The global telecom industry has experienced massive network transformation from voice-driven 2G/3G networks to data-driven 4G and 5G ones. While all stakeholders in the telecom sector have been instrumental in enabling this transformation, the test and measurement (T&M) industry, in particular, has played a vital role in the process.
T&M investment has become a critical component of deployment strategies being adopted by stakeholders across the global telecom and technology ecosystem. Global communication service providers, network operators, mobile device manufacturers, equipment manufacturers, system integrators as well as enterprises are leveraging T&M solutions to ensure that their offerings are foolproof. Further, the adoption of suitable T&M solutions has enabled network operators to test and deploy new technologies, bring down operating costs and deliver high quality services at all stages of the network lifecycle.
A look at the key trends and growth drivers for the global T&M market…
Evolution of networks
The biggest growth driver for the global T&M industry has been the evolution of telecom networks. At present, key global markets are witnessing a massive proliferation of 4G and long term evolution (LTE) networks. This is driving consumer demand for high speed connectivity, which is leading operators to conduct accurate carrier testing, battery testing, conformance testing and field evaluation, thereby fuelling the worldwide sale of LTE testing equipment. As a result, the global LTE testing equipment market, currently valued at approximately $3 billion, is expected to witness exponential revenue growth in the coming years.
In terms of regions globally, Asia presents immense opportunities for the LTE testing equipment market, with South Korea acing the pack. The country has positioned itself as a lucrative, high potential market for LTE testing equipment providers. South Korean telecom operators such as SK Telecom are deploying LTE testing equipment for network T&M in a range of devices. The African region, a relatively untapped market for LTE providers, is expected to create enormous opportunities for LTE testing equipment suppliers in the near future on account of its thriving telecom industry.
However, the world is now slowly transitioning to 5G networks. While countries such as the US and South Korea have already launched these networks, others stand at the brink of deployment. In this scenario, T&M solutions are helping telecom operators in testing the capability and ensuring the reliability of their networks. In light of this, the demand for extensive 5G T&M equipment and services is set to experience a significant push. For instance, as per a report by Future Market Insights, the revenue of the global 5G tester market is projected to reach $629 million in 2019, witnessing a 14.6 per cent growth over 2018. As per the report, over 40 per cent of this demand will come from telecom providers with global companies such as Verizon and AT&T switching to 5G networks and raising the demand for 5G testers. Among 5G testers, network analysers and signal analysers remain the most sought after in the global market.
The rise of optic fibre testing
The rising deployment of optic fibre in global telecom networks is propelling the demand for T&M solutions. The advent of 5G is significantly impacting the need for optical test equipment that enables 5G fixed wireless access trials. Going forward, the commercial deployment of 5G networks is expected to drive the implementation of fibre, thereby boosting the demand for test equipment. In fact, the global fibre optic test equipment market is estimated to grow at a compound annual growth rate (CAGR) of about 7.7 per cent between 2018 and 2025.
Optical time domain reflectometers are witnessing the strongest growth among different types of fibre optic test equipment. Further, fibre inspection probes are growing at a fast pace.
North America is a region that has emerged as the biggest revenue generator for the global fibre optic testing equipment market. It is expected to retain its position during the period 2018 to 2025.
Emerging technologies
Another factor responsible for driving the global uptake of T&M solutions is the emergence of technologies such as internet of things (IoT). According to Ericsson, the number of global cellular IoT connections is expected to reach 4.1 billion by 2024, growing at a CAGR of 27 per cent between 2018 and 2024. The rising deployment of IoT is likely to bring in significant changes in the requirements for T&M equipment and create new opportunities for vendors. Reliable T&M of IoT networks, the deployment of which will enable several new applications and use cases, ranging from the automation of homes to the automation of manufacturing processes, is paramount. As IoT is spreading its roots across all verticals, industry stakeholders are increasingly looking at integrating a massive network of connected devices and machinery. This has resulted in the emergence of new alternatives for accessing connectivity that are driving the expansion of testing equipment on a global scale.
Other emerging technologies such as artificial intelligence (AI), virtual reality and machine-to-machine communications are also expected to drive the growth of the T&M market. These technologies will lead to the development of a new breed of devices and networks, which will require extensive T&M. The uptake of these technologies will drive the growth of the T&M industry in the years to come.
Consolidation continues
The global T&M industry continues to be shaped by consolidation. Over the past couple of years, a number of telecom T&M companies have resorted to mergers and acquisitions. Larger, well-established players have acquired smaller companies with new technology strengths and niche market leaderships. Further, the acquisition of companies by financially strong players to grow inorganically, up to a leadership position, is on the rise. For instance, Keysight Technologies has acquired Anite, Ixia and Thales Calibration Services over a span of three years. The acquisition of Thales has established Keysight as the largest calibration and support services organisation in Australia. Viavi Solutions signed a definitive agreement to acquire the T&M business of Cobham Wireless to strengthen its competitive position in 5G deployment. Viavi has diversified into military, public safety and avionics test markets.
Forging partnerships
A number of global manufacturers and vendors of T&M equipment have been forging partnerships and alliances to drive growth. These strategic deals have been playing a vital role in increasing the uptake of T&M equipment and helping companies gain a competitive edge in the market. For instance, a recent collaboration between Rohde & Schwarz and Gemalto paved the way for the development of new T&M tools that facilitate LTE testing by reducing time and costs. This is otherwise challenging in the case of LTE and LTE-Advanced modules. A number of companies are also collaborating with operators and handset manufacturers for conducting 5G-related T&M.
The way ahead
Although the global T&M industry is witnessing significant traction, the growth path is not devoid of challenges. For one, the T&M market is extremely price sensitive. Another bottleneck that global T&M vendors face is providing testing solutions to best suit the skills and capabilities of end users.
The challenges notwithstanding, the global T&M equipment industry is expected to witness massive expansion on the back of upcoming technologies such as 5G, AI and cloud. However, to cater to the varied requirements of each technology, T&M equipment vendors will have to constantly innovate and upgrade their offerings in line with customers’ needs.
