple channels—on either the 2.4GHz or 5GHz frequency band—into smaller allocations called resource units (RUs.) Each RU can then be divided into yet smaller channels, with that traffic earmarked simultaneously for multiple devices. Each of those devices can have dramatically different traffic profiles (e.g., a TV that is streaming an 8k movie and a connected thermostat communicating with a cloud-based analytics engine).
The net result is a reduction in latency for connected devices and an increase in the aggregate throughput across the wireless network. WiFi 6 adds both uplink and downlink OFDMA, meaning that routers and CPE can intelligently allocate different levels of transmitting and receiving power per connected device, depending on variables such as distance, noise, and other signal impediments.
As for mesh capabilities, consumer mesh routers have been growing at a fast pace over the last year, with total units expected 23 M this year. Operators are becoming smarter about identifying when mesh routers are required by means of delivering apps that allow new subscribers to describe their homes, the placement of their routers, and the types of devices throughout the home that might require closer proximity to a mesh base station or satellite. As such, they are either re-selling mesh routers or integrating mesh capabilities directly into their higher-end gateways.
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The Dell’Oro Group Broadband Access 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] by technology ADSL/ADSL2+, G.SHDSL, VDSL, VDSL Profile 35b, G.FAST), PON Optical Line Terminals (OLTs), Customer Premises Equipment ([CPE] for Cable, DSL, and PON), along with SOHO WLAN Equipment, including Mesh Routers.