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Coherent DSPs Will Drive Significant Upgrades in 2023 and 2024

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New Opportunities in Edge Infrastructure as Bandwidth Demands Begin to Exceed 10G

As of early 2023, service providers have a broad installed base of over 13 million ports of 10G for 4G/5G and fixed-access networks that could benefit significantly from a network upgrade to 100G. Historically, service providers have taken a cautious approach towards upgrades as price and power considerations have kept many parts of the network at 10G, despite the significant increases in bandwidth downstream with both consumer and enterprise buildouts.

There is a substantial upgrade opportunity as next-generation 100G DSPs come to market. New 100G DSPs should be able to improve energy efficiency, while providing robust long-haul connections in the 80+ km range. Traditional Dense Wavelength Division Multiplexing (DWDM) technologies or first-generation ZR/ZR+ 100G modules serve these longer distances today but are very power-hungry and approaching full saturation. With the price of new 100G DSPs entering the market expected to offer significant cost savings compared to previous technologies, we anticipate that the service providers will want to upgrade and additional new market opportunities will open in service providers, cloud, and enterprise edge networks.

As customer bandwidth continues to explode and grow the need for higher-capacity links continues to increase. Customers expect a fast, robust connection, whether home on their broadband link, roaming at a coffee shop, or working in an office campus.

We anticipate many service providers will look at 100G Coherent as the next speed to standardize their networks with while some may upgrade existing links to higher speeds. In addition, because of the compelling cost, these service providers will start adding new edge connectivity that was not cost-effective or practical with older 10G technologies.

The 100G Coherent opportunity will hit several large markets. We see traditional wireless opportunities in 5G base station backhaul and newer fixed wireless access deployments. Additionally, broadband providers will benefit from 100G Coherent technology for both consumer and enterprise-facing connectivity.

Anticipate a variety of other networks opportunities with 100G. For example, enterprises may deploy 100G data center interconnects with ZR/ZR+ for more extensive facilities as an alternative to relying on the cloud, colocation, or centralized data centers, as bandwidth is no longer limited to location. Another potential is additional rural broadband buildouts as new cost structures allow service providers to reach smaller sites profitable.

We expect vendors to introduce DSPs, transceivers, and networking equipment designed to address the network upgrade opportunity throughout 2023, with modest shipments in 2023 and a more significant ramp in 2024 after operators go through their qualification cycle.

By Alan Weckel, Founder and Technology Analyst at 650 Group