Developing Economies Driving Broadband Market

The Broadband CPE and Infrastructure market was nearly 2.4B in Q2 2012, .4% increase sequentially and 6% Y-Y. The infrastructure market was nearly $1.4M (down 13% Y-Y) and the CPE market was approximately $1B (up 7% y-Y).

The BB market is driven significantly by the number of broadband lines: more than 16M new broadband lines were added in Q1 2012 for a total of 612 M lines worldwide. This growth is driven by the developing economies in Latin America, Eastern Europe, and South/East Asia. DSL continues to be the majority of the market, followed by Cable, FTTx (fiber to the node with copper to the premise) and FTTH, although fiber is growing faster.

The market is in the midst of several technology transitions. The growth of fiber to the node or to the premise is changing the landscape. The biggest issue is the return on investment/payback time on the investment. Most of the FTTH growth is occurring in markets where governments are subsidizing fiber. VDSL and vectoring are growing as companies are starting their first commercial deployments.

In CPE, the trend toward commoditization and high volumes is favoring consumer electronics manufacturers over companies that traditionally sold through service providers players, such as Motorola, Alcatel-Lucent and Technicolor (Cisco’s purchase of Linksys places it in both camps). The Infrastructure segment (CMTS, QAMs, DSLAMs, video processing equipment and video on-demand servers) was down 13% Y-Y. The annual decline was across all segments, although DSLAMs, QAMs and servers suffered the largest declines.

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David Dines
ddines@acgresearch.net
www.acgresearch.net