Global Optical Encryption Market Size By Encryption Layer (OTN-Layer 1, MACsec-Layer 2), By Data Rate (Less Than 10G, Greater Than 100G), By Vertical (Government, Healthcare), By Geographic Scope And Forecast

Optical Encryption Market Size And Forecast

Optical Encryption Market size was valued at USD 3.09 Billion in 2020 and is projected to reach USD 5.96 Billion by 2028, growing at a CAGR of 8.54% from 2021 to 2028.

Emerging requirements of regulatory compliances, growing concern over data security and privacy due to cyberattacks, and rising data center deployments are the major driving factors for the Optical Encryption Market. The Global Optical Encryption Market report provides a holistic evaluation of the market. The report offers a comprehensive analysis of key segments, trends, drivers, restraints, competitive landscape, and factors that are playing a substantial role in the market.

Global Optical Encryption Market Definition

Optical encryption is a means of securing in-flight data in the transport layer of the network as it is carried over optical waves across fiber-optic cables. Due to a wide range of cyber-attacks, many industries are focusing on security and safety concerns of data, optical encryption has helped the telecommunications market to have a safe and secure transmission of data. Many financial and government industries have started the usage of optical encryption due to their growing security concerns, as a result, the price and availability of optical encryption engines have increased dramatically.

The aforementioned is a factor expected to drive Optical Encryption Market growth. Optical encryption provides service to any possible network, this service can be offered not only by traditional service providers but also by data center and internet exchange operators who wish to provide exceptionally secure connections. It doesn’t require an underlying payload, nor the optical transport network frame is padded thereby optical encryption doesn’t come at the cost of fiber bandwidth. This is the most important method of encrypting the data optically for the next generation and core optical transport layer globally.

Global Optical Encryption Market Overview

An increase in cyber-attacks, growth in data safety & security concerns as well as an increase in investments for smart city projects by various governments are the major factors that drive the growth of the Optical Encryption Market. The effective security of the network relies on multiple layers of defense and not just at the core and edge of the network, but also along the network path, while most organizations focus much of their security at user and application end, which is essential to protect the in-flight data as it travels across the network.

In addition, the industry-wide adoption of cloud computing applications for hosting, processing, and data storage led to an increase in the frequency of sensitive data transferred across the network, which added costs associated with data loss. An increase in data breaches fosters the growth of the market. For instance, 2019 accounted for some of the breaches from major players in various industries, including Zynga, Facebook, Adobe Creative Cloud, and Capital One Financial Corporation, and is reported as much as a leak of 218 million data records.

Furthermore, an increase in the penetration of the internet, data traffic, and numerous benefits provided by optical encryption such as reduced cost, lower latency, high bandwidth efficiency, improved performance, and high availability, fuels the growth of the Optical Encryption Market. Also, the increase of in-flight data to be carried at longer distances across waves, including 10 G, 40 G, and 100 G, among others, has initiated the adoption of optical encryption to protect high-capacity that is be traveled across countries. For instance, in January 2020, BGN Technology, a transfer company of the Ben-Gurion University of Negev, introduced all-optical stealth encryption technology that claimed to be significantly more secure and private for the network transmission of the data center and cloud computing.

The solution is said to employ the phase mask that enables it to change the phase of each wavelength. However, change in government policies for data protection across different regions and increase in network complexity hampers the growth of the market. Furthermore, the adoption of new technologies like cloud-based services and IoT technology in optical encryption and growth in the implementation of networks in emerging nations are anticipated to provide major opportunities for the market.

Global Optical Encryption Market Segmentation Analysis

The Global Optical Encryption Market is segmented on the basis of Encryption Layer, Data Rate, Vertical, and Geography.

Optical Encryption Market, By Encryption Layer

• OTN-Layer 1
• MACsec-Layer 2
• IPsec-Layer 3

Based on Encryption Layer, the market is bifurcated into OTN-Layer 1, MACsec-Layer 2, and IPsec-Layer 3. IPsec-Layer 3 encryption accounted for the largest share of the Optical Encryption Market in 2017. Layer 3 encryption is widely used and accepted for internet-based virtual private networks (VPNs). Many large-scale IPsec deployments are currently in operation across enterprise and government networks.

It provides seamless security to application and transport layers and can be applied to networks of all sizes from local area network (LAN) to wide area network (WAN). The market for Layer 1 is expected to grow at the highest CAGR during the forecast period. The reason for this growth is the advantages such as reduced cost, lower latency, high bandwidth efficiency, improved performance, and high availability, offered by Layer 1 encryption.

Optical Encryption Market, By Data Rate

• Less than 10G
• Greater than 10G and less than 40G
• Greater than 40G and less than 100G
• Greater than 100G

Based on Data Rate, the market is bifurcated into Less than 10G, Greater than 10G and less than 40G, Greater than 40G and less than 100G, and Greater than 100G. The greater than 10G and less than 40G data rate segment accounted for the largest share of the Optical Encryption Market in 2017. This can be attributed to the large-scale adoption of optical encryption in different verticals such as BFSI, government, healthcare, and energy and utilities where the average data rate transfer is in the range of 10G and 40G.

The market for greater than 100G optical encryption is expected to grow at the highest CAGR during the forecast period. This growth can be attributed to the requirement for encryption rates to align at speeds beyond 100G for any packet size so as to meet the demand for increased bandwidth driven by cloud services, mobile devices, and massive increases in video traffic.

Optical Encryption Market, By Vertical

• Banking, financial services, and insurance (BFSI)
• Government
• Healthcare
• Data center and cloud
• Energy and utilities
• Others

Based on Vertical, the market is bifurcated into banking, financial services, and insurance (BFSI), Government, Healthcare, Datacenter and cloud, Energy and utilities, and Others. The banking, financial services, and insurance (BFSI) vertical accounted for the largest share of the market in 2017. Optical encryption is being increasingly deployed by the BFSI sector to protect their customers, meet government and industry data security compliance standards, facilitate security auditing, and avoid reputation damage caused by data breaches.

The Optical Encryption Market for the data center and cloud vertical is expected to grow at the highest CAGR during the forecast period. Data centers play a crucial role in delivering IT services and providing storage, communications, and networking to a growing number of networked devices, users, and business processes in general. The growing importance of data analytics has boosted the value and growth of data centers.

Optical Encryption Market, By Geography

• North America
• Europe
• Asia Pacific