Why Fiber Optic Technology Business is Booming

Fiber optic technology is a major foundation of the internet. Fiber-optic subsea cables covering thousands of miles connect continents together, allowing faster exchange of data. Meanwhile, the massive data centers that host all of our cloud-based applications also rely on fiber connections. Increasingly, these fiber connections travel directly into peoples’ homes, providing them with fast, reliable internet. Sadly, only 43 percent of U.S. households have access to a fiber internet connection.

“In some cases, especially in rural and far-flung areas, it can be prohibitively expensive to deploy fiber and it can be very expensive for households to pay for it,” says Julija Jurkevic, a senior research analyst at S&P Global Market Intelligence.

The Bipartisan Infrastructure Law enacted in November 2021 aims to bridge this digital divide. A total of $65 billion dedicated to expanding access to broadband internet to all Americans. The government support, along with some other factors, have caused an increase in the demand for fiber products.

Fiber-Based Networks 

With fiber-optic broadband driving internet service adoption worldwide, Kagan’s survey of global fixed broadband status indicates that 1.06 billion homes will have a fixed broadband subscription by the end of 2021. Fiber-to-the-premises, or FTTP, comprise 56 percent of the total by year-end, with just 18.7 percent of fixed broadband homes still relying on xDSL, while cable will hold an estimated 21.4 percent in the market share.

Still, an estimated 11.9 million homes will drop xDSL in 2021. At the same time, fixed broadband penetration is expected to reach 47.6 percent of existing households worldwide by end-2021, surpassing the 50 percent threshold by year-end 2024, as subscriptions rise to 1.18 billion, and past 1.2 billion by 2025, equating to a 3.7 percent  compound annual growth rate (CAGR) across 2020-2025.

To understand the technology behind fiber-optic internet and how the market for fiber products is changing, CNBC visited Corning’s optical fiber and cable manufacturing facilities in North Carolina. 

Most famous as the maker of Gorilla Glass for iPhones, Corning is also the world’s largest producer of optical fiber by manufacturing capacity and market share, as well as the largest manufacturer of fiber cable in North America. In Q2 2022, Corning disclosed that the optical communications business was its largest segment by revenue, reaching sales of $1.3 billion.

North America lags the global fiber-optic broadband

While fiber dominates globally, its availability and service take-up differ greatly across regions and individual markets.It is estimated that by 2025, fiber will become the dominant fixed broadband platform in all regions but North America and the Middle East and Africa. As of 2021, the technology dominates only in Asia-Pacific and Eastern Europe.

Asia-Pacific is the largest market for fixed broadband and full fiber, the latter forecast to represent more than 80 percent of the region’s subscribers by year-end 2021. The world’s largest broadband market, mainland China, will account for 53.1 percent of global fiber homes by year-end. 

Fiber is the dominant platform in Asia including in the less developed markets of Indonesia, Malaysia, Thailand and Vietnam. The affordability of broadband services has helped drive fiber adoption, evidenced by our affordability index, which shows a relatively low threshold of 1 percent to 1.3 percent as of end-2020. The Philippines had an affordability index of 2.1 percent as of end-2020. Thanks to the archipelago’s challenging geography, fixed wireless dominates the market, and fiber’s share is estimated to lag behind the Asia-Pacific average  which recorded 38.8 percent at end-2021. Asia will also account for 74.2 percent of the world’s FTTH subscribers by year-end.

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