By Patrick McLaughlin
The future is bright for the passive optical LAN (POL) market, at least according to one research organization that recently published a study on the technology. Published in August 2016, the study “Passive Optical LAN Market Global Industry Analysis, Size, Share, Growth Trends and Forecast 2016-2024” by Transparency Market Research examines the market’s technology all the way to the chip. According to Transparency, the market’s revenue totaled $14.1 billion in 2015 and will reach $103.4 billion by 2024, yielding a 22.9 compound annual growth rate (CAGR).
“By component, the wavelength division multiplexers/de-multiplexers segment accounted for 12 percent of the global POL market revenue in 2015,” the organization said, “emerging as the leading contributor. This segment is expected to grow at a CAGR of 22.3 percent over the forecast period. Optical amplifiers, on the other hand, are poised to register the highest CAGR of 24.0 percent during the same period.”
Transparency says that Huawei Technologies Co. Ltd, along with ZTE Corporation and Alcatel-Lucent S.A. lead the market. “These three companies accounted for a combined share of over 75 percent in the overall POL market in 2015, indicating the high degree of consolidation … Most of these companies are focusing on business expansion to increase their consumer base and new product development and technological enhancement to deliver value enhancements to customers.”
Growing need for bandwidth presents a significant opportunity for the POL market’s players, the researcher said. “IT professionals have declared that the demand for higher bandwidth is presently large and is likely to grow in the near future, owing to the increasing number of subscribers using a greater number of connected devices and data-dense services. Africa and Asia are likely to witness a sudden surge in the demand for bandwidth, rising at a CAGR of more than 38 percent.”
In 2015, the Asia-Pacific region led the POL market geographically, accounting for more than 36 percent of the $14.1-billion total. Transparency Market Research noted, “The growing demand for passive optical networks in the region, especially in China, is one of the primary forces driving this POL market. A surge in data traffic and the use of electronic gadgets by a large number of customers further drives the APAC market.
Governments of major countries across the region are planning to invest in the deployment of fiber-optic networks to improve the network infrastructure in their respective countries. This is anticipated to boost the Asia-Pacific market for POL during the forecast period.”
North America is also a key market, the firm said. “Technological advancements and an increasing demand for more-advanced security are some factors that can be expected to boost the growth of passive optical LAN in North America,” Transparency stated. “Furthermore, the rising demand for energy conservation and simplified network operations is anticipated to bolster the growth of the POL market in this region. The POL market in North America is expected to grow at a CAGR of 20 percent over the forecast period.”
Shortly after Nokia launched its POL technology portfolio in April, Ana Pesovic-who heads the company’s fixed networks fiber marketing activities-discussed the merits of POL in a blog post titled “What to Use When Your Ethernet LAN Maxes Out.” In the post she explained, “Ethernet LANs are reaching their capacity limitations and many enterprises are considering how their LANs will cope 5, 10, 15, 20 years from now. Many are also looking to their IT managers to deliver cost savings from the LANs and services.”
Citing a seven-page report by Gartner, Pesovic then described POL’s reach advantages over a tradition structured cabling system (30 kilometers versus 90 meters), as well as the fact that a POL’s singlemode cabling infrastructure is equipped for whatever upgrade the user will undertake.
“An area where Gartner advises caution is in calculating capex and opex savings,” she noted. “POL requires less active equipment than Ethernet and cabling is easier to install, which translates into real estate, power and other savings. POL uses statistical multiplexing to share bandwidth between users in a dynamic way and optimize the network performance.
“This concept needs to be understood when designing a POL, but the bottom line is that there is a tradeoff between cost and bandwidth per endpoint. A large number of ports at the optical splitter will reduce cost, but may not provide sufficient bandwidth performance. Enterprises need to carefully consider their bandwidth objectives now and in the future when designing the LAN.”
She concluded by acknowledging Ethernet’s familiarity and POL’s relative unfamiliarity among networking professionals.
“There is a large pool of talent with Ethernet LAN experience as well as an abundance of equipment providers,” Pesovic noted. “For most IT managers and support staff, POL installation and operation must be learned and there are few experienced POL providers to guide them. In telecoms networks, fiber is a no-brainer in greenfield deployments. It’s the only futureproof solution. The same argument can apply to a greenfield LAN deployment for exactly the same reasons.”
We will continue to follow technological and market developments with passive optical LANs, and keep you updated in this magazine and on our website, cablinginstall.com.
Patrick McLaughlin is our chief editor.