The global optical transport network market size was valued at USD 20.6 billion in 2022. It is expected to reach USD 46.12 billion by 2031, growing at a CAGR of 9.37% during the forecast period (2023–2031).
Optical transport networks (OTNs) are layered and hierarchical networks that use optical fiber to transmit data between nodes. The next-generation industry standard OTN, a digital wrapper, offers a quick and well-liked method to multiplex various services onto optical light paths. It is a collection of optical network components linked together by optical fiber and can transport, multiplex, switch, control, monitor, and sustain the functionality of optical channels carrying client signals. Technology solutions like OTN are being adopted as network service providers deal with the ever-growing issue of rapid user growth and increasing digital traffic with mobile applications, social media, cloud computing, and video calling.
The level of urbanization also drives the demand for internet penetration. As a result, these developments are making more people use the internet, which suits the market's expansion. Furthermore, the need for high-speed internet is being driven by the idea of smart cities. The Internet of Things, which connects various devices from mobile phones to wearables in the public, commercial, and residential sectors, is a key component of the smart city infrastructure.
Furthermore, 5G optical networks based on Dense Wavelength Division Multiplexing technology with specific or fixed spectrum allocation are necessary for the infrastructure of smart cities. The market-driven high-speed internet is also a focus in the Middle Eastern region. Overall, the expanding digital transformations worldwide drive the need for internet and high-speed internet connections, which rely on the optical transport network. Consequently, market growth was anticipated.
Optical transport network providers provide dedicated bandwidth to important data centers, carrier hotels, and business locations on long-haul and metro telecom networks. As a result, the market is seeing significant investment, motivating players to concentrate on the market under study. In April 2021, Raidus introduced a collection of optical transport network suites that use a next-generation network protocol to multiplex various services onto optical light paths effectively and universally, providing users with up to 200 Gbps of network capacity. In August 2021, Nokia and Vocus launched a 200G optical network in Australia, upgrading the latter's optical network between Darwin, Adelaide, and Brisbane to deliver 200G using the photonic service switch from the former company. The company has also planned to deliver 300G and 400G soon.
The ability to tolerate chromatic dispersion, a phenomenon caused by different optical pulses transmitted at different speeds and wavelengths, is crucial. Its low tolerance makes an alternative technology like Ethernet more necessary. The multiplexing performance between Ethernet and OTN is one of the critical differences. With the aid of statistically distributed packet arrival patterns, statistical multiplexing is used effectively in Ethernet to multiplex variable bitrate channels. The static multiplexing of lower bitrate channels into higher bitrate channels is used by OTN, though. Therefore, Ethernet may enable higher throughput utilization by statistically multiplexing using IHON (integrated Hybrid Optical Networking) mechanisms. The shift might be triggered by a failure to showcase such technologies for the continuously evolving digital transformation across end-users like IT and healthcare.
The landscape of optical networks is evolving quickly and is predicted to grow significantly in the coming years. Although managing optical transport can be difficult, the pandemic has made us aware of how virtual networks are—not just for remote learning and work from home but also for entertainment. It is anticipated that all network segments will experience significant growth in the upcoming years. Datacenter interconnect is not far behind the edge of the network connected to residential broadband and the metro. The long-haul and core areas of the network are still expected to grow significantly, albeit more slowly, than the metro/edge areas.
| Study Period | 2019-2031 | CAGR | 9.37% |
| Historical Period | 2019-2021 | Forecast Period | 2023-2031 |
| Base Year | 2022 | Base Year Market Size | USD 20.6 Billion |
| Forecast Year | 2031 | Forecast Year Market Size | USD 46.12 Billion |
| Largest Market | Asia Pacific | Fastest Growing Market | North America |
By region, the global optical transport network market is segmented into North America, Europe, Asia-Pacific, and the Rest of the World.
Asia-Pacific is the most significant revenue contributor and is expected to grow at a CAGR of 11.02% during the forecast period. China will have 2 billion Internet of Things devices by 2021, and by 2025, it will have plans for robotics and intelligent manufacturing. More than 70% of large Chinese firms are slated to be digitalized by 2025, and the country as a whole will see the construction of more than 500 demonstration manufacturing facilities. This strategic step will likely increase interest in OTN solutions in the region, leading to increased demand and possible expansion. The digitization of machinery and plants is gradually gaining momentum in South-East Asian nations. This has increased the amount of data traffic in these nations. In addition, Australian network operator TPG Telecom installed a modular 4G/5G Smart Node solution from a leading communications technology vendor in October 2021, making it the first network operator in the Asia-Pacific region to put up a functioning 5G femtocell.
North America is expected to grow at a CAGR of 8.68% during the forecast period. One of North America's top regions in terms of market share for fiber optic cable assemblies. Since it offers much more bandwidth, there is a high demand for fiber optic cables. Additionally, there is more internet usage and data traffic in the area. According to the Fiber Broadband Association, the Bipartisan Infrastructure Deal for Americans also includes a massive USD 65 billion Investment for Widespread Deployment in Unserved and Underserved Areas and Adoption by In-Need Customers. This hints at the size of the unserviced areas in the United States and the rising demand for network connectivity. The operator must implement strategic optical networking projects covering the network's access, metro, and backbone portions that will deliver its optical transport network plan to deal with this growth as 5G mobile broadband services and FTTH uptake increase.
