The Global Synchronous Optical Network market size was valued at US$ 6.30 billion in 2023 and is expected to reach US$ 11.22 billion by 2030, grow at a compound annual growth rate (CAGR) of 8.6% from 2023 to 2030. Synchronous Optical Networking (SONET) is a standard for optical telecommunications transport formulated by the Exchange Carriers Standards Association (ECSA) for the American National Standards Institute (ANSI), which allows multiple digital streams to be multiplexed over a single optical fiber. SONET defines interface standards at the physical layer of the OSI model. With SONET, carriers can transport PDH signals as well as virtual tributaries using SDH transmission standards. Key drivers supporting the SONET market growth are increasing internet penetration, rising demand for high bandwidth services, growing adoption of cloud-based services, and surging data traffic worldwide.
The Synchronous Optical Network Market is segmented by technology, application, components, data rate, distance, industry vertical, and region. By technology, the market is segmented into WDM, SONET, fiber channel, Ethernet, ATM, HDLC, and others. The WDM segment accounts for the largest market share as WDM allows transmission of multiple signals over a single strand of fiber and helps maximize bandwidth utilization.
Synchronous Optical Network Market Regional Insights
- North America is expected to be the largest market for Synchronous Optical Network Market during the forecast period, accounting for over 35% of the market share in 2022. The growth of the market in North America is attributed to early adoption of SONET and optical fiber networks and heavy investments in R&D activities in advanced networking technologies.
- The Asia Pacific market is expected to be the second-largest market for Synchronous Optical Network Market, accounting for over 25% of the market share in 2022. The growth of the market in is attributed to high demand for SONET equipment from emerging economies such as China, India, and Southeast Asian countries.
- The Middle East & Africa market is expected to be the fastest-growing market for Synchronous Optical Network Market, with a CAGR of 12% during the forecast period. The growth of the market in Middle East & Africa is attributed to increasing investments to strengthen communication infrastructure across countries.
Figure 1. Global Synchronous Optical Network Market Share (%), by Region, 2023
Synchronous Optical Network Market Drivers:
- Surging Demand for High-Speed Data Services: The demand for high-speed data services is increasing rapidly around the world. Consumers are using bandwidth-intensive applications like video streaming, online gaming, video conferencing, remote desktop access etc. that require faster internet connectivity. SONET provides secure and reliable high-speed data transmission over optical networks. The rising popularity of high-bandwidth applications is a major factor driving the growth of the global SONET market. The rapid increase in global data traffic will compel service providers to deploy high-capacity networks like SONET to meet the rising bandwidth requirements. This creates significant opportunities for SONET vendors.
- Proliferation of Cloud Computing: The adoption of cloud computing has amplified exponentially over the past decade. Organizations are moving their business-critical applications and sensitive data to the cloud to boost efficiency and agility. This requires high-speed networks that can provide secure connectivity between the cloud platform and end-users. SONET offers reliable and low-latency cloud connectivity, making it an ideal solution. According to Right Scale's 2020 State of the Cloud Report, over 80% of enterprises had a multi-cloud strategy in 2019 compared to just 58% in 2018. As more workloads move to the cloud, the deployment of SONET systems will also grow to support seamless cloud connectivity.
- Emergence of 5G Networks: The rollout of 5G networks presents a massive opportunity for SONET vendors. 5G delivers multi-Gbps speeds and ultra-low latency for supporting next-gen immersive applications. SONET can provide the high-capacity optical backbone required for 5G networks. Many network operators like Verizon, AT&T, and others are leveraging SONET for 5G transport infrastructure.According to GSA, 144 operators in 60 countries had launched 5G networks commercially by October 2022. More widespread adoption of 5G globally will boost the adoption of SONET for building network backhaul.
- Increasing Fiber Optic Infrastructure Investments: Investments in fiber optic infrastructure have increased worldwide, especially in emerging economies. Governments are undertaking national broadband projects to enhance internet connectivity. Developed countries are also proactively deploying fiber networks to support advanced services and applications. For instance, in 2021, the US government announced the Internet for All initiative involving $65 billion for fiber broadband infrastructure funding. Such investments in fiber networks present significant opportunities for SONET vendors.
