Broadband equipment spend is on the downswing – for now

Wondering how the broadband equipment market is doing? Not great, according to Dell’Oro Group. In first quarter 2024, global revenue for the broadband access equipment market dropped 12 percent year-over-year to $4.1 billion, as spending in the market reached a two-year low. What’s the deal? Dell’Oro VP Jeff Heynen said that in some cases, operators are still working through excess inventory they built up in late 2022. That’s a situation still affecting optical networking equipment. “They had pulled forward orders in order to make sure they could meet subscriber demand or to have equipment ready as they continued their fiber expansion projects,” he said. But stockpiled inventory isn’t the only issue in North America. Dell’Oro’s report found North American broadband providers in first-quarter reduced their spending on new equipment by 25 percent year-over-year. That’s due to stalled subscriber growth along with increasing labor costs. So, operators don’t need as many modems or gateways, Heynen said. The Broadband Equity, Access and Deployment (BEAD) program is also impacting new equipment sales in North America. Some broadband providers are slowing their deployments now, he said, “as they wait on decisions by individual states for project allocations.”