Broadband to Make Key Transitions in 2020
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INDUSTRY ANALYSIS Broadband to Make Key Transitions In 2020 Large incumbent telcos, independent telcos, cable operators and electric cooperatives set bold broadband plans for 2020. By Sean Buckley / Broadband Communities s the new year begins, BROADBAND FTTH PENETRATION TO RISE COMMUNITIES is asking industry AT&T, CenturyLink and Verizon furthered Acolleagues what will drive the broadband fiber to the home (FTTH) growth in 2019, a industry in 2020. trend that will continue as providers ramp up Leichtman Research Group (LRG) found new builds and increase penetration. that 82 percent of all U.S. households get internet It’s hard not to notice fiber’s influence on service, of which 96 percent is broadband. broadband. Consider the fact that in 2002, Fiber continues to become a significant only 50,000 U.S. homes had access to fiber factor in the broadband race. Market research connectivity. firm RVA revealed in its North American 2019 Fiber broadband now passes 46.5 million Advanced Broadband Report that broadband unique homes in the United States – about 37 providers had passed 49.2 million homes with percent of total homes – and connects 20.5 fiber, up 17 percent in 2019. million. Unique homes are defined as those with But a key challenge for wireline broadband at least one fiber service marketed. RVA said operators will be how to stay ahead of the this excludes estimates of redundant services impending 5G threat. available to the same home. Jeff Heynen, senior RVA reports the number of homes passed research director for market research firm by fiber has risen 16 percent since 2018. Fiber Dell’Oro Group, says 5G became available to 6.5 million additional should motivate operators unique homes since the beginning of 2019. to accelerate their 1 Gbps But for all this growth, RVA notes that short- broadband plans. term take rates are declining slightly: There was “Operators are moving a 44 percent average take rate based on unique passings and a 66 percent average market share Jeff Heynen to a world where their fixed Research Director, broadband offerings will (excluding homes with no home internet). Dell’Oro Group need to be 1-plus gigabit, at “The lower take rates are due to new builds, a minimum,” Heynen says. particularly from larger players,” said Michael “That has been a benchmark threshold for some Render, CEO and founder of RVA, during a time, but 2020 is the year it gets delivered and, webinar presenting the research firm’s 2019 in some cases, exceeded. The reason is that there FTTH findings. “AT&T is building so quickly is industry pressure on how to differentiate from that its take rate is below 30 percent and will 5G services.” take time to ramp.” 38 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | JANUARY/FEBRUARY 2020 From the Fiber Broadband Association’s North American 2019 Advanced Broadband Report Nevertheless, AT&T remains a and reduce fiber builds could affect the have fiber are significantly lower. So, big player. It gained 318,000 new overall U.S. FTTH industry. something tells me they will continue subscribers, achieving 3.5 percent AT&T’s Stephens told investors to move forward, expanding where they of third-quarter IP broadband during the Wells Fargo TMT Summit can and overbuilding the VDSL areas.” revenue growth. that the company still has plans for AT&T might be capping new “Our 300,000- significant new fiber builds, though at a builds, but Heynen says CenturyLink plus AT&T Fiber slower pace. and Verizon are expanding their FTTH net adds drove “When you think about capex presence in existing markets. broadband revenue going forward, the accelerated fiber- “CenturyLink is another operator growth,” said John to-the-premises build getting us to 14 that will keep the North American Stephens, CFO million is completed,” he said. “We’ll market going as it is building out its of AT&T, during continue to spend money on fiber, but GPON and XGS-PON footprint this the accelerated build is completed.” its third-quarter year,” he says. RVA said AT&T’s fiber plans means John Stephens earnings call. CenturyLink has attacked the 2020 deployment will be down, but CFO, AT&T Stephens added fiber broadband market on various still strong. that there’s plenty fronts, expanding availability in “AT&T will existing markets and even outside its of room to expand. “We’ve got just drop off quite a bit own territory. It established a fiber under 4 million customers on fiber, and in 2020,” Render leasing arrangement with Springfield we’ve got about 14 million capable,” he said. “Still, we will City Utilities to deliver services said. “We’ve got a lot of room to grow.” see record growth Verizon saw FTTH gains, adding by historical to Springfield, Missouri, residents 36,000 Fios internet subscribers in the standards.” (See “Springfield, Missouri, and third quarter. As