Fiber-optic cable market still going strong, finds study

June 5, 2007 -- The amount of fiber-optic cable installed worldwide jumped 27% in 2006 compared with 2005 installations, according to a recent report by KMI Research.

June 5, 2007 -- The amount of fiber-optic cable installed worldwide jumped 27% in 2006 compared with 2005 installations, according to a recent report by KMI Research.

According to the report, Western Europe led the growth surge with a 22% increase in installations, followed by North America with a 12% increase. The annualized growth rate through 2011 will be 9%. The growth figures are based on kilometers of cabled fiber installed each year.

"We saw 16% growth in 2005, which gives two successive years of strong double-digit growth," comments Patrick Fay, KMI's senior consultant and the report's principal author.

According to Fay, with growth forecasted to grow by 11% in 2007, total fiber demand will exceed the peak level of fiber installed in 2001. The report says that the fiber-optic cable market will average almost double-digit growth in unit quantities through the next five years.

Fay notes that, unlike the last telecom boom, this surge in demand is linked to sustainable initiatives such as fiber-to-the-home, and network construction in developing markets by alternative wireline and wireless companies. Tightness in supply may occur in local markets depending on seasonal demand, he says, but in aggregate, the industry is poised to meet this demand as fiber manufacturers have brought on new capacity to meet forecast growth.

The report addresses key questions raised by this forecast. First, the role of FTTx-related deployments is discussed as the major factor driving this growth; second, the increased contribution of developing markets in the telecom sector is presented.

According to KMI, two countries -- the United States with FTTP and China as a developing market -- best represent FTTX's role and developing economies' contribution to the worldwide fiber market. The U.S. and China have accounted for almost 50% of demand since 2005, reports the firm, a development that will continue through 2009.

The combined demand for the U.S. and China to the worldwide market is shown in the figure below.

According to KMI, in the U.S., Verizon continues to be the most important contributor. Last year, Verizon increased its installations of cabled fiber to more than 8 million kilometers and accounted for almost 40% of the U.S. market. Incumbent operators Telecom and Netcom, along with China Mobile and Unicom are installing millions of fiber-km to promote rural connectivity, to connect switches together and to increase base-station density for 3G services.

The 2007 edition of KMI's "Worldwide Optical Fiber and Cable Markets" report analyzes the fiber and cable markets by country, region, application, producer, fiber type, price, and other segmentations, presenting forecasts in unit quantities and market value ($M). The annual report is intended as a strategic tool and a critical reference document for the fiber and cable industries. The 2007 edition was completed in April.

KMI was acquired by CRU International in September 2006.

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