Broadband Access & Home Networking Market—A Look into 2023

Over the last two years, you’d be hard-pressed to find an area of service provider networks that have received more investment and attention than broadband access networks. For mature markets, it is rare to see consecutive years of double-digit revenue growth. But that is indeed what has occurred, as 2021 revenue growth was 16% and 2022 growth over 2021 is currently expected to be around 12%, reaching just over $18 billion worldwide. But even without the benefit of having finalized fourth-quarter numbers, all signs—both quantitative and qualitative—point to another year of spending increases on broadband equipment in 2023, albeit nowhere near the double-digit percentage growth we have seen over the last two years. Here is what we are expecting in this coming year:

• The Great DSL Displacement Will Accelerate: Amidst all the hype around fiber network buildouts, one of the biggest drivers for these investments has gone unspoken, perhaps because it is just assumed—and that is that a large percentage of the revenue growth for PON equipment has come directly at the expense of spending on DSLAM ports and corresponding CPE. While this substitution is obvious, the amount of revenue shifted from DSL to PON equipment over the last two years is informative in helping to understand just how much PON equipment revenue growth is due to Greenfield buildouts and how much is due to overbuilding and the literal retirement of copper and DSL assets.
• Subsidies Offset the Increasing Cost of Infrastructure Builds—but Subscriber Growth Will Slow: Due to inflation and anti-inflationary policies of national governments, globally, we do expect new subscriber growth to slow, resulting in flat to perhaps low single-digit ONT unit growth this year. Slowdowns in new housing starts and the purchase of existing homes will also be a drag on overall subscriber growth this year. At the same time, we do not expect to see any slowdown in the purchase of new PON infrastructure, as state and federal subsidization efforts in the US, several EU countries, Thailand, the Philippines, China, and elsewhere will reduce the effective cost of fiber buildouts and, more importantly, offset the additional cost of any assumed debt due to interest rate increases. 
• Consensus in Cable Architectures; But Obstacles Remain: The focus by cable broadband suppliers will shift to supplying the short-term projects of doing mid- and high-split band plan upgrades to increase upstream bandwidth using existing DOCSIS 3.1 technologies, while also preparing the outside plant for forthcoming upgrades to either 1.2 GHz or 1.8 GHz spectrum plans for either full duplex or extended-spectrum DOCSIS 4.0 deployments later this year. The consensus around Remote PHY for DOCSIS also opens the door for R-OLT modules to be deployed alongside RPDs in select node housings—something that wasn’t possible with R-MACPHY due to power limitations. Cable operators will continue to fend off new fiber and FWA competitors with a combination of highlighting speeds that are equal to fiber (at least on the downstream side) but subscriber support that exceeds what the upstarts provide because of their years of experience.