Connecting Gigabit Society and Zettabyte Era

Structured cabling using both UTP and Fiber optic cables is the accepted cabling backbone of any building complex, office installation or manufacturing plant. The structured cabling market has witnessed stable growth over past several years, however, in the recent times, overall, the industry is passing through a turbulent phase. A newly released ‘hot topic study' from UK based Building Services Research and Information Association (BSRIA) charts the global structured cabling market through the year 2020, concluding that by then the total market will exceed $8 bn. The market totaled $6 bn in 2012, BSRIA says, and will chart a course of 4% annual growth through 2020.

The US, Germany and the UK are top three country markets for structured cabling components. At the same time, markets of countries of the Asia-Pacific region are considered to have the best growth opportunities.

The BSRIA report states, "The structured cabling market is facing a turbulent time. Structured cabling in data centers continues to move toward the use of fiber. The number of smaller data centers that mainly use copper will decline as the penetration of cloud services increases and outsources become more prevalent."

Industry Trends

One major market that continues to grow is the data center and this is giving the growth impetus for structured cabling industry. Spurred first by the growth of the Internet and now, in addition, by the extensive utilization of smartphones and applications like on-demand video, the need for data center continues to increase. And this growth in the data center market has increased the need for fiber-optic products.

The optimization of network infrastructure is another trend that impacts structured cabling, since network connectivity of servers, storage, desktops, etc, all rely on cabling.

Going ahead, fiber-optic products are poised to steadily take share from copper in the structured cabling market over the next five years, indicate market pundits. Although copper's grip on the structured cabling market is slipping, there are opportunities with higher-bandwidth shielded products, such as CAT6A F/UTP and CAT7 S/FTP, which will both see upwards trend as these products also support 10-Gigabit Ethernet.

On the other hand, the Indian telecommunications industry has witnessed sluggish growth in last couple of years and still recovering from the debacles of 2G spectrum scam. The vendors in this space are now cautious in terms of their investments and this has had an impact on the industries like structured cabling. However, a CMR report on structured cabling industry indicates that this is a temporary phenomenon. The India SCS industry is already gaining momentum. Organizations across verticals are facing the common problem of data explosion, mainly consumer / customer data in the form of digitized records, emails, feedback gathered via social media, video services and so on. This has resulted in demand for higher bandwidth and high-end technology. These organizations are also voluntarily adopting internet-based applications, IP applications and virtualization to address the higher levels of computing needs for expanding business operations.

CMR report further elaborates that the India SCS market recorded a year-on-year growth of 20% in 3Q (July-September) 2012 in revenue terms, though the quarter-on-quarter growth was only 5.6%. In 3Q 2012 the copper cables and components market grew at a rate of 5.8%, whereas the fibre cables and components market grew at a rate of 5.2% compared to 2Q (April-June) 2012.

Major wireless operators in India have chosen to replace corrugated copper cables in their networks with coaxial cables in order to keep their capex spends low. For structured cabling solutions providers the key growth verticals are IT and BPO-ITeS, Government, Manufacturing, Telecommunications and BFSI. Though, IT and BPO-ITeS and Government have been major contributors, but the last few quarters have seen a slump in business from these verticals. Explaining this factor, CMR report states that the slowdown in the US and the European economies had impacted demand from the IT and BPO-ITeS sector in the last few quarters and the investments made were mainly to service domestic demand. On the other hand, investments by the Government sector, made with a long term focus, saw a slowing down in the last few quarters due to delays in decision making.

On the other hand, many companies like Legrant, Sterlite, Belden, Hubble, Leviton, etc, are carving out niche in segments like automation, machine building, oil and gas, transportation grids and more.

Another key segment is the emergence of IP-based video surveillance systems which is slowly and firmly getting established. IMS research forecast that in 2013, global network video surveillance equipment sales will overtake analog video surveillance equipment sales. The trend is away from analog-based video systems that run over coaxial-cabling systems and toward IP-based systems running over twisted-pair and/or fibre-optic cabling systems. This acceleration in the transition from Analog to IP video surveillance is also true for other endpoints like Telephones, Access Control Systems, Sensors and Intelligent Building Management Systems.

CAT Phenomenon

In copper cables, CAT 6a is widely used by Indian customers. There has been a lot of debate about CAT 7, but this latter form factor is yet to pick up, while the Cat 6a segment continues to display healthy traction. The growing need for faster data transmission and stable performance across a wider frequency range has given rise to Cat 6a and Cat 7.

