Total spending on broadband equipment in 2024 is set to experience a 5 percent decrease, Dell’Oro Group said in its report.
This decline in spending on broadband equipment is attributed to the lingering effects of interest rate increases aimed at curbing inflation. The anticipated reduction would bring the total spending to approximately $16.5 billion, a level on par with the expenditure in 2021.
Jeff Heynen, overseeing the Broadband Access and Home Networking market research program at Dell’Oro Group, has also indicated an expected decline of around 10 percent in spending on broadband equipment for 2023.
This follows three consecutive years of robust growth in broadband network and service investments from 2020 to 2022, where growth rates reached 9 percent, 15 percent, and 17 percent, respectively.
While these projections suggest a temporary setback, there are positive indicators for the future. Early signals for 2025 suggest a return to growth as various subsidization efforts, including BEAD, begin to impact broadband equipment suppliers.
Despite the current challenges, specific segments such as fixed wireless CPE, cable DAA equipment, and PON equipment by tier 2 and tier 3 operators are expected to exhibit pockets of growth, indicating resilience in the broadband market.
Cable Operators Adopt Strategies to Combat Fixed Wireless and Fiber Challenges
Cable operators are facing a perception challenge in the market, with consumers viewing them as providers with inferior copper technology compared to the flexibility offered by fixed wireless solutions. Larger cable operators, including Comcast and Charter, are taking proactive measures to counteract these perceptions.
Comcast has launched its X-Class Internet tiers, providing symmetrical speeds of 2 Gbps in select cities, with plans to expand to additional locations in 2024. The company is leveraging full-duplex DOCSIS 4.0 and introducing new CPE using Broadcom’s D4.0 silicon. Additionally, a combined gateway with Wi-Fi 7 is anticipated later in the year.
Charter, on the other hand, is set to accelerate Remote PHY and vCMTS rollouts in 2024, employing Extended Spectrum DOCSIS 4.0. The year will witness broader availability of 1.8 GHz amplifiers and taps, offering a choice of CPE with dedicated silicon for ESD and a combination of FDX and ESD variants.
Cox is also entering the fray, rolling out 1.8 GHz amplifiers in 2024, aligning with Charter’s strategy while awaiting wider availability of taps and CPE.
Despite challenges, the deployment of DOCSIS 3.1 Plus is emerging as a viable stopgap measure for operators, offering increased throughput within the existing DOCSIS 3.1 framework.
Fiber Deployments and PON Equipment Dynamics in 2024
The PON equipment market is expected to witness dynamic changes in 2024, with tier 1 operators recalibrating inventories and smaller operators continuing their fiber network upgrades. XGS-PON is predicted to dominate spending this year, surpassing 2.5 Gbps GPON revenue and more than doubling it.
While tier 1 operators may experience a short-term reduction in homes passed goals, a renewed construction phase is anticipated in 2025, propelling the overall PON market through the end of the decade.
In addition, cable operators worldwide are expected to undertake additional FTTH deployments, utilizing Remote OLT platforms and traditional OLT platforms to integrate ITU PON into existing DOCSIS management frameworks.
Wi-Fi 7 Progress Accelerates in 2024
The Wi-Fi Alliance’s recent announcement of certification testing for Wi-Fi 7 products has set the stage for accelerated progress in 2024. Operators are expected to deploy numerous Wi-Fi 7 residential routers and broadband CPE models by the end of the year. This move aims to differentiate services in crowded broadband markets and eliminate confusion between Wi-Fi 6 and Wi-Fi 6E.
Early gateway models have already been introduced to the market, with widespread availability expected in the coming months. Anticipating this trend, a forecast suggests over 2.5 million residential Wi-Fi routers and broadband gateways will ship in 2024. This figure is likely to increase based on the opening of certification testing.