The worldwide market for broadband customer premises equipment (CPE) will grow at a faster rate in 2014 than it has since 2010, rising 20 percent year-over-year to reach nearly $11 billion, according to the latest market research from IHS Technology.
Global broadband CPE market revenue will increase a “whopping $1.8 billion” this year, according to the latest data from the market research company’s Home Networks Intelligence Broadband CPE Market Monitor, part of IHS’ Consumer Electronics service.
2014’s growth sets the stage for another increase of around $1 billion in global broadband CPE revenue in 2015 and again in 2016, when global market revenue will reach nearly $13 billion, according to IHS. Market revenue will peak in 2017 at some $13.1 billion, IHS forecasts.
“Managing the broadband experience has become a strategic priority for Internet service providers (ISPs), with online video consumption and the number of connectable devices in the household continuing to grow rapidly,” John Kendall, IHS Connected Home senior analyst, was quoted in a company press release.
“Delivering a reliable broadband service that meets customer expectations increasingly requires investment in more advanced broadband CPE that not only expands bandwidth to the home, but also around the home.”
Broadband CPE Revenue Boosters
A new surge in the DSL CPE segment will be a major factor in propelling the overall CPE market higher this year. “New very-high-speed DSL (VDSL) bonding and vectoring technologies are letting service providers offer broadband speeds up to 200 megabits per second (Mbps) on legacy copper infrastructure,” IHS elaborates. That puts VDSL data transfer rates on par with the cable industry’s DOCSIS 3.0, “without the need to invest in FTTP (fiber to the premises) infrastructure.”
Another result of increasing bandwidth throughput in “more mature markets” is movement of the “bandwidth bottleneck” further down the line, “from the last mile into the household,” IHS points out. More accurately, this means moving the bandwidth bottleneck “into the CPE serving that household,” the market research company adds.
Wi-Fi is becoming “the choke point for connectivity” as household members connect more and more devices to wireless networks, IHS continues. Broadband CPE shipments that incorporate IEEE 802.11ac will grow rapidly to 2018 as wireless network services providers address the issue, according to IHS, which forecasts the number of households with ISP-supplied 802.11ac CPE increasing to 472 million in 2018 from just 116,000 in 2013.
The need to provide a broader range of broadband services to homes will heighten the need for more advanced broadband gateways that can deliver services to set-top boxes (STBs), multimedia home gateways or directly to connected screens, IHS notes. Many CPE suppliers and operators have anticipated this. Some have focused on developing new software as well as advanced hardware for pay-TV and broadband CPE, either organically or via acquisitions, IHS says.
“The 802.11ac standard offers service providers the opportunity to initially leverage better Wi-Fi as a differentiating factor, but it will very quickly become table stakes, especially in more mature, saturated markets,” Kendall commented. “Internet service providers want to avoid being the ‘dumb pipe,’ or merely the means by which their customers receive bandwidth to their homes. Instead, the strategic focus is on becoming a partner with the customer, by helping to manage that bandwidth, route traffic more efficiently, and monitor and remotely troubleshoot interruptions or degradation of service.
“The future of the broadband CPE market will no longer only be served by brute-force bandwidth solutions, but by more intelligent management of that bandwidth in the home network. This has the added benefit of reducing operating expenses, such as lowering call volumes to service centers and expensive truck rolls.”