2015 broadband equipment sales start strong but may not finish that way

First quarter sales of DSL, PON, and point-to-point Ethernet fiber to the home (FTTH) broadband aggregation equipment grew by 14% year-over-year, according to the latest figures from IHS (NYSE: IHS). However, the market research firm believes the space will end 2015 down versus 2014.

Sales of broadband gear totaled $2.1 billion in the first three months of 2015, according to the most recent IHS Infonetics "PON, FTTH, and DSL Aggregation Equipment" report. While that number is significantly better than the total for 1Q14, it represented a 5% decline versus 4Q14.

"Broadband aggregation equipment spending went above $2 billion in each of the last three quarters, so there was bound to be some slowdown to start the year,&" said Jeff Heynen, research director for broadband access at IHS.

A relatively mild slowdown versus the $8.2 billion spent during 2014 likely will continue throughout the year, he added. &"Though we look for spending to drop to around $7.8 billion for the full-year 2015, that total is well above historical years and shows operators' continued commitment to providing premium fixed broadband services around the world," Heynen said.

GPON and VDSL proved particularly hot in the first quarter of 2015. PON sales in general grew 18% year-on-year, with North America a particularly strong market for GPON. IHS says that telco operators and competitive carriers there are warming to gigabit FTTH deployments as a means of staying ahead of cable operator competition, whose DOCSIS-based hybrid fiber/coax networks currently can't support similar equivalent symmetrical speeds. A growing number of municipalities also have launched gigabit broadband projects based on FTTH.

While upcoming DOCSIS 3.1 technology will enable cable MSOs to offer 1 Gbps downstream, the technology's limitations will make symmetrical 1-Gbps services a challenge. Some cable operators, most notably Comcast, have turned to FTTH in response (see, for example, "Comcast one ups Google Fiber, AT&T with 2-Gbps broadband in Atlanta").

Meanwhile, IHS reports that Latin America is becoming a more vibrant market for broadband equipment, thanks to the lifting of regulatory restrictions as well as a slowing of operator consolidation.

The quarterly IHS Infonetics "PON, FTTH, and DSL Aggregation Equipment" report covers BPON, EPON, GPON, FTTH, FTTB, PON, and DSL aggregation equipment and subscribers. The research service provides worldwide and regional market size, vendor market share, forecasts through 2019, analysis and trends.

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