New Street Research notes that during 2020, a number of wireline telecom companies in the United States have announced plans to deploy fiber-to-the-home (FTTH) to markets they previously served with copper. And the analyst group is forecasting that homes passed by fiber will increase from 40 million to 60 million over the next 10 years. That would increase the percentage of homes passed from 25% to 35%.
“We expect deployments to gain pace in 2022 and 2023, given that several of the companies planning deployments are still in restructuring,” writes New Street in an investor’s note released yesterday.
Of the 40 million homes passed, AT&T and Verizon together currently account for more than 30 million of those passings.
Telecom companies that have announced more fiber deployments include Frontier, AT&T, Lumen Technologies, Verizon and Windstream.
Frontier, which is undergoing a restructuring after bankruptcy, currently passes about 3 million homes with fiber, but Frontier is targeting from 3 million up to 9 million more homes passed as it shifts its revenue base from predominantly legacy copper to fiber by 2031. New Street uses the low end of that target for its financial models.
Frontier has also qualified as a bidder in the upcoming RDOF auction. Beginning Oct. 29, the qualified bidders will compete against each other in Phase 1 of the auction, designed to bring gigabit broadband speeds to unserved rural areas.
AT&T currently has FTTH passing 15.5 million residences, and it has committed to pass 3 million more homes over the next three years. New Street estimates it will pass almost 4 million more homes between 2020 and 2030.
AT&T’s CEO John Stankey sees fiber enhancing all parts of AT&T from wireline to wireless to video. On the company’s recent Q3 earnings call Stankey said, "We're not looking at our investment on a customer segment by customer segment basis, but we're looking at it as every trench foot of fiber that we put in has a bunch of different access technologies that hang off the end of it.”
Verizon currently passes 15.8 million homes with fiber, and it’s slated to add about 2.8 million more homes by 2030 as it completes its One Fiber project, which has been ongoing for several years.
CenturyLink, which recently rebranded as Lumen Technologies, currently passes about 2 million U.S. homes with fiber, according to New Street Research, and its expansion plans aim for 6.8 million households passed by 2030. However, Lumen’s fiber focus seems to be more on the enterprise market, rather than residential. At last count, Lumen had 170,000 buildings “on-net” with fiber.
And finally, Windstream, which recently emerged from Chapter 11 bankruptcy, passes about 1.3 million homes with fiber, and New Street projects that it will pass an additional 1.5 million homes by 2030.
“The economics for FTTH deployment are driven by density more than any other factor,” writes New Street. “The carriers started FTTH deployments to their densest markets first. The 20 million that are being targeted next will be to the densest parts of the remainder (leaving aside markets that receive RDOF support).”
Of the 40 million homes currently passed by FTTH, 14 million homes are actually connected to fiber, suggesting 37% penetration of the addressable market. New Street said that penetration is lower than it was five years ago because there has been an 80% increase in homes passed by fiber in just the last five years. Penetration in mature fiber markets has tended to stall at around 40%, said the analysts.