The demand for better broadband connectivity is driving many telecom operators to make a big push to expand their fiber footprints. According to a report from financial analysts at Cowen, in 2021 telecom operators, led by AT&T, are expected to expand fiber to 5 million more homes, bringing the total homes passed in the U.S. to approximately 42 million. The firm estimates that 2025 that number could increase to 68 million homes passed with fiber, which means fiber would have a penetration rate of more than 50% in the U.S.
AT&T is at the forefront of the fiber push. Executives at the company told analysts at their annual investor event earlier this month that AT&T will deploy fiber-to-the-premises (FTTP) to an additional 3 million locations across 90 metro areas this year and add 4 million FTTP locations in 2022.
But AT&T isn’t alone. Cowen analysts noted that Frontier Communications, which is in the process of emerging from bankruptcy, has plans to upgrade fiber to 3 million homes, which would double its existing fiber footprint. And the investment firm said that number could grow as high as 9 million FTTP homes depending on the economics.
Windstream, which is now privately held having emerged from Chapter 11 bankruptcy last fall, also has said it will expand its fiber holdings. The company had 462,000 fiber homes as of the end of 2020. However, Cowen noted that Windstream was awarded $523 million over the next 10 years in the recent Rural Digital Opportunity Fund (RDOF) reverse auction. The company must build fiber to 192,000 locations as part of its RDOF commitment.
In addition, Consolidated Communications has plans to upgrade 2 million homes to fiber by the end of 2025, which would give it fiber to 70% of its service area.
Cowen analysts said that assuming these telco fiber initiatives come to fruition, telecom operators could end up with 8.4 million subscribers over the next 5 years from these new fiber homes passed. This compares to Cowen’s estimate for the cable operators, which has them adding 12 million broadband subscribers in the next five years. And while Cowen estimates that cable operators will attract the majority of new broadband customers, they said that if the telecom operators were to achieve their fiber buildout targets over the next five years, they were pose a “formidable threat” to cable.