January 10, 2018
"Americans are frustrated with the slow pace of broadband deployment" is a sad cliché. According to FCC data for 2016 (the most recent available), 21% of census blocks -- home to 10% of the US population -- have no provider offering fixed broadband service at the Commission's 25/3 Mbits/s standard, and only 13% have three or more. The US is 18th among OECD countries in broadband penetration, and has the fourth highest prices. Meaningful competition is almost non-existent.
Fortunately, the stars are aligning for a growth spurt in broadband infrastructure. Unlike the past, the new infrastructure is being designed from the start to support multiple services, to spread capex and risk across product lines. US telecom providers look to support emerging services, meet growing mobile demand and struggle with competition from cable multiple system operators (MSOs), while dealing with aging copper networks. They have little choice but to spend their way out of these problems.
A new Heavy Reading Report, "US Converged Fiber Access Infrastructure: 2018-2021 Outlook," looks at drivers, trends and leading indicators behind an expected boost in new converged access network deployments over the next three years. The drivers include: As MSOs deploy DOCSIS 3.1 throughout their footprints, telcos are faced with a hard choice: counter them with competitive offerings or abandon geographic markets. This includes business, enterprise and wholesale services, as well as residential and small business offerings. MSOs are evolving their networks to fiber-deep architectures in support of DOCSIS 3.1 and other initiatives. Copper networks are well past their sell-by date. Some are visibly decaying, and recent natural disasters have made matters worse. Aging leads to frequent network outages with expensive truck rolls. Since regulated plain old telephone service (POTS) is affected, telcos are under pressure to permanently fix or replace the copper infrastructure. Operators that retire copper plant in favor of fiber reap big opex savings. Mobile operators are densifying portions of their 4G networks in response to explosive traffic growth and the price of obtaining additional spectrum. They need both more capacity and better coverage. The densification trend will explode with upcoming 5G deployments. All of this requires densely deployed fiber for back-, mid- and front-haul. Internet of Things (IoT), smart cities and smart grid mean large numbers of connected devices. These, in turn, require ubiquitous fiber for backhaul. The broadband divide has real consequences for rural communities and impoverished areas that lack adequate broadband service. In the absence of interest by incumbents, many communities are taking their fate into their own hands by building their own fiber networks. Some of the obstacles that have held back fiber deployment are crumbling. The new FCC Republican majority blames excessive regulation for the broadband investment gap and have eliminated some sources of delay and obstruction. Tier 3, municipal enterprises, rural electric co-ops, public-private partnerships and non-incumbent commercial providers are obtaining better access to financing as their peers have demonstrated success and new business models have become mainstream. Local governments have growing incentives to cooperate with service providers in permitting infrastructure. Against that background, the trends point to strong growth in new converged fiber deployments over the 2018-2021 timeframe. The roughly 15% growth that started in 2016-2017 will likely accelerate. With 5G deployments starting as early as mid-2018, and rollouts in 2020, the industry will have to place a lot of fiber. Most telling, announcements by operators and their key partners lay out aggressive deployment plans. The next few years' investments might not completely close the broadband divide, but will be a big step in the right direction. — Dan Grossman, Contributing Analyst, Heavy Reading
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