With the cross regional expansion of data center service providers, utilizing PON technology to achieve efficiency improvement is becoming a new trend. The latest report from Dell’Oro Group shows that PON technology is expanding from traditional residential networks to data centers and enterprise applications. From 2026 to 2030, the cumulative expenditure on PON equipment in data centers is expected to exceed $3 billion, with a compound annual growth rate of 52%.
Introducing PON into data centers can enable operators to replace copper cabling and active aggregation switches with passive optical distribution networks. One of the key advantages of PON in data centers is its ability to be used for out of band management – remote access and control of data center equipment through dedicated fiber optic networks.
PON based out of band management is different from traditional out of band management architecture. The latter relies on dedicated switches for each rack, increasing complexity and power dissipation requirements. Jeff Heynen, Vice President of Broadband Access and Home Networking Research at Dell’Oro Group, stated that “PON technology is increasingly shifting from traditional residential networks to enterprise applications, providing new growth opportunities for PON equipment suppliers.” He pointed out that various large-scale enterprises are “increasingly deploying PON technology for passive fiber distribution, which has lower costs and much longer value retention time than traditional copper cable infrastructure.”
Market momentum of out of band management
As large-scale enterprises, Neocloud, and hosting service providers deploy PON for out of band and infrastructure management networks, Ciena and Nokia are rapidly entering the market.
Ciena claims that its data center out of band management solution based on XGS-PON technology can replace the large traditional management network within modern ultra large scale data centers. This solution was originally developed for Meta and can greatly simplify remote access, configuration, and troubleshooting of servers and switches for operators. Ciena CEO Gary Smith stated during the Q2 2026 financial report that “DCOM’s climb has been very smooth, contributing to an 88% year-on-year growth in our routing and switching business.” He added that in addition to Meta, the company has received preliminary orders from a second large-scale customer and the laboratory certification of the third one is progressing smoothly.
Nokia also sees strong demand for PON out of band management platforms. Although no customers have been publicly announced yet, Nokia announced in March the expansion of its OOBM product portfolio and the launch of Aurelis for Data Centers. Nokia claims that the platform can reduce the number of active switches by 90%, save more than 50% of power consumption, and simplify 80% of operational work.
Enterprise PON and FTTR acceleration
Dell’Oro also expects the enterprise market and fiber to the room to continue driving PON deployment. More and more enterprises are deploying passive optical LANs, as the long-term speed increase and operational cost reduction outweigh the cost of deploying fiber optics inside buildings. FTTR technology has shown outstanding performance in the Chinese market, and Chinese operators are continuously deploying tens of millions of master-slave ONUs to provide FTTR services for residential broadband users.
