Summary Bullets:
- Fixed access deployments will continue in the accelerated tempo brought on by the COVID-19 pandemic. 10G and symmetrical connectivity will become the new gold standard, but not the norm.
- The rift between the Chinese and Western vendors around future PON technologies will continue to drive leading broadband access markets on diversifying paths.
10G Adoption Accelerates, Benefiting Vendors with Mature and Market-Ready Solutions
Fixed broadband access has for a long time been a relatively stagnant market, due primarily to two factors: increased consumption of mobile connectivity and poor adoption of services that were to ‘fill up the pipes’ of residential broadband and generate bottom-up demand for faster internet. The COVID-19 pandemic and associated lockdowns have practically obliterated these two limiting factors, driving consumption of streaming video, two-way video communications, and general capacity demand stemming from online gaming and large file downloads. With multiple home-bound users using one home broadband for work, education, and entertainment at the same time, home broadband technologies stemming from designs deployed since the 1990s are quickly showing their weak spots. This has generated increased demand for 10G-capable fiber technologies like XGS-PON. This, in turn, accelerated finalization of the DOCSIS 4.0 standard, which is designed to enable cable operators to provide 10G services as well.
In 2021, the 10G (predominantly XGS-PON) deployments will accelerate, driven by usage pattern changes brought on by the COVID-19 pandemic, and the primary beneficiary will be vendors and operators with mature and deployment-ready XGS-PON solutions. 10G will become the gold standard for premium home broadband in fiber access, which will drive demand for 10G over other technologies like coaxial cable, for example, where it still is not technologically feasible. Growing adoption of XGS-PON will positively affect economies of scale, while operators that deploy first will be able to sell the 10G connectivity at premium pricing – especially to homeworkers who can get their home broadband subsidized by their employer.
The Rise and Rise of Fiber, Decline of Copper, and (Sort of) New Life for Coax
COVID-19 accelerated the broad industry trend toward a fiber-dominated, if not fiber-only, future. A firm course to an all-fiber future has become global, from European governments that mostly threw their weight explicitly in favor of fiber broadband access to countries like India where fiber deployments are gaining pace quickly. Although the actual connection reaching the customer premises may continue to be something other than fiber, optical technology, most likely PON, will be the foundation for virtually all fixed access connections. Also, the usefulness of copper (twisted pair) connections is quickly reaching its limits, and even if it does not get fully replaced by fiber, it will be replaced, mostly by maturing FWA technologies. The future of coaxial cable-based connectivity is still up in the air, and mostly will be defined by the agility of the cable connectivity ecosystem, which will increasingly need to position its technology as a complement to PON and not an alternative to it.
In the fixed access ecosystem, 2021 will most likely mark the beginning of the end of copper-based access in most markets. From policy makers to consumers, the support for fiber-based broadband connectivity is outweighing operator choices and priorities. In the current market climate, which favors government support for broadband access, this can be a decisive factor – as can be seen in such diverse markets as China or the UK. Cable operators – themselves adopting specific flavors of PON as a part of their infrastructures – will need to step up their game and implement DOCSIS 4.0 much faster than previous iterations of DOCSIS or risk facing increasing competitive, and possibly regulatory, pressures in markets with insufficient competition. On the other hand, FWA will be confirmed as a part of operators’ fixed access mix in 2021, mostly riding on expanding accessibility of 5G access in developed markets.
25G or 50G for Future PON? It Depends
Increased emphasis from 5G operators on small cells and C-RAN and converging fixed and mobile access network footprints gave rise to a more intense focus on 5G transport use cases in fixed access networks. While most fixed access networks are still predominantly used for home broadband, there are examples of PON-based mobile backhaul for 4G, for example. However, 5G requirements dictate that PON flavors which can support 5G mobile transport – fronthaul especially – will need to not only be faster than currently mainstream XGS-PON, but also support much higher connection quality. To that end, the industry has mainly coalesced around two nascent standards: 25G PON and 50G PON. The debate around these two technologies has largely divided the industry in two camps. 25G PON enjoys the support of several vendors and operators which formed the 25GS-PON MSA (multi-source agreement) Group late last year – most notably Nokia, which launched the first 25G solution based on its Quillion chipset around the time the MSA Group was formed. 50G PON, on the other hand, enjoys the support of Chinese operators and vendors, with Huawei and ZTE at the fore.
Even as operators and vendors focus on industrializing 10G PON in 2021, the camps formed around two competing future PON technologies will solidify. For operators and equipment vendors, the choice will be strategic; switching sides once mass deployment and industrialization of one of the technologies begins is likely to be prohibitively expensive. Considering the current state of technology development for both 25G and 50G PON, these choices will need to be made in 2021, shaping the future PON market for years to come.