Synchronous Optical Network Market Opportunities:
- Increasing Deployments in Smart Cities: The development of smart cities globally provides an excellent opportunity for SONET adoption. Smart cities utilize digital connectivity for automating and integrating various urban systems. SONET can provide the high-capacity fiber optic backbone required for enabling seamless connectivity across smart city infrastructure. The rapid proliferation of smart cities will boost demand for SONET deployments.
- Growth Prospects in Emerging Markets: Emerging economies like China, India, Brazil, and others are undertaking massive investments in telecom infrastructure driven by rising internet penetration among consumers and businesses. This offers significant scope for SONET market expansion as service providers in these countries are deploying SONET equipment to scale network capacity.For example, Airtel Africa partnered with Ciena in 2021 to upgrade its network in Ghana using Ciena's SONET and Ethernet solutions. Such developments highlight the strong demand growth expected from emerging markets.
- Increasing Adoption in Enterprise Networks: Enterprises are modernizing their network infrastructure to support the work-from-home trend, cloud adoption, IoT connectivity etc. SONET offers enterprises with secure and reliable high-speed connectivity for seamlessly connecting headquarters, branches, data centers and remote sites.Verizon Business recently deployed Ciena's SONET equipment to provide highly reliable and scalable network connectivity for enterprise customers. The growing enterprise adoption of SONET will boost market growth.
- Potential in Submarine Cable Networks: Submarine communications networks span across continents through deep-sea cables providing international connectivity. SONET allows transmitting massive volumes of data across transoceanic distances. Submarine network operators are deploying next-gen SONET equipment to meet surging bandwidth demand.For instance, Orange partnered with Ciena in 2020 to upgrade its existing Line 17 submarine network using Ciena’s GeoMesh Extreme solution. Such submarine cable upgrades will create new revenue opportunities for SONET vendors.
Synchronous Optical Network Market Trends:
- Integration with Packet-Optical Transport Systems: Packet-optical transport systems (P-OTS) allow transporting data traffic seamlessly over optical networks. P-OTS leverages benefits of both SONET/SDH TDM networks and packet networks. SONET systems are increasingly integrated with P-OTS to enable service providers to handle diverse traffic formats over converged networks. In March 2022, Infinera expanded its P-OTS portfolio with metro packet-optical transport solutions having 200G coherent optical technology. The integration of SONET and P-OTS allows operators to optimize network efficiency.
- Adoption of Software-Defined Networking: Software-Defined Networking (SDN) and Network Function Virtualization (NFV) technologies are seeing increased adoption in telecom networks. SDN-enabled SONET equipment provides greater network agility, flexibility and programmability. For instance, Lumentum launched its SDN-enabled SONET platform in 2018 that allows programmable optical layer automation. The shift towards software-defined SONET networks is a key trend.
- Use of Machine Learning in SONET Systems: SONET equipment vendors are integrating machine learning (ML) capabilities in their systems to enable self-organizing networks. ML algorithms help SONET networks to automatically predict and resolve issues through continuous learning. In 2019, Ciena launched its Adaptive Network solution that leverages AI/ML to provide greater network visibility and performance insights to operators and allow networks to self-optimize. The adoption of ML is transforming SONET networks to be more resilient and efficient.
- Increasing Deployments of 100G+ SONET Systems: Growing bandwidth demand is driving operators to deploy next-gen ultra-high capacity SONET systems supporting 100G, 200G and 400G line rates. 100G SONET was standardized in 2016 under the name OTU4. Ciena's WaveLogic 5 platform provides programmable 200G-800G coherent optics to power high-speed optical networks. The transition to 100G and beyond speeds will be a key technology trend in the SONET market.
