Gearing up for the future needs

Five trends the optical cabling industry must watch out for as they roll out infrastructure that can handle the data demands of tomorrow

From the fourth industrial revolution to the unveiling of the metaverse, new applications and use cases are constantly shaping our communications landscape. Communication service providers and those rolling out infrastructure must anticipate the data demand from these use cases over the next decade and invest capital today for their networks of tomorrow. These include high-speed broadband networks, Fibre to the Premise (FTTX) networks, the convergence of optical and wireless networks, and the rapidly emerging data centre infrastructure; all of these rely heavily on optical fibre cable.

Economic uncertainties today make it challenging to plan new infrastructure and network roll-outs, but it is important to build these networks for the data demands over the long term. It is better to over-build networks today than run out of capacity tomorrow. Let us look ahead to understand what is in store for the optical cabling industry in the year and beyond.

AltNets will create competition for established players, especially in geographies where the FTTH roll-out has been slow to begin.

The post-pandemic surge in rollouts will continue despite economic uncertainty

The COVID-19 pandemic triggered a huge rise in demand for networking and connectivity. Adults in the US spent an average of 485 minutes – 8 hours and 5 minutes – per day on digital media in 2021. There was an appetite for greater bandwidth from businesses and individuals alike. This led to a bullish outlook for the fibre optic cabling industry, which remains the case as we approach 2023.

The demand for network infrastructure is only getting stronger, with countries investing heavily in infrastructure for telecom networks. This will ensure demand for fibre optic cabling remains strong and the post-pandemic bounce continues, albeit tempered slightly by the financial uncertainty experienced by global markets.

Demand will outpace supply, but networks will still be deployed

We’re currently living through a phase where there is more demand for network capacity than what is currently available. In 2022, the size of the global fibre optics market was $10.8 billion. Looking ahead, IMARC Group projects that the market will grow at a compound annual growth rate (CAGR) of 16.8% from 2023 to 2028, reaching $26.3 billion.

The optical fibre industry has gone through periodic cycles of over- and under-capacity, and we are at a stage of the cycle where capacity investments have not kicked in yet. As we go through this period of under-capacity, we should expect demand for fibre optic cabling to remain strong. This could add pressure to infrastructure rollouts in the coming years, and customers rolling out networks will be looking to lock in strong supply partners.

Demand for infrastructure will increase the role of AltNets and private equity in network roll-outs

The demand for FTTH infrastructure in particular has led to the rise of AltNets in countries where the pace of deployment is highest; the US and UK have many examples. This model has created many valuable companies, often backed by PE money. These AltNets will likely create a different dynamic within the fibre optic industry in terms of capacity demand and innovation. They will also create competition for established players, especially in geographies where the FTTH roll-out has been slow to begin. The big caveat is the impact of economic headwinds, but the AltNet model is here to stay.

The need for more skilled workers will lead to new training initiatives and product innovation

Laying fibre optic cables is a one-time project. An installed network is expected to last for years to come. Setting aside issues like budgets, supply constraints and permissions to lay networks (right of way), the biggest challenge faced by infrastructure projects is in finding the human resource to make it happen quickly, which makes it important to train the workforce quickly.

Expect cable suppliers and the ecosystem to innovate to make the deployment of fibre faster, easier, and more manageable for a less-skilled workforce.

In some cases, skilled workers can’t be trained fast enough to keep up with deployments. Hence, we are likely to see cable suppliers and other parts of the ecosystem innovate to make the deployment of fibre easier, faster, more affordable, and more manageable for a less skilled workforce.

Vendor lock-in will become less appealing as customers prioritise long-term flexibility

Network rollouts are complex, time-sensitive initiatives with several challenges. Customers will need to ensure that their supply risk is low, for example by avoiding vendor lock-in. While patents and proprietary components will continue to spur innovation within the market, especially in closures and termination solutions, we’re likely to see customers favour lowered supply risks as well. This will ensure that networks can be deployed on time, and also that future maintenance of the network is not subject to the whims of a single supplier.

By Dr. Jitendra Balakrishnan

Jitendra is the CTO for Connectivity Solutions at STL

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