FTTx GPON OLT and ONT shipments are at all-time highs. The GPON optical component supply chain is scrambling to meet demand and DFB (distributed feedback) laser suppliers are operating at near-maximum capacity. Because expanding laser production capacity is capital-intensive, laser manufacturers are studying demand forecasts.
These record levels are primarily due to China Mobile’s aggressive expansion into FTTH. China Mobile’s FTTx equipment orders will continue to be larger than originally forecast, and China Mobile is well positioned to expand aggressively based on its strong financing position. A wireline broadband network enables China Mobile to own the mobile customer at home, offering bandwidth-intensive applications. The firm can also use FTTx for internal needs such as mobile backhaul.
China Mobile’s strong move into FTTH affect all layers in the supply chain - from subcomponent vendors such as lens, laser, and PLC manufacturers, to transceiver/BOSA suppliers, to CPE and central office equipment vendors.
It’s difficult to forecast China Mobile’s future GPON OLT and ONT orders. Telcos at the provincial level often determine their respective FTTH deployment plans, so when China Mobile submits a ‘group’ RFP to GPON equipment vendors, levels shipped may vary significantly from the contracts.
In any case, China Mobile is decidedly well positioned to build an FTTx network, bring existing mobile customers onto its new wireline broadband network, and offer additional services. Positive factors include:
- Large existing subscriber base - China Mobile has more than 800 million subscribers and growing - a large base for additional services like data-intensive broadband applications.
- Plenty of room for growth in FTTx subscriber market in China - At year-end 2014, FTTx household penetration in China was under 12%. Reaching even 30% FTTx household penetration means massive effort by all three major telcos given China’s large population and size.
- FMC (fixed-mobile convergence) - China Mobile could use its FTTx network to support mobile backhaul, thus saving capex as mobile data traffic continues to grow.
- Extending existing M2M focus - China Mobile is developing M2M vertical market solutions. While M2M largely entails wireless connectivity, wireline broadband connectivity plays a supporting role in many vertical M2M applications. An FTTx network will support China Mobile’s ongoing expansion into M2M.
- Expanding OTT partnerships - China Mobile has several OTT partnerships which could be expanded to wireline broadband networks - enabling an even better customer experience over large device screens such as HD TVs.
- Local FTTx network building, component, and equipment expertise - China is home to major suppliers of active and passive FTTx components and equipment, and China dominates worldwide consumption of PON equipment due to deployments by China Telecom. China Mobile will benefit from cost-cutting approaches developed in China along with expertise regarding ODN building and management.