In Europe, advancements in, adoption of, and network expansion in telecommunications have needed to be faster. 27 EU nations now have commercial 5G services, with the most recent project being launched in Portugal by NOS in December 2021, according to the European 5G Observatory. Additionally, the number of 5G subscriptions in Western Europe increased from 6.49 million in 2020 to 30.56 million in 2021, according to Ericsson Mobility Visualizer, published in February 2022. Furthermore, by 2022, the number is anticipated to rise to 68.6 million. According to a study by FTTH Council Europe, there were nearly 182.6 million homes with fiber-to-the-home (FTTH) and fiber-to-the-business (FTTB) connections in the EU39 countries in September 2020, an increase of just over 10 million from the previous year. Thus, it is anticipated that the OTN market will grow due to the rising demand for network efficiency to handle the increasing consumer data traffic.
Countries including Mexico, Argentina, Chile, the countries of the Middle East and Africa, are still in the development stage and have only the most basic network connectivity. They hardly need OTN solutions and barely have the necessary technology. Fiber connectivity has recently seen steady growth in cities like Mexico and Argentina. The network provider may have a business opportunity in the broadband industry, where market penetration is still relatively low. In mid-2020, the regulator reduced internet subscription fees by 50% in nations like Libya. Regarding mobile broadband, LTE services only have a small geographic footprint, which has slowed the sector's development. Given that Latin America's network connectivity is expected to increase over the next few years, this points to the market's potential growth under investigation.
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The global optical transport network market is bifurcated based on technology into WDM and DWDM.
The WDM segment is the highest contributor to the market and is expected to grow at a CAGR of 12.16% during the forecast period. By allowing multiple data streams to be transmitted over a single optical fiber network at various frequencies, WDM (Wavelength-division multiplexing) increases bandwidth. At WDM wavelengths, signals are unrelated to one another. Over the past five to ten years, optical transport networks have transitioned from SONET to WDM architectures. Carriers could access enormous capacity by using WDM systems to transmit multiple wavelengths over a single fiber. Compared to deploying single-channel networks or overlaying various networks for each service offering, this results in significant cost savings for carriers.
Businesses across various industries are quickly adopting optical networking solutions as their bandwidth and distance requirements continue to rise. This is due to the massive growth of over-the-top applications, cloud computing, and mobile devices and the need for consumers and employees to always have access to their data and applications. Dense wavelength division multiplexing (DWDM) can fit more channels onto a single fiber thanks to its smaller wavelength spacing. It performs best in systems with more than eight active wavelengths per fiber. The C-band frequency range can easily accommodate more than 40 channels thanks to DWDM's fine spectrum dicing. The throughput of DWDM in current optical fiber systems is 100 Gbps. To adopt optically based transmission networks, carriers can use add-drop multiplexers and DWDM in conjunction with network management systems. Using this method, the cost of meeting increasing bandwidth demand is significantly lower than that of laying new fiber.
Based on the offering, the global optical transport network market is bifurcated into services and components.
The component segment owns the highest market and is expected to grow at a CAGR of 10.78% during the forecast period. The component segment is subdivided into optical transport, switch, and platform. An accepted industry standard protocol for multiplexing various services onto optical light paths is called the Optical Transport Network, or OTN. OTN maintains the native structure, timing, and management information while transparently encapsulating the payload for transmission across optical networks. The use of optical transport networks is driven partly by the expansion of 100G(+) transmission in response to the propelled growth of applications like cloud computing, video streaming, 5G, and data centers. As an illustration, Vodafone announced in February 2021 that it would be testing a new Passive Optical Network (PON) transport technology that could deliver speeds of up to 100G over a single wavelength.
The service segment is subdivided into network maintenance and support and network design. The adoption of connectivity advancements in various industries is accelerating due to the growing digital transformation enabled by data and networking technologies like IoT, blockchain, cognitive, and advanced analytics. Data traffic has increased exponentially due to the Internet of Things (IoT) and changing automation trends, which have made OTN more necessary for both large corporations and small and medium-sized businesses (SMEs).
Based on the end-user vertical, the global optical transport network market is bifurcated into IT, telecom, healthcare, and government.
The IT and telecom segment is the highest contributor to the market and is expected to grow at a CAGR of 9.78% during the forecast period. In the coming years, cable operators must make several architectural and technological decisions, including how they will switch to a Distributed Access Architecture (DAA) and which of the many options the development of their HFC networks will offer. On the business side of their operations, a transition that is even more critical is happening, namely the gradual replacement of video services with high-speed broadband as the cable industry's primary revenue generator. Therefore, optical solutions arenecessary and are anticipated to provide these operators with good services. Over the past few years, Chinese carriers have aggressively deployed 100G-capable OTN switching networks.
Edge networks need differentiating network capabilities to provide the improved services that families and businesses expect. Public and private clouds and virtual private networks have become popular among companies and government agencies, necessitating high-availability network services that can deliver these unique capabilities. Today's service providers must deal with high-capacity demand from their corporate clients brought on by the expansion of online government services. Thanks to technological advancements, governments can use smart city initiatives, shared services, and DCI to improve constituent service and public safety.
