There may be a broadband boom, but global spending on broadband access equipment fell 3% in Q2 2023 to $4.7 billion, fresh data from Dell’Oro Group showed. Jeff Heynen, Dell’Oro VP, told Fierce that while spending in Europe and the Asia-Pacific regions were up, there was a substantial decline in the North American market. Spending in the latter in particular is likely to decline for the full year 2023, he added, even if there is some recovery in the back half of the year.
According to Heynen, there are a few factors at work in the North American market that are driving the drop. The big one is that the region is facing a tough comparison from last year, when spending on PON equipment for fiber rollouts was “crazy” high. Now, though, purchases of OLTs and other PON gear have slowed.
“Some of the larger operators have been pretty clear about reducing their homes passed goals for this year just because of labor shortages and things like locating and permitting and just a backlog of existing projects,” he explained. “It doesn’t change the long-term expectations in the region but just in the short-term I think there’s digestion going on of all the equipment that was bought combined with the labor shortages and the extra time and cost associated with the fiber buildouts right now.”
Meanwhile, in the cable realm, Heynen said spending on DOCSIS network infrastructure is likely to come in flat or slightly up for the full year in North America. Globally, cable access concentrator revenue – which includes spending on Remote PHY devices, Remote OLTs and virtual CMTS platforms – was up 15 percent year on year to $270 million (though it’s worth noting North America dominates the global cable market). But CPE purchases were way down. Heynen chalked that up to lackluster subscriber growth which is coming in flat or outright negative.
“They just don’t need to buy those new units when they can use the existing inventory they have,” Heynen said. “Are they waiting on DOCSIS 4.0 units and maybe Wi-Fi 7 units? Yeah, I think there is some of that that’s factored into the equation, but I think that has a lesser impact on their purchase decisions now than the immediate lack of subscriber growth.”
Heynen added smaller cable operators in North America are spending more on fiber as they transition away from DOCSIS technology. But tier 1 providers are still all in on DOCSIS and the tier 2 and 3 spending on PON is “still nowhere near” reaching DOCSIS spending.
“That day will come but I don’t think it will be anytime certainly within this decade in North America,” he concluded. “In other regions it’s already happening. In Latin America and Europe we will see that cut over to more spending on fiber.”