it penetrates existing Heynen agrees CenturyLink Expand Fiber Network,” markets, Verizon is allowing customers that although the November/December 2019). Michael Render to build custom Fios bundles, including North American The telco also has revamped its CEO and Principal MDU broadband focus by adopting a purchase an internet-only option. Analyst, RVA LLC market will be “Consumer Fios revenue increased Market Research and “flat” in 2020, five-technology method: GPON, Wi-Fi, by 1.7 percent due primarily to the Consulting AT&T’s efforts G.hn, G.fast and mmWave wireless. demand for our broadband offerings,” to migrate CenturyLink will continue to look for says Matt Ellis, CFO of Verizon. customers from VDSL2 to FTTH new opportunities to bring GPON- will mitigate churn. based services to as many buildings as it SHOULDERING AT&T’S “AT&T said they will be more can reach in its footprint. CAPEX EFFECT incremental, but they have also had Grand Central at the Junction, AT&T’s plans to reduce its overall success in securing fiber customers,” a 17-acre, mixed-use development capital budget to $20 billion in 2020 he says. “The churn rates where they in Wentzville, Missouri, selected JANUARY/FEBRUARY 2020 | www.broadbandcommunities.com | BROADBAND COMMUNITIES | 39 INDUSTRY ANALYSIS From the Fiber Broadband Association’s North American 2019 Advanced Broadband Report CenturyLink’s fiber network to deliver SMALLER CARRIERS TO Consolidated and Shentel are also symmetrical speeds up to 940 Mbps for RAMP FIBER hot on the FTTH and broadband trail. residences and businesses (See Property Independent ILECs, CLECs and Since it acquired FairPoint, of the Month, page 30). electric cooperatives, which accounted Consolidated upgraded 500,000 “Over the next five years, you’re for 25 percent of new fiber home residents and small businesses going to see CenturyLink maintain our connections, continue to stretch the throughout Northern New England, fiber focus,” says Dan O’Connell, VP of investment dollar. In 2019, RVA including 1 Gbps services to more than consumer sales for CenturyLink. “We said smaller providers represented 25 86,000 New Hampshire locations. know that we win when we deliver fiber “The real value is in that in close to the unit and CenturyLink ON.” percent of new homes marketed and 41 percent of FTTH capital expenditures. proximity to the FairPoint network, Verizon also will make ongoing we’re able to within 500 feet address moves to increase FTTH density and Cincinnati Bell, Consolidated Communications and Shentel are the business market and extend into expand NG-PON2. Throughout its neighborhoods,” said Bob Udell, CEO among many independent ILECs with Northeast footprint, Verizon has been of Consolidated, during its third- retiring copper facilities and migrating significant fiber build plans. quarter earnings call. “We upgraded customers to FTTH, according to FCC Cincinnati Bell, which is being 110,000 locations and have 50 Mbps or filings. It said that “fiber’s resiliency acquired by Brookfield Infrastructure, higher speeds available to roughly half and reliability, especially in inclement is expanding its FTTH footprint in of our footprint.” weather, will benefit customers.” Cincinnati and Hawaii. It reaches 60 to In September, Verizon and Calix Fellow independent Shentel 65 percent of homes in Cincinnati with launched Glo Fiber by extending the demonstrated 34 Gbps by using bonded FTTH, as well as 50 percent in Oahu NG-PON2 at Verizon’s innovation existing 6,000 route miles of fiber in its and 35 percent in Hawaii overall. territory. Shentel plans to extend fiber lab in Waltham, Massachusetts. At Leigh Fox, CEO of Cincinnati Bell, that time, Verizon said the bonded to 60,000 homes. Following 10,000- told investors during the Wells Fargo transmission technology could satisfy 12,000 in 2019, it plans to build TMT Summit that the company is future needs of small and mid-size another 30,000–40,000 this year. business customers. also eyeing markets outside of its “The FTTH initiative is an “Verizon continues to expand in its ILEC territory. opportunity to edge out in some existing serving areas and continues to “We have had business wins adjacent markets where we think upgrade OLTs and ONTs,” Heynen that draw in consumer builds,” Fox we can get a healthy return on our says. “The NG-PON2 project continues said. “The business win pays for investment,” said Dave Heimbach, to move forward slowly and will likely the trunk, and we spur off that into COO of Shentel, during the UBS increase incrementally in 2020.” neighborhoods.” Global TMT Conference. 40 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | JANUARY/FEBRUARY 2020 ELECTRIC COOPERATIVES’ 28 percent year over year, with all Lumos adopted ADTRAN’s INFLUENCE WILL RISE technologies showing significant year- 10G fiber-access portfolio to deploy Rural electric cooperatives are driving over-year declines.