Synchronous Optical Network Market Report Coverage
||Market Size in 2023:
||US$ 6.30 Bn
|Historical Data for:
||2018 to 2021
||2023 - 2030
|Forecast Period 2023 to 2030 CAGR:
||2030 Value Projection:
||US$ 11.22 Bn
- North America: U.S. and Canada
- Latin America: Brazil, Argentina, Mexico, and Rest of Latin America
- Europe: Germany, U.K., Spain, France, Italy, Russia, and Rest of Europe
- Asia Pacific: China, India, Japan, Australia, South Korea, ASEAN, and Rest of Asia Pacific
- Middle East & Africa: GCC Countries, Israel, South Africa, North Africa, and Central Africa and Rest of Middle East
- By Technology: WDM, SONET, Fiber Channel, Ethernet, ATM, HDLC, Others
- By Application: ISP, Corporates, Education, Government, Utilities, Others
- By Components: Optical Transmitters, Optical Receivers, Optical Fibers, Optical Switches, Optical Amplifiers, Optical Splitters, Others
- By Data Rate: Less than 2.5 Gbps, 2.5-10 Gbps, 10-40 Gbps, More than 40 Gbps
- By Distance: Less than 200 km, 200-500 km, 500-1000 km, More than 1000 km
- By Industry Vertical: IT & Telecom, BFSI, Healthcare, Government, Transportation & Logistics, Others
Huawei Technologies Co. Ltd., ZTE Corp., Cisco Systems Inc., ADVA Optical Networking SE, Nokia Corporation, Ciena Corporation, Infinera Corporation, Fujitsu Ltd., ECI Telecom Ltd., Telefonaktiebolaget LM Ericsson, NEC Corporation, Juniper Networks Inc., Coriant GmbH, Huawei Marine Networks Co. Limited, NTT Electronics Corporation, Lumentum Operations LLC, Plaintree Systems Inc., Marben Products, Smartoptics AS, Shenzhen HiSilicon Technologies Co. Ltd
- Increasing internet penetration
- Growing demand for high bandwidth
- Rising data traffic
- Increasing adoption of cloud services
|Restraints & Challenges:
- High initial investment cost
- Lack of infrastructure in emerging regions
- Complexity in installation
Synchronous Optical Network Market Restraints:
- High Cost of Deployment: The biggest challenge impacting SONET adoption is the high cost associated with deploying and managing SONET equipment. The optical line terminals (OLTs), optical network units (ONUs) and other hardware are expensive. Constant upgrades are required to support evolving technologies like 5G. Operators need skilled manpower for deploying and maintaining SONET networks which further adds cost.
- Long Gestation Period for Returns: The initial upfront investment for setting up SONET networks is very high. Operators also need to regularly upgrade the network infrastructure to keep up with growing demands which entails additional capex. Due to the substantial initial investment, the ROI realization period is lengthened. This can act as an impediment for service providers.
- Growing Competition from Alternative Technologies: Emerging technologies like carrier Ethernet and MPLS networks are being increasingly adopted by operators as they are easier to deploy and manage compared to SONET. Even legacy networks like asynchronous transfer mode (ATM) pose competition. The availability of such alternatives at a lower cost than SONET is impacting its adoption among price-sensitive customers.
New product launches
- In March 2022, Huawei launched the industry's first 50G PON OLT, the MA5800-X17, to help operators build high-quality ultra-broadband full-fiber access networks. This launch strengthens Huawei's leadership in 50G PON.
- In January 2021, ADVA launched the FSP 150-XG118Pro, its new edge device for open optical transport networks. It helps to simply and securely aggregate, filter, and route up to 16 services over one optical port.
- In September 2020, Infinera expanded its 400G product portfolio, including its seventh-generation Infinite Capacity Engine, providing network operators with the innovative coherent optical solutions.
Acquisition and partnerships
- In October 2021, Lumentum acquired NeoPhotonics for approximately $918 million to accelerate optical networking strategy. This acquisition strengthens Lumentum’s vertical integration capabilities.
- In March 2020, Ciena partnered with UK’s CityFibre, Vodafone, and TalkTalk to build Britain’s wholesale full fiber platform. This partnership strengthens Ciena's footprint in UK.
- In November 2018, Infinera acquired Coriant for $230 million. The combined company has become one of the top optical network equipment providers globally.
Figure 2. Global Synchronous Optical Network Market Share (%), by Distance, 2023
Top companies in Synchronous Optical Network Market
- Huawei Technologies Co. Ltd.
- ZTE Corp.
- Cisco Systems Inc.
- ADVA Optical Networking SE
- Nokia Corporation
- Ciena Corporation
- Infinera Corporation
- Fujitsu Ltd.
- ECI Telecom Ltd.
- Telefonaktiebolaget LM Ericsson
Definition: Synchronous Optical Networking (SONET) refers to a standard protocol for optical telecommunications transport formulated by the Exchange Carriers Standards Association (ECSA) for the American National Standards Institute (ANSI). It defines interface standards at the physical layer of the OSI model and allows multiple digital streams to be multiplexed over a single optical fiber. SONET helps carriers transport PDH signals as well as virtual tributaries using SDH transmission standards. It enables service providers to deliver high-speed data, voice, and video communications all over optical fiber-based networks.
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