The global optical wavelength services market size was valued at USD 3.93 billion in 2021. It is expected to reach USD 7.99 billion by 2030, growing at a CAGR of 8.20% during the forecast period (2022–2030).
Optical wavelength service is a high bandwidth, point-to-point delivery service based on fiber optics. Dense-wavelength division multiplexing (DWDM) technology enables the transmission of numerous high-bandwidth channels over a single fiber strand. Businesses are storing and moving enormous amounts of data to support important business decisions and give marketing teams access to insightful data. The expense of installing and maintaining a separate fiber channel can be decreased by having numerous firms use a single fiber strand. Depending on their needs for data transmission, service providers provide businesses with metro wavelength services, domestic wavelength services, and international wavelength services.
People, processes, data, and objects are now frequently connected to the internet and one another using the Internet of Things (IoT). By Huawei's GIV 2025 report, there may be more than 100 billion connected objects worldwide by 2025. Such pronounced IoT device growth raises internet demand even higher, necessitating a robust network. Additionally, according to Cisco, linked home applications will account for 48%, or nearly half, of all M2M connections by 2023, demonstrating the pervasiveness of M2M. These applications include home automation, security, video monitoring, connected white goods, and tracking applications. The usage of the internet has been actively encouraged by governments all around the world. The growing demand for the internet drives the global optical wavelength services market over the forecast period.
The need for optical wavelength services with more bandwidth has increased due to the rise in bandwidth-intensive applications, including video and web conferencing, cloud storage, audio, video streaming, gaming, and others. In addition, the demand for optical wavelength services has also increased due to the rise in video and web conferencing. Applications that broadcast videos, like Microsoft Teams, Zoom, Skype, and Google Meet, may need more bandwidth to function correctly. For example, Good Meet needs up to 4 Mbps for HD video chats with groups. Due to remote and hybrid work and learning during the epidemic, such applications have been employed extensively to help people and organizations stay resilient. In addition, Microsoft revealed in October 2020 that Teams, a video conferencing program, had 115 million daily active users (DAU). The market for optical wavelength services is further driven by the expansion of streaming video and audio applications.
A market limitation for optical wavelengths, such as remote working, has led to an increase in the adoption of virtual connectivity. Several virtual network products have recently been made available that perform the operations of conventional network devices, including switches, routers, and firewalls. Companies like Cisco Systems and Verizon have collaborated to create a flexible networking infrastructure. For instance, Verizon Business and Cisco teamed up in June 2020 to expand their Virtualized Network Services (VNS), adding Cisco's Enterprise Network Compute System (ENCS) to their already-existing compute devices. In order to speed up attempts at digital transformation, businesses worldwide are concentrating on creating a digitally ready infrastructure at the edge. Vendors in the market also provide adaptable and agile products and can swiftly deploy solutions since they see this as an opportunity.
Data is increasingly being stored and transmitted on a global scale. The total rise is driven by various sources, mainly responsible for introducing applications that use significant-high data rate transmission between systems. Asynchronous Transfer Mode (ATM), Public Internet Service (PIP), Virtual Private LAN Service (VPLS), Internet Protocol Virtual Private Network (IP VPN), Private Internet Service (PIP), Asynchronous Transfer Network (SONET), Ethernet, Storage Transport Services, and Wavelength Services are some of the services that enable high data rate transmissions. The demand from wholesale service providers, big Internet service providers (ISPs), and the wireless sector to extend their network reach where they do not own infrastructure has been steadily rising over the past few years and is likely to continue to grow over the forecast period.
The global optical wavelength services market is segmented by bandwidth, fiber channel interface, and organization size.
Based on bandwidth, the global market is bifurcated into less than 10 Gbps, 40 Gbps, 100 Gbps, and more than 100 Gbps.
The less than 10 Gbps segment is the highest contributor to the market and is expected to grow at a CAGR of 10.06% during the forecast period. Bandwidth-intensive applications demand high-performance connectivity. In the development of fiber optic transmission technology, wavelength services are a crucial phenomenon that can boost a single fiber's capacity. The technology is integrated with network management tools to enable carriers to adopt optically-based network infrastructures and satisfy future bandwidth demands. Fiber has a theoretically large bandwidth of roughly 25 THz in the low-attenuation region, which is 1,000 times larger than the global radio spectrum. Electronic speed limits how quickly an end user can access a network, limiting the achievable speeds of fiber to a few gigabits per second.
Initially, only after integrating optics onto substantial processor boards in routers or optical networking equipment were 100 Gbps speeds feasible. Since 100 Gbps pluggable optics are already commonplace thanks to advancements in related sectors, metro deployments can innovate more quickly in terms of power, size, and cost reduction. A traditional method for combining 10 Gbps lines from an access network for transport is wavelength division multiplexing (WDM). The total capacity of a 40-wavelength, 100 GHz-spaced DWDM network with 10 Gbps per wavelength is 400 Gbps per fiber pair. This bandwidth is quickly used up in metropolitan areas with heavy demand.
The implementation of 100 Gbps data transfer speeds in metro areas, made possible by the development of 100 Gbps solutions, has increased the amount of accessible fiber bandwidth from 400 Gbps to 4 Tbps on a fiber pair when used in conjunction with DWDM. Data center operators, content providers, and Internet exchanges were some of the first specialized clients to demand 100 Gbps metro solutions.
Based on the fiber channel interface, the global market is bifurcated into OTN, SONET, and Ethernet.
