Dell'Oro analyst: XGS-PON is now the preferred technology for North American operators

On October 26/2022, Fiber Optic Online News, market research firm Dell'Oro Group analyst Jeff Heynen recently published a column analyzing the adoption and development of XGS-PON technology in the North American market. He stated that in the past two years, North America has been the fastest-growing region for PON devices used to provide residential fiber broadband services. Between 2019 and 2022, the shipment volume of XGS-PON OLT ports in North America increased by 2231%.

The main content of his column is as follows:

Driven by both public and private investment, North America has been the fastest-growing region for PON devices used to provide residential fiber broadband services in the past two years. The total expenditure of service providers in the region on PON devices has increased from $774 million in 2019 to an expected $1.9 billion in 2022. Service providers of all sizes are continuing to expand their initial goal of covering thousands of households with fiber optic, as they seek to surpass Cable operators who have dominated the broadband market in the region for many years while also excessively building traditional DSL networks. In fact, in many cases, the main reason for the high attention paid to fiber optic is that in 2020 and 2021, due to users' bandwidth needs easily exceeding the bandwidth provided by ADSL2+and VDSL technologies, DSL users turned to Cable services in large numbers.

The focus on speed and long-term competitiveness has led to another unique development in the North American market: the rapid rise of XGS-PON as the main technology used in the construction of the new FTTH network. Between 2019 and 2022, the shipment volume of XGS-PON OLT ports in North America increased by 2231%, jumping from 32000 in 2019 to 748000 in 2022 (expected data). If it weren't for the continuous supply chain issues that led to a large backlog of suppliers, the shipment volume figure for 2022 might have been even higher.

Although Tier-1 operators such as AT&T and Frontier Communications account for the majority of these shipments, it should be noted that various types and sizes of operators are deploying XGS-PON, including power cooperative enterprises, rural operators, Tier-3 telecommunications operators, and cable operators. In fact, after multiple informal conversations with these smaller, community centered operators, it is difficult to find a company that has not yet deployed XGS-PON.

Obviously, service providers are focused on maximizing their investments and ensuring the long-term success of their large and expensive fiber optic construction projects. Therefore, it is not surprising that XGS-PON has quickly become the preferred technology for the vast majority of North American fiber optic service providers. In fact, it has already reached the point where the shipment volume of XGS-PON OLT port exceeds that of GPON OLT port. This occurred in the third quarter of 2021 and has not changed since then.

The situation with ONT is slightly different, as the quarterly shipment volume of XGS-PON still lags behind that of GPON. This is largely due to the embedded foundation of the GPON network and supply chain limitations on the availability of new, cost-effective XGS devices.

Service providers clearly believe that the multi gigabit symmetric services that XGS-PON can deliver are now their bargaining chip. In many cases, symmetric 1Gbps services are considered the lowest service level, while symmetric 2Gbps and 5Gbps quickly become intermediate and advanced service levels. Bell Canada has provided a symmetrical 8Gbps service hierarchy, and Google Fiber has announced plans to add 5Gbps and 8Gbps service tiers by 2023. With the large-scale fiber optic expansion in North America transitioning to a speed war, more service providers will launch such ultra high-speed services.

The focus on speed and the need to stay ahead of competitors may lead North America to accelerate the adoption of new PON technologies, including 25Gbps and 100Gbps PONs. Considering that service providers are rapidly evolving from shared user capacity of 10Gbps per OLT port, this seems crazy. But if the supplier is already launching 5Gbps and 8Gbps tiered services, they will quickly run out of XGS-PON capacity, even if it is oversubscribed. It is possible that the fees for these high-end services will be relatively mild in the short term, as most users insist on using service tiers ranging from 500Mbps to 1Gbps. This leaves sufficient time for XGS-PON to move forward at least before 2030, which is in line with the typical lifecycle of PON technology.

But speed is ultimately only one aspect of successful broadband services. Whether it is adding new residential service layers based on new parameters such as delay, jitter, and uplink speed, or expanding residential service based networks to enterprise and wholesale mobile backhaul services, operators must find a way to differentiate their fiber optic networks and services.

Therefore, the ability to configure and deliver new services specifically designed to address how customers use bandwidth will be a key component of a successful broadband service provider. Whether it's home safety, cybersecurity, parental control, or bandwidth priority for applications or traffic, successful service providers must supplement the higher speeds they offer through applications and beneficial services, allowing customers to fully utilize their subscription services.

Due to the current large-scale fiber optic construction in North America and its reliance on XGS-PON and the ability to provide 10Gbps speeds, service providers in the second half of this decade will directly focus on how to maximize their investment and consolidate the relationship between users and services and support, which will far exceed what is currently provided.

Source: https://www.c-fol.net/news/211_202210/20221026092144.html