Asia overtakes the U.S. in PON OLT sales this year

The Asian/Pacific market is set to surpass North America this year in sales of optical line terminal (OLT) hardware, the passive optical networking (PON) equipment that typically sits in the carrier central office. That’s according to a recent study published by Infonetics Research.

Just two years ago, North America represented 73% of all OLT sales, while Asia/Pac represented just 8%, Infonetics said. But in 2003, North American OLT sales dropped to less than half of the market while Asia/Pac rose to more than a third. Next year, more than half of all OLT sales will take place in Asia/Pac, while roughly a third will be in North America.

North American PON is dominated by ATM-based BPON, which makes up 77% of the current OLT revenue here, while Asia/Pac PON is dominated by Ethernet-based EPON, which makes up 72% of OLT revenue there. Industry experts have suggested that the spread of EPON in Asia—especially Japan—could drive down the cost of EPON technology in parallel with the cost reductions resulting from Verizon Communications’ and others’ use of BPON, keeping EPON an appealing proposition to American service providers.

Asia/Pac should continue to dominate OLT sales for the next three years at least, Infonetics said, tapering off slightly from a peak in 2005 to comprise 56% of OLT sales in 2007. The North American OLT market will rebound from a nadir in 2005, rising to 37% of the market in 2007. Europe, combined with the Middle East and Africa, represent a distant third, its 19% share of the OLT hardware market in 2002 projected to shrink to 7% in 2007.

The global OLT hardware market grew 15% sequentially to $52 million in the third quarter and should continue to grow at a “high double-digit” compound annual growth rate, Infonetics said.