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Telcos to nearly double fiber footprint by 2027 – reportThe numbers of US homes passed by telco fiber and subscribing to those fiber-fed services will soar over the next five years as the phone companies keep installing fiber at a torrid pace, according to a new report by the financial analysts at Cowen. The comprehensive report, put together by a team of Cowen analysts, projects that telco fiber-to-the-home (FTTH) lines will pass 82 million American households by 2027, nearly double the 44 million households passed today. Led by AT&T, the four biggest telcos (AT&T, Verizon, Frontier and Lumen) will account for the lion's share of those deployments, together passing more than 71 million homes with fiber. But the telcos won't be alone in the fiber frenzy. The Cowen report also projects that cable operators will pass another 5 million homes with fiber lines over the next six years, largely because of Altice USA's current big push in the New York metro area to match Verizon's Fios rollout. Cable operators already pass about 5 million homes with fiber. Overall, Cowen estimates that the US now has 50 million homes passed by fiber lines, with the telcos accounting for the bulk of them. Telco FTTH subs will more than double Further, the report predicts that 35 million US homes will subscribe to telco fiber-enabled services by 2027, up from 16 million now, with fiber accounting for 75% of new broadband subscribers. As a result, FTTH's share of the broadband market will surge from 14% today to 26% in five years, even as the total addressable market (TAM) continues to expand. Large, midsized and small telcos will all participate in this massive fiber deployment, using FTTH to reverse nearly two decades of broadband market share losses to the cable industry, the Cowen analysts say. For instance, they project the nation's biggest telcos will add a combined 7.7 million fiber subs over the next five years. "The next few years will be historic in terms of telco FTTH upgrades, providing consumers speeds of 1 Gbit/s, closing the digital divide, expanding the total addressable market and achieving a 'Gigabit America'," the analysts wrote. "After years of hemorrhaging subscribers, we expect Big Telco to stem the tide of losses to Cable..." But cable will hold its own Notably, though, the report forecasts that telcos will achieve these subscriber gains mainly by upgrading their own remaining 15 million DSL subs to FTTH, not by taking away broadband customers from cable operators. "The cable decade of dominance of DSL-share stealing is over," the analysts wrote, forecasting that the telcos will overtake the cable companies in broadband sub net gains by 2024. "Cable's days of stealing DSL subs are over, though only losing modest share (DSL taking the brunt), as the focus will be on defense." In fact, the analysts argued, cable operators will largely hold their own by playing "tenacious defense" — locking in subs to longer-term deals, cutting prices, offering mobile bundles, hiking speeds to 10 Gbit/s, going "fiber deep" and, in some cases, building all-fiber networks in greenfield and brownfield areas themselves. Thanks to moves like these, the analysts expect cable's broadband market share to dip only slightly from 61% today to 58% in 2027 while the telcos' market share creeps up from 25% now to 27% in 2027. "It's far from doom-and-gloom for cable operators," the analysts note. "With cable's effective marketing plan and speed upgrades, the vast majority of subscriber losses will be from the 15 million DSL subscribers, not cable." The Cowen team also expects fixed wireless access (FWA) to play a notable tole in the US broadband market by the middle of the decade, accounting for a small but increasing fraction of high-speed data customers throughout the 2020s. "FWA will establish a solid but niche foothold," they wrote. Total broadband market will keep expanding Overall, the Cowen analysts believe that US broadband penetration will blow past their earlier top estimates of 85% to 90% penetration of all occupied households, thanks to pandemic-induced lockdowns, a huge influx of government funding for broadband (over $130 billion) and the lower cost of capital. They now expect US service providers to add a collective 17 million broadband subs by 2027, enough to reach 97% penetration of occupied homes and 90% penetration of overall homes, up from 90% and 82% today Indeed, the analysts believe that broadband could achieve utility-like penetration levels of 98% or more, like wired phone service did at its peak last century. All this fiber spending will be a boon for equipment vendors. Specifically, the Cowen analysts single out Calix, Adtran, Ciena, Cisco, MasTec, Nokia and Juniper as likely beneficiaries. The analysts also see potential for further market consolidation. Some scenarios they envision are Charter buying the Suddenlink portion of Altice USA's footprint and Charter or Altice USA merging with T-Mobile to form a third converged player in the national market. — Alan Breznick, Cable/Video Practice Leader, Light Reading A version of this story first appeared on Light Reading. Home page image source: Pixabay. |
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Thursday, August 4, 2022
11:00 a.m. New York / 4:00 p.m. London The digital divide in North America is leaving millions without adequate broadband. Incumbents operate in “islands” of connectivity, serving densely populated areas and, at a national scale, perpetuating the digital divide in the gaps in between their service footprints. Regional ISPs have a clear role in closing that gap. These regional ISPs operate in a highly fragmented landscape, including smaller wireless and FTTH incumbents, satellite ISPs, electric co-ops, tribal communities, and municipalities in public/private partnerships. These regional ISPs face the same cyber threats and operational challenges as their Tier 1 counterparts, but with far fewer resources and revenue-generating population density. As a result, many regional ISPs have developed highly innovated business models for access and core technology, partnerships, financing and services. The discussion will cover:
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