'Extraordinary' Rush to Fiber Seen Not Universally Viable

The U.S. is in the midst of a huge run of fiber-to-the-home (FTTH) deployments by broadband providers, though it won't reach a significant part of the country, an ACA Connects webinar heard Thursday. Many providers are transitioning to fiber, but that transition is focused on profitable areas and leaves behind minority communities, some said.

The rush to fiber "has been extraordinary," with 2 million FTTH deployments last year, 7 million expected this year and 9 million next, said MoffettNathanson's Craig Moffett. FTTH predates the federal infrastructure bill, and is driven by the low cost of borrowing along with private equity investors -- who traditionally had been hesitant about projects with long rates of return -- "falling over themselves to fund fiber-like investments," he said. About 35% of the U.S. is overbuilt with fiber, and another roughly one-third will be covered over the next decade, Moffett said: Low population densities for that final third of the country almost surely will keep fiber out of reach.

Shentel's Glo FTTH will pass an additional 75,000 homes this year and double that next, said Chief Operating Officer Ed McKay. He said government subsidies are needed if there's to be headway in fiber reaching that final third. He said "the vast majority" of Virginia could have FTTH, but it's less practical in some Midwest states.

The broadband competition executive order earlier this year (see 2107090006) shows the White House isn't convinced there's sufficient competition, said Public Knowledge Senior Policy Counsel Jenna Leventoff. Often consumers don't reap rewards of competition until at least four providers are in a community, and "we're not even close to that" for much of the U.S., she said. Leventoff said federal broadband deployment money should go more toward open-access networks instead of to particular providers pledging to cover an area. She said there also needs to be a policy priority on providing computers and teaching digital literacy skills.

Slowdown in broadband subscriber growth at major providers like Comcast and Charter Communications was expected, given their huge 2020 growth, Moffett said. He said there's a growing number of edge-outs by fixed wireline providers into new territories. He said the demand for service has made investments workable in areas once considered not dense enough to be financially viable. He said the balancing act for fixed wireline providers is trying to get high market share while also discounting service costs so much that it becomes difficult to attract investors for yet more expansion into areas with less population density.

Fixed wireless emerging as a strong competitor in the home broadband market isn't likely except in non-rural areas, Moffett said. He said low earth orbit satellite broadband isn't likely to be a significant player except in rural areas, given capacity issues. Federal subsidization of broadband costs "may be missing the mark" because the majority of that funding has gone to mobility rather than fixed broadband, though the goal seemingly was to drive broadband to the home, Moffett said. McKay said about 1% of Shentel's customers are taking advantage of the emergency broadband benefit, and the program shouldn't make customers choose between mobile and fixed.