Technavio analysts expect the global optical transport network (OTN) equipment market to exceed USD 16 billion by 2020, growing at a CAGR of over 19%, according to their latest report.

OTNs are predominantly powering communications in major enterprises such as finance, media, and entertainment. This is because OTN has the ability to meet the stringent standards and high bandwidth requirements of these industries.

The rise in popularity of bandwidth-intensive high definition and 3D video is expected to drive the market for OTN. The rapid growth in video on demand (VOD), gaming on demand, IPTV, and network DVR during the forecast period will increase video transmission significantly, thus boosting the adoption of OTN.

Technavio’s lead hardware and semiconductor market research analysts have identified the following five factors that will drive the growth of the OTN market:

• Migration to WDM architecture
• Reduction in transportation costs and scalability beyond 40G
• Private networks and flexibility
• Secure and dynamic infrastructure
• Demand for high bandwidth

Migration to WDM architecture
Optical transport networks have started migrating toward WDM architecture from SONET technology over the last couple of years as it enables them to tap into enormous capacity by carrying multiple wavelengths over a single optical fiber. This has allowed carriers to save significantly on the cost of deploying single channel networks or an overlay of multiple networks for each service offering.

The benefits of WDM include fault detection, performance monitoring, and isolation of the wavelength. According to Asif Gani, a lead analyst for semiconductor equipment at Technavio, “Although in the initial stages of implementation, many of these key features were missing or not implemented properly by the WDM equipment vendors, however, with technological enhancements, the actual benefits of this system will be realized during the forecast period.”

Reduction in transportation costs and scalability beyond 40G
The adoption of OTN has allowed carriers to transport data to multiple clients on a single wavelength and preserve their specific requirements thus reducing the overall cost of transportation and ensuring efficient bandwidth utilization.

With OTN, carriers are also able to provide high-capacity services at speeds of 100 Gb and above. The network architecture of OTN is designed and optimized to support massive capacity services, such as 40G or even terabit payloads.

Private networks and flexibility
OTNs support the partitioning of the network into separate private networks. This allows the carriers to offer their clients dedicated, specific and configurable bandwidth, with guarantee on network capacity and improved performance for each client.

The flexibility of the network architecture enables carriers to employ the technology required to support current transport demands. In addition, it also allows the future adoption of new technologies as per business requirements.

Secure and dynamic infrastructure
The OTN infrastructure allows it to create channelized links and distribute traffic on dedicated circuits. This ensures high level of security and privacy for the users, as it can effectively stop hackers from gaining access to other parts of the network, even if they hack and gain access to any one part of the network.

The use of OTN with a control-plane, allows the network to be dynamic and responsive to upper-layer applications in real time. This makes it possible for emerging services, such as cloud computing and (IoT) to be managed by the control plane.

Demand for high bandwidth
There is a surge in demand in the telecom sector for high bandwidth from enterprises as well as individual customers which is shaping the future of the OTN market. Increased use of Internet for gaming, video calls, online shopping and social media has significantly increased the requirement for high bandwidth, especially in metropolitan cities across the globe.

Enterprises are also demanding higher bandwidth from service providers, with the largest requirement coming from financial and government organizations. “Network providers and networking equipment manufacturers need to be able to support the huge digital traffic flow over the networks. OTN can easily support high bandwidth, and is thus rapidly gaining traction in metros,” says Asif.

Source: Technavio
with Business Wire