Optical fibers are extensively used in fiber-optic communications, where they permit the transmission of data over longer distances and at higher bandwidths than electrical cables. Fibers are preferred over metal wires because signals travel along them with lower resistance. Additionally, fibers are immune to electromagnetic interference, which distorts the signals. It is because of fiber cables that the world feels so interconnected and you can easily stream videos from the US on the Asian subcontinent. The demand for fiber optic cables is expected to grow exponentially until 2020, mainly due to the transition towards 5G networks and the need to effectively manage the growing data traffic across the globe. (Source: Fiber Optic Cables Procurement Report)

Spend potential and key markets

Owing to the expanding broadband network and investment in next-generation passive optical network-based technologies, such as 5G network and IoT, Europe is expected to witness a higher demand for fiber optic cables in the coming years. Also, at present, North America is one of the key markets for the suppliers of fiber optic cables, owing to the large investments from telecommunication service providers such as Verizon and AT&T to improve LTE connectivity and their initial investment in 5G networks.

The APAC region is expected to witness rapid growth due to the implementation of government initiatives to improve network and communication infrastructure in countries such as China, India, and South Korea. Finally, regions such as South America and MEA are expected to grow steadily due to the focus on improving network connectivity across countries such as Brazil, South Africa, Chile, Argentina, Iran, and Israel.

Cost analysis: Supplier costing

Manufacturing costs account for a major chunk of the supplier’s cost base, which includes expenses incurred to obtain raw materials such as optical fiber, PE, PVC, steel, and aluminum. Additionally, labor costs are also expected to increase marginally due to the growing competition among suppliers. Finally, R&D costs are expected to increase slightly as suppliers are increasingly focusing on developing patented technologies to manufacture complex cable designs and cables that are specific to the application.

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Supplier selection and procurement best practices

Buyers must engage with suppliers who can provide end-to-end fiber optic solutions that include design, installation, and maintenance services. To procure the best quality fiber optic cables, it is critical to engage with suppliers who possess valuable design experience and understand application needs to save time and money for buyers. Buyers usually engage for long durations with suppliers, which is why they must evaluate suppliers’ financial and operational capabilities to determine the long-term procurement viability.

Top five suppliers of fiber optic cables

• Corning
• Prysmian Group
• FiberHome Telecommunication Technologies
• HENGTONG Group
• Hangzhou Futong Communication Technology Holdings
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SpendEdge’s procurement report offers strategic insights on the supply market for fiber optic cables and helps category managers to gain information on the procurement trends, pricing models, supply market, and key sourcing procurement challenges affecting the global fiber optic cable market.