Optical Transport Network Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Optical Transport Network Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Global Optical Transport Network Market (henceforth referred to as the ‘market studied’) was valued at USD 18.38 billion in 2021, and it is projected to be worth USD 32.39 billion by 2027, registering a CAGR of 9.47% during the period 2022-2027 (henceforth, referred to as the ‘forecast period’).

Key Highlights

• The service provider networks and telecommunications industry are rapidly evolving to face an explosion of digital traffic driven by mobile applications, multimedia services, social media, cloud computing, and VoIP. Moreover, in recent times, there has been an ever-growing array of bandwidth-hungry applications.
• Earlier, network traffic used to be all about voice calls carried over circuit-based networks in a predictable network connection between pairs of endpoints. In the current market scenario, most network traffic is packet-based, generated by many services and applications in unpredictable traffic patterns, with widely varying and more stringent demands on bandwidth and data transmission performance.
• Additionally, enterprise companies need high speeds, reliability, and high uptime for data processing and other tedious processing applications. Hence, they are constantly in search of optimal network solutions. To avoid losses owing to system failures, companies rely on high-speed optical transport networks.
• The tolerance to chromatic dispersion is an important factor as it’s a phenomenon by which different optical pulses are spread due to the different wavelengths transmitted at different speeds. Low tolerance to it increases the need for an alternative technology such as Ethernet.
• The spread of the COVID-19 pandemic resulted in a major supply chain disruption, which is expected to impede the 5G buildout process in the short & medium term. The major 5G hardware delays and general effects of the economic slowdown will hit the market significantly in the coming 1-2 years. But in the longer term, the escalating needs for digital health, home connectivity, and even economic stimulus measures are expected to give 5G buildout a boost.

Key Market TrendsIT and Telecom Industry to Drive the Optical Transport Network Market

• Cable operators are bound to face an array of architectural and technology crossroads over the next few years, including the way they will transition to a Distributed Access Architecture (DAA), as well as the many options presented by the future evolution of their HFC networks.
• An even more pressing transition is taking place on the business side of their operations, namely the gradual replacement of video services with high-speed broadband as the cable industry’s primary revenue engine. Thus, optical solutions are required and are expected to offer profitable services to these operators.
• In February 2022, China Mobile partnered with Huawei in building an optical network to connect the Guangdong-Hong Kong-Macao area. Huawei says that it is “the world’s largest green all-optical switching hub network.” In recent years, Huawei and China Mobile Guangdong have jointly built an all-optical network cluster for the Greater Bay Area. Both Macao and Hong Kong are special administrative regions of China.
• Some of the players, such as Infinera and Tejas Networks, are currently very active in the market. In September 2021, Bharti Airtel selected Tejas Network for the expansion of its optical network capacity in the key metros. Tejas will supply its TJ1600 DWDM/OTN products to extend Airtel’s optical network, support 5G backhaul, offer B2B services and broadband applications. Tejas’ TJ1600 is an optical transport platform that consolidates multiple layers of networking functions. It also supports wireless backhaul, data center connectivity, enterprise services, router bypass, and wholesale services.
• NEC and Infinera teamed up to deliver a converged packet and Optical Transport solution to a leading Japanese service provider and an affiliate of Power Nets Japan (PNJ). The regional telecommunications carrier selected Infinera’s mTera Universal Transport Platform to cost-efficiently scale its metro network infrastructure and enhance service flexibility, as growth in the enterprise and residential high-speed services drives the demand for network capacity.
• Further, the Cisco global busy hour study findings indicate that the usage of the internet may record a CAGR of 37% until 2022, for five years, as compared to 30% of the average internet traffic. The 5G services are further adding to the growth opportunities in the sector. The rising demand may provide further impetus to the growth of the market during the forecast period.

Asia Pacific to Witness the Fastest Growth

• South-East Asian countries are gradually gaining momentum in the digitization of plants and machinery. This has further propelled the data traffic in such countries. For instance, in line with Malaysia’s JENDELA Plan (The Jalinan Digital Negara), part of the 12th Malaysia Plan (2021-2025), to provide high-speed broadband in two million homes to drive the digital economy, in May 2021, Nokia was chosen by Allo, an Information and Communications Technology service provider in Malaysia, to implement a gigabit fiber network in the states of Melaka, Johor, Negeri Sembilan, and East Coast of Malaysia.
• Further, in October 2021, Australian operator TPG Telecom deployed a modular 4G/5G Smart Node solution from leading comms tech provider to become the first network operator in the Asia-Pacific region to deploy a live 5G femtocell.
• Amid the pandemic, OTN played a vital role in the sports and entertainment sector as well. Companies such as Telstra supported a remote production project for the Indian Cricket Tour of Australia, which took place between November 2020 and January 2021. Due to COVID-19 restrictions, a broadcast team couldn’t be sent from India to Australia.
• Developing countries such as India Pakistan, among others, are investing in modern infrastructure to support the digital economy and technological advancement. For instance, in June 2021, Pakistan’s state provider PTCL (Pakistan Telecommunications Company Limited) collaborated with Huawei to upgrade its IP Edge and Optical Transport Network (OTN) infrastructure. Further, PTCL has also tapped Huawei to deploy a unified IP Edge network covering more than 130 locations so that it can begin offering next-generation IP services.
• Further, In May 2021, Reliance Jio announced to be constructing the largest international submarine cable system centered in India. Jio is currently deploying two next-generation cables, namely India-Asia-Xpress (IAX) system that connects India eastbound to Singapore and beyond while the India-Europe-Xpress (IEX) system connects India westbound to the Middle East and Europe.

Competitive Landscape

The competitive landscape of the Optical Transport Network Market is fragmented because of the presence of a large number of companies. Some of the key players of this market are Fujitsu, Huawei, Cisco, ZTE Corporation, among others. The players in this industry are constantly working on developing new product portfolios. They are trying to gain a competitive advantage with mergers and acquisitions, partnerships, and constant innovations.

• February 2022 - Bharti Airtel signed a deal with Huawei worth INR 3 billion as part of the ongoing Airtel process to upgrade and expand its National Long Distance (NLD) network which is currently run by the Chinese vendors
• January 2022 - Vodafone Idea Limited is revamping the backbone scalability and service resiliency by deploying industry-leading 5th-generation coherent optical solutions from Ciena. Vi deployed Ciena’s 6500 packet-optical platforms powered by WaveLogic 5 Extreme for high speed 300G/400G services, upgradable to 800G.
• October 2021 - ZTE Corporation announced that it had launched its new-generation compact metro edge ON products – the optical Omni-gateway ZXMP M721 series, namely ZXMP M721 CX66A (E) and ZXMP M721 CX63A (E). The products may support all-scenario access of 4G/5G/home broadband/enterprise/cloud services with large-capacity and unified cross-connection in a compact size.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Companies Mentioned

Nokia Corporation
Ciena Corporation
CISCO Systems Incorporation
Huawei Technologies Co. Ltd
ZTE Corporation
Fujitsu Ltd
Infinera Corporation
Telefonaktiebolaget LM Ericsson
NEC Corporation
Yokogawa Electric Corporation