US fiber internet providers and their suppliers are significantly attracted, which has analysts excited.

“We’re seeing a boom in new FTTH deployments. These deployments will peak in 2024-2026 and continue throughout the decade,” Strategy Analytics analyst Dan Grossman wrote in an article on the company’s website. “It seems like every working day there is a new announcement from a certain operator that starts building FTTH networks in its community.”

Dell’Oro analyst Jeff Heynen agrees. “As service providers look to differentiate their services in an increasingly competitive market, fiber infrastructure is spurring new subscriber growth and demand growth in client devices with advanced Wi-Fi technology,” he said in a release. “As a result, we have significantly revised up our long-term forecasts for the broadband and home networking markets.”

Specifically, Dell’Oro recently raised its global revenue forecast for passive optical network (PON) fiber optic equipment to $13.6 billion in 2026. The company attributes this growth in part to XGS-PON deployments in North America, Europe and other regions. XGS-PON is an updated standard of PON, capable of supporting 10G symmetrical data transmission.

Strategy Analytics’ Grossman saw a similar trend. XGS-PON is a standout performer, he said, with an unnamed supplier reporting a 93 percent year-over-year increase in XGS-PON port shipments.

Grossman explained that the price of XGS-PON equipment has dropped to the point where the technology can be used in new fiber network builds. He pointed out that operators often do not want to upgrade their existing networks while using XGS-PON for new deployments, so XGS-PON OLT port shipments are a good proxy for new PON home and business coverage numbers.

Supply Side

Grossman noted that several fiber optic equipment suppliers, including ADTRAN, Calix, DZS, and Nokia, reported significant growth in their fiber optic equipment sales. Calix Chairman and CEO Carl Russo said on its most recent quarterly earnings call conference, “We are capitalizing on this great long-term opportunity and growing every day.” Calix reported that the U.S. market in the second quarter of 2022 Revenue was up 33% year over year.

In fact, many suppliers have already started raising the price of their equipment. Executives pointed to several reasons behind the price hikes, from inflation to tight supply chains to customers willing to pay more.

For example, Corning CFO Edward Schlesinger said that sales in its fiber optics segment rose 22% year over year due to strong volume and price growth. “We believe the company is in the early stages of a multi-year construction cycle across multiple segments of the passive optics market,” Schlesinger said on the company’s most recent quarterly call conference. “We are responding to this demand by ramping up production and opening new facilities. As always, we de-risk these investments by requiring a meaningful commitment from our customers, often including funding before construction begins.”

Demand Side

Fibre network operators are clearly keen to ensure a continuous supply of fibre optic equipment.

In a recent article on the company’s website, AT&T network director Chris Sambar wrote: “We have deployed more fiber than any other competitor, adding more than 350 customer locations across the country on average per hour. Speeds like these allow that our fiber network is on track to cover more than 30 million locations by the end of 2025.” AT&T’s fiber buildout had problems last year, but this year it’s still on track, company executives say.

AT&T isn’t the only U.S. carrier building fiber at breakneck speed.

For example, Altice reported that the company added 270,000 FTTH coverages in the second quarter. Additionally, Lumen said the company added 205,000 fiber-enabled locations in the second quarter. Frontier said it added 281,000 fiber locations in the second quarter, up from 211,000 in the previous quarter.

As the Financial Times reports, all fibre demand is putting pressure on fibre supply. Citing data from market intelligence firm CRU Group, the publication noted that global fiber prices rose 70 percent last year. Europe, India and China are the regions most affected by the crisis.

But the situation in the US doesn’t seem to be that bad. The Financial Times quoted Corning’s chief executive as saying that after falling nearly every year for the past decade, fiber prices in the U.S. are up just 2% this year.

According to the publication, part of the reason for the price increase has to do with fiber composition. For example, there is a shortage of helium, a key component in the manufacture of fiber optic glass. In addition, the price of silicon tetrachloride, another key component of optical fiber production, has risen by 50%.