The Ethernet segment owns the highest contributor to the market and is expected to grow at a CAGR of 9.49% during the forecast period. Ethernet is a technology that connects wired local area networks (LANs) using the "common network language" protocol. Fiber Optics Ethernet uses optical fibers, which have high bandwidth and can travel great distances. With the help of the External Network to Network Interface (ENNI) standard, carrier Ethernet facilities and enterprise networks may be rapidly and easily connected. This allows for a faster rollout and improved visibility across virtualized network connections. Ethernet Private Line (EPL), Ethernet Virtual Private Line (EVPL), and Ethernet Local Area Network (ELAN) are services that allow for high-speed data transmission across many sites (up to 100 Gb/s).
Synchronous optical networking (SONET) is a communication standard. It was established by the American National Standards Institute (ANSI) and the Exchange Carriers Standards Association (ECSA). SONET's OC levels vary from 51.8 Mbps (OC-1) to 9.95 Gbps (OC-192). SONET and Ethernet produce a hybrid voice, image, data, and video network. TDM for SONET is approximately 30 years old but still commonly used. In addition, Ethernet and OTN channels are replacing TDM-based SONET and product and service support. OTN's MPLS-TP technology enables SONET-like packet transport services. Businesses that have not updated to newer technologies still use SONET/SDH fiber lines—innovating for these clients.
Based on organization size, the global market is bifurcated into small and medium-sized enterprises and large enterprises.
The large enterprise segment is the highest contributor to the market and is expected to grow at a CAGR of 4.42% during the forecast period. Wavelength services' virtually infinite capacity makes them the perfect choice for financial institutions, data centers, and other situations requiring the sharing of massive amounts of data. For instance, the introduction of Wavelength, an optical wavelength service, was announced by Spark light Business. It is intended to use fiber infrastructure to provide carrier and business customers with a dedicated, point-to-point, high-capacity data network service. Massive-sized enterprises can send large amounts of data at speeds between 10 and 100 Gbps over a dedicated throughput with minimal jitter and latency thanks to optical wavelength services.
When faced with shocks like the coronavirus epidemic, SMEs are less resilient and flexible. SMEs have comparatively higher prevention costs and process adjustments, like a move to teleworking, because of their smaller size. In order to keep up with demand as application loads rise and bandwidth requirements grow, optical Wavelength Services must be delivered more quickly, and bandwidth upgrade intervals must be reduced. For instance, Neptune IP Transport and Apollo Optical Transport systems were used by Eastern Slope Rural Telephone to enhance their fiber network serving clients in eastern Colorado. The Neptune and Apollo platforms provided Eastern Slope Layer 2 Ethernet aggregation capabilities and fast DWDM. The system was built to support legacy TDM services, handle future bandwidth growth, and add support for mobile backhaul and business services.
By region, the global optical wavelength services market is segmented into North America, Europe, Asia-Pacific, and the Rest of the world.
Asia-Pacific is the most significant shareholder in the global optical wavelength services market and is expected to grow at a CAGR of 11.22% during the forecast period. Asia-Pacific is improving its communication infrastructure as part of its digital transformation. The region's IT companies are driving demand for end-to-end wavelength services. In addition, LAN and WAN connectivity expansion will support regional market growth over the forecast period. Data center traffic management is also driving demand for optical wavelength services. According to data center space per user, China's internet data centers are expected to grow at least 22 times the rate of the U.S. or ten times Japan's current space. Some policies encourage IT adoption and digital transformation of traditional industries. The region's demand for internet data center services is growing, fueling market growth.
North America is expected to grow at a CAGR of 8.80% during the forecast period. Due to the region's extensive internet penetration and expanding communication infrastructure, North America has significantly impacted the development of the global market for optical wavelength services. These trends call for better connectivity, which drives up demand for optical wavelength services in the area. The region has many established vendors. These companies include, among others, Zayo Group Holdings, Inc., Verizon Communications, Inc., Crown Castle, Inc., Charter Communications, Inc., Cox Communications, and CarrierBid Communications. Additionally, the high adoption of cutting-edge technologies in the United States, such as AI, 5G, IoT, and high-performance computing, is fueling the demand for a high data transmission rate, which in turn is driving the market's expansion.
Europe is anticipated to grow significantly over the forecast period. In July 2020, Infinera's 600G optical transmission technology was chosen by Europe's terabit-capable network GÉANT for its upcoming development stage. Additionally, Italian wholesale infrastructure provider Open Fiber chose Nokia to provide optical transport technology for the nationwide expansion of its Ultra-BroadBand (UBB) network starting in September 2020. To support the goals of the Italian Gigabit Society 2025 strategy, Open Fiber committed to constructing a complete fiber-optic UBB network to connect over 6,000 municipalities throughout Italy. Nokia will offer the 1830 Optical Network Extender (ONE) and Network Functions Manager-Transport (NFM-T) solutions for the aggregation layer of Open Fiber's Access Network alongside its technology and services partner SIAE Microelettronica. Therefore, it is anticipated that these developments will positively influence the market's growth in the area.
Latin America, the Middle East, and Africa are included in the rest of the world. Over the forecast period, internet traffic in Latin America is anticipated to increase significantly. As a result, the demand for fiber optics has driven the market for optical wavelength services. The region's digital transformation is driving digital ecosystems. Growth in private interconnection in the area is also a sign of pervasive digital transformation within businesses, which increases data exchange between companies in the area. Major cities across Latin America have received offers and signing contracts from organizations desiring to network and broaden their reach due to the rising popularity of fiber optic networks among telecom and internet service providers. The three countries expected to contribute most to the regional market growth are Argentina, Brazil, and Mexico. However, there is tremendous room for growth in nations like Chile and Uruguay.
The global optical wavelength services market’s major key players are
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