If 5G mobile is the part of telecom that still consumes much of the industry and political attention, the smart money is on fiber.
Nokia, a bellwether, reported stable sales at its mobile business for the recent first quarter but a 37% year-on-year boom in fixed. Global market revenues from passive optical network (PON) equipment exceeded $8 billion last year, according to Omdia (a market researcher and sister company to Light Reading). In 2027, they will be nudging $16 billion, it predicts.
Investor and government enthusiasm for digging up streets and laying cable explains why companies are piling into a sector that has been dominated until now by just a handful of mainly Chinese suppliers. Last year, Huawei, ZTE and Fiberhome claimed a 64% share of the market for optical line terminals (OLTs), the boxes that sit at the telco end of the fiber line. With nearly a quarter of OLT revenues, Nokia was the only big Western provider. But all these companies are suddenly under attack.
This means new OLTs, oh, Ciena
But the fiber market is also attracting interest from companies that have not previously made broadband access equipment. In the vanguard of that movement is Ciena, a US firm best known as a manufacturer of optical equipment used outside the access network. Michael Genovese, an analyst with Rosenblatt Securities, says it is now a "meaningful player" in a part of the PON market he values at $3 billion.
Indeed, Ciena has already been able to land a contract with AT&T, one of the biggest US operators, for the supply of OLTs based on XGS-PON, a higher-speed successor to the GPON standard widely used today, according to Genovese. AT&T plans to extend fiber to between 3 and 4 million homes by 2025, he says, and has previously relied heavily on Nokia for its OLT equipment. Genovese estimates the AT&T deal alone may account for 2% of Ciena's revenues next year.