Optical transport to grow at a 10% CAGR through 2017

• Global optical transport market to reach US $13bn in 2017
• 100 Gigabit to grow at a 75% CAGR

"I won't be surprised if it [100 Gig] grows even faster"

Jimmy Yu, Dell'Oro Group

The Dell'Oro Group forecasts that the global optical transport market will grow to US $13 billion in 2017, equating to a 10-percent compound annual growth rate (CAGR).

In 2012 SONET/SDH sales declined by over 20 percent, greater than Dell'Oro expected, while wavelength-division multiplexing (WDM) equipment sales held their own.

Regions

Dell'Oro expects optical transport growth across all the main regions, with no one region dominating. The market research company does foresee greater growth in Europe given the prolonged underspend of recent years.

European operators are planning broadband access investment such as fibre-to-the-cabinet/ VDSL vectoring as well as fibre-to-the-home. "That will drive demand for backhaul bandwidth and that is where WDM fits in well," says Jimmy Yu, vice president, microwave transmission, mobile backhaul and optical transport at Dell'Oro.

Technologies

Forty and 100 Gigabit optical transport will be the main WDM growth areas through 2017. Yu expects 40 Gigabit demand to grow over the forecast period even if the growth rate will taper off due to demand for 100 Gigabit.

The 100 Gigabit market continues to exceed Dell'Oro's forecasted growth. The market research company predicts 100-Gbps wavelength shipments to grow at a 75 percent CAGR over the next five years, accounting for 60 percent of the WDM capacity shipments by 2017. "I won't be surprised if it [100 Gig] grows even faster," says Yu.

"A lot of people wonder why have 40 Gig when there is 100 Gig? But that granularity does help service providers; having 40 Gig and 100 Gig rather than going straight from 10 Gig to 100 Gig," says Yu. The 100 Gig sales span metro and long-haul networks with the latter generating greater revenue due to the systems being pricier. "Forty Gigabit sales were predominantly long haul originally but we are seeing a good chunk of growth in metro as well," says Yu. 

The current forecast does not include 400Gbps optical transport sales though Yu does expect sales to start in 2016.

Dell'Oro is seeing sales of 100 Gigabit direct detection but says it will remain a niche market. "We are talking tens of [shipped] units a quarter," says Yu.

There are applications where customers will need links of 80km or several hundred kilometers and will want the lowest cost solution, says Yu: "There is a market for direct detection; it will not be a significant driver for 100 Gig but it will be there."