This article analyzes trends discussed at Mobile World Congress 2024 in Barcelona related to the overall outlook for the wireline market, XGS-PON, automation in fixed broadband access, and the extent of wireline/wireless network convergence.
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Summary
The evolution of the fixed broadband access market was discussed at the 2024 Mobile World Congress event in Barcelona. This article analyzes trends related to the overall outlook for the market, opportunities for XGS-PON growth, automation in fixed broadband access, and the extent of convergence between wireline and wireless networks.
The broadband access equipment market remains affected by the pandemic
2023 was a difficult year for the fixed broadband access equipment market. While FTTP rollouts have generally moved up operators’ agendas and fiber deployments continue in all regions, vendors have taken a significant hit from the fact that operators built up significant stocks of inventory during the pandemic. Falls in annual revenue in 2023 should not be taken as a sign of a declining market but rather as the flip side of the outstanding results achieved in 2022, which were partly due to operators building up their inventories in the first place. The consensus among vendors was that the first half of 2024 would see operators continue to run down their existing inventories before a recovery in the second half of the year. All agreed that 2025 will be a positive year, for instance, as vendors start to see revenue from government-funded broadband rollouts in the US.
There is increasing momentum behind XGS-PON and solutions to ease the deployment of the technology
There are signs of growing momentum in XGS-PON. A plausible argument is that once operators wind down fiber builds, a part of the saved capex could then be invested in rolling out XGS-PON. Multi-year deployments of XGS-PON of this type could plausibly fit with operators’ reduced capex intensity targets. It is noteworthy that MEO in Portugal, which is a leading country in Europe in FTTP coverage, recently launched 10/10Gbps offers based on XGS-PON. More generally, it is always striking to see the range of motivations that operators have in upgrading to XGS-PON—for instance, as a strategy to disrupt the retail market, such as with Digi in Spain (whose rollout was evident on a stroll close to the conference venue), or for the use of the PON network for enterprise applications.
Continuing the XGS-PON focus, there were examples of multi-PON optical network terminals (ONTs) that can support both GPON and XGS-PON in a similar concept to combo PON deployments on the optical line terminal (OLT) side. Such ONTs might make sense as a way to avoid a second truck roll when customers upgrade to XGS-PON-based access. One challenge is that these devices will likely have a long lifetime in customers’ homes, and if they come integrated with Wi-Fi, there is a chance the Wi-Fi performance will eventually be seen as lacking as new Wi-Fi generations continue to offer improvements. On the ONT side, it was also interesting to learn from one vendor selling both OLTs and ONTs that around 50% of its ONTs were connected to other vendors’ OLTs and that this number had actually fallen over the past couple of years (due to a change in the vendor’s country mix). This reflects the maturity of interoperability in this area, even if there is still room for improvement. In other words, there are plenty of opportunities for standalone ONT vendors.
Automation can deliver value across the full fiber lifecycle
Automation for fixed broadband access networks was also an important topic. One area this pertains to is geospatial software that can automate the planning and design process for FTTP networks, thereby saving costs and improving time to market. There will be opportunities for vendors as Ericsson exits this market: Ericsson’s solutions are built on ESRI, so existing ESRI partners could benefit. There will also be opportunities for other vendors to find ways to partner with ESRI, such that migrating to their solutions will be easier. Automation in broadband access was also discussed—for instance, easing operations support system (OSS) integration challenges and speeding up the launch of new services and devices. Significant uncertainty remains about the exact extent of cost savings related to this automation.
There are some signs of convergence in the wireless and broadband markets, but differences remain
It was evident that the focus on fixed broadband and mobile is quite different. There is less focus on telco cloud in the OLT space than in mobile RAN, although it is most definitely still there. There were some signs of convergence between fixed and mobile, but some vendors still reported stand visitors confused that other telcos are using PON for x-haul. On this note, PON for backhaul will be the initial driver for XGS-PON rollouts in India.
During the event and in recent conversations, it has also become apparent that there is renewed interest in fixed wireless access—for instance, for both 5G and non-5G mmWave. The challenge to monetize 5G in the consumer mobile market and the very large capex involved in nationwide 5G rollouts might also push some emerging market MNOs to launch 5G fixed wireless access (FWA), using mid-band spectrum, for example. This is a very low-cost option initially that might even entail sharing receivers between households, but it runs the risk of overbuild from new FTTP players who may observe the very low (sub-USD100) costs per premises passed for fiber in many emerging markets. In addition, there will also be significant opportunities for FWA of different stripes as part of government-funded broadband rollouts in the US, even if fiber accounts for the majority of deployments.
Appendix
Author
Stephen Wilson, Senior Principal Analyst, Broadband Access Intelligence Service