CMR report indicates that advanced copper cables are being demanded in India across verticals and Cat 6a cables particularly have high acceptance levels in Data Centre segment. Some concerns for the copper cabling market are the increasing prices of copper in international commodity markets, and limitation of maximum of a span of 100 metres without any deterioration in the data and service quality.

Although the overall market globally for Category 6 cabling will shrink over the next five years, manufacturers have the opportunity to capitalize on this mature product and it will continue to be a source of revenue. The structured cabling business has always been competitive and the commoditization of the market caused by the recession has put additional pressure on manufacturers as the number of new installations dwindled; competition for every job is fierce. End-users are watching their budgets.

Category 5e will mainly be used in low-end installations such as residential and to support applications such as building automation systems, security, and lighting.

The move towards 10 Gigabits

The growing need for faster data transmission and stable performance across a wider domain of applications has given rise to Cat 6a and Cat 7.

Both can support speeds of up to 10 Gigabits per second on copper.

Advanced copper cables are being demanded and Cat 6a cables particularly have high acceptance levels in the Data Centre segment. Cat 6 cable has outsold Cat 5e for the past three years.

The increase in network bandwidth requirement is driving 10 Gb/s Ethernet products that will work over structured copper cabling. The cabling industry believes that UTP cabling systems for category 6 will support 10Gb/s applications over 100 m. Category 7 systems utilizing S/FTP cabling exhibit superior overall transmission performance. Lower levels of signal loss and alien crosstalk suppression allow for a higher signal to noise ratio. As a result, an S/FTP cabling system can easily support maximum channel length requirements of 100m.

Fiber Quotient

In the Fibre segment, residential complexes in urban areas across the country are driving the demand for FTTH, as this form factor allows a single service provider to deliver voice, data and video content. This trend is likely to see a further increase as FTTH and FTTP both find increasing acceptance and deployment in India. Both the rapid spread of broadband as also innovation in technology will drive the adoption of fibre optic cabling. The benefit of having fibre optic cables is that they provide faster transmission of data and is not affected by electromagnetic interference while can be laid out for long distances.

While at the consumer end, HD video, high-quality voice and data services and remote access of applications are expected to gain momentum and this would further drive the demand for fibre-optic cabling solutions. Also, in large installations, fibre is a preferred medium when a video surveillance system is being installed in a high footfall environment such as an airport or hospital.

The Road Ahead

The year till now has been a slow moving one for the industry which were further influenced by dollar rate fluctuations. Interestingly, none of the reports indicate a negative trend. There are clear indicators that future holds better promises for this industry.

The key drivers in times to come which would give the right boost to this industry include infrastructure development projects, better government policies, constant increase in demand for higher bandwidth and adoption of high-end technology by consumers and businesses alike.

With the strong emergence of the concept of Bring Your Own Device (BYOD) will strengthen the need for wireless infrastructure within the building. In the next five years there will be major changes in the types of devices that are supported in the work area and in the structured cabling systems that are installed to support them.

Industry specific, the Fibre-optic cabling market is expected to see higher than average growth. Significant increase in number of data centers being established across the country is one of factors. In addition, the need for uninterrupted services at businesses (including intra department and branches) as well as in some instances housing complexes will drive demand for fibre based solutions. Furthermore, verticals like healthcare, hospitality, education, and infrastructure are undergoing reformation and the new projects as well as the a large number of old ones are in process of modernizing which will provide a plethora of opportunities for structured cabling solutions provider.

Above all, new investments are coming from B, C and D class cities and hold significant growth potential, which also provide a galore of opportunity for this industry.

Conclusion

The approval of the new task group to study Class II channels is a recognition of the advances in PIMF cabling technology needed to support the use of balanced twisted copper cabling for 40 G applications. This recognition is somewhat tempered by the fact that TIA TR42.7 has to deal with the issue of three different connector types allowed for Class II. It is not clear whether TR42.7 will continue to require a single interface allowing portability and interoperability of cabling, LAN, and SAN equipment in data centers that generally use the RJ45 connector as the standard ubiquitous interface for balanced twisted pair cabling.

Recent market data from BSRIA indicates that the adoption rates of Category 7/7A cabling will continue to remain below two percent of the total market through 2015. Our view is that this confirms the issues customers and the market in general face with Category 7A/Class FA cabling and may continue to haunt the market acceptance and adoption of Class II cabling. A likely reason for this poor adoption is the lack of a standardized interface connector for Class II cabling.