Ovum recently released an updated optical networks (ON) forecast for 2012–18, prompted by an upbeat 2Q13 and brisk sales of 100G equipment. We now expect the ON market to exceed $17.5 billion by 2018, for a 3.1% CAGR from 2012.
Ethernet, IP VPN, and mobile voice and data services provide a solid baseline of revenue-generating traffic growth bolstering sales of ON gear. Data center interconnect and cloud service adoption provide further traffic growth upside.
With the exception of Europe, regions are in a build cycle. Our 9.1% growth projection for North American ON for 2013 reflects that this is a solid bounce-back year for the region after two years of non-growth. Network core investments are resuming, and 100G is being deployed in volumes. The North American tier-1 CSPs and cable operators are investing in core network to support all traffic types.
The market for submarine line terminating equipment (SLTE) is projected to achieve modest growth of 3.3% in 2013. The catalyst for further subsea growth will be large-scale new builds. Those builds will come in time based on bandwidth, country, diversity, security, and latency needs.
Our growth projection for Asia Pacific ON in 2013 is 3.1%. Strong growth in the ASEAN-5 countries (Indonesia, Malaysia, Philippines, Thailand, and Vietnam), China, and Australia and New Zealand will mitigate projected market declines in Japan and India.
ON revenues in South & Central America (SCA) are projected to grow at 1.6% for 2013. Since 2005, SCA has had quite a good run, with the ON market more than doubling and passing the $1 billion mark as the SCA economies continue to grow and diversify.