North American broadband providers will invest more than $60 billion in fiber-to-the-home (FTTH) projects over the next five years, a figure about twice the amount invested in FTTH buildouts during any previous five-year stretch, according to a new forecast from RVA Market Research and Consulting.
There is still room in the region for operators to reach out to first-time fiber customers, although some of the coming investment also will spur competition for customers that already have FTTH from existing providers.
Michael Render, founder and CEO RVA told FierceTelecom that big FTTH players like AT&T and Verizon still have unbroken ground in their incumbent markets where they can deploy FTTH despite heavy investments in the past, and might even eventually look to expand FTTH beyond their traditional market borders.
“Our intelligence indicates AT&T may be building as much or more in the next five years as they did in 2016-2020,” Reder stated via email. “AT&T has already announced about two million new homes to be passed in 2021. We currently expect Verizon to build at the moderate pace they have the last few years -- but they could become more aggressive.”
Render added that Frontier, Lumen and other Tier 2 telcos are other candidates to build out at a strong pace during the next five years, “limited only by their financial ability to do so.” Cable TV companies also are likely to bring FTTH to new areas, and the smallest operators--rural electric coops, municipalities, Tier 3 telcos and others--should not be counted out of the FTTH boom. “Small player projects are expected to be financed by both private and public investment,” Render stated. “There are now about 1,200 such providers.”
The coming round of strong FTTH investment is being driven by several factors, including increasing consumer awareness of the high-quality user experience available via FTTH, as well as operator acknowledgment that FTTH spending will pay back in the form of lower operational expenses and churn going forward.
Also, Render said home networking and video consumption trends during the Covid-19 pandemic have factored into growing demand for FTTH and increasing take rates for service providers. “We believe there is a clear connection between the pandemic and accelerated demand for FTTH," he stated. "Our consumer studies and others have shown a dramatic increase in working at home and the use of two-directional video, as well as virtual private networks.”
Render said RVA’s own study from early in the pandemic found that videoconferencing for business increased 160%, about 430% for education purposes and 500% for healthcare applications.
He added, “Our research shows that Internet with slower speeds, less reliability, and more latency has negative real-world impacts noticed by consumers – more in-home rationing (not allowing too many high bandwidth users in the home at any given time), more unproductive time waiting for applications to load, and disruptive educational and medical access.”
The RVA 2021-2025 Forecast Report discusses the consumer and competitive FTTH drivers and the impact of 5G on fiber deployment and provides detailed history and forecast for many types of U. S. and Canadian FTTH providers. The report is based on extensive research and quantitative analysis involving interviews with hundreds of providers, vendors, and industry experts, as well annual consumer surveys of over 2,500 online users.