AT&T to deploy FTTP network based on XGS-PON in Amarillo, TX

The city of Amarillo, TX has selected AT&T to install fiber-to-the-premises (FTTP) networks, covering more than 22,000 customer locations. The project  will cost about $24 million (with $2 million coming from the city).  The network, which will be built out over three years, still requires final approval by Amarillo and a final contract between AT&T and the city.

AT&T already has access to public rights of way in Amarillo with its legacy infrastructure and will work closely with the city on permitting activities required for the fiber build-out.

[Amarillo residents and businesses also served by Altice USA’s Suddenlink Communications.]

AT&T is taking the public/private partnership route here. The telco inked a similar $39.6 million agreement (with about $10 million coming from public funds) last year with Vanderburgh County, Indiana, to build fiber to about 20,000 locations in the rural, southern tip of the state. AT&T also has a $33 million fiber project underway to connect about 20,000 locations in Oldham County, Kentucky.

As noted in an earlier IEEE Techblog post, AT&T’s FTTP buildout/upgrade plan is targeting 30 million locations by 2025. AT&T added 289,000 FTTP subs in Q1 2022, ending the period with a grand total of 6.28 million, and enough to offset a quarterly loss of 284,000 non-fiber subs (including U-verse Internet customers).

“What we’re doing here in Amarillo that’s different is that this is an urban core,” said Jeff Luong, president, broadband access and adoption initiatives for AT&T. “The city of Amarillo identified a specific area that they believe is challenging from a connectivity perspective in their urban core,” he added.

“The area that the city wanted to address is actually the city core. It’s actually an area they feel is underserved,” he said. “We are expanding access, we are providing a very affordable free solution when partnered with ACP [Affordable Connectivity Program] and then we’ll be actively engaging in adoption, digital literacy and other type of activities to ensure that people have access, they can afford it and that they understand how to use the service.”

“We’re working with the public sector to identify areas that are more challenging to build on our own from a private sector perspective and creating these type of public/private partnerships where we, AT&T, will invest our own capital. But the public sector would also contribute a share of the cost to expand fiber connectivity to these locations,” Luong said.

AT&T today delivers services in the area via other technologies, including legacy copper networks. The new fiber overlay, based on XGS-PON, will be capable of delivering symmetrical speeds of 5 Gbit/s, replicating a new mix of multi-gigabit services that AT&T has launched in its other FTTP markets.

AT&T already has access to public rights of way in Amarillo with its legacy infrastructure and will work closely with the city on permitting activities required for the fiber build.

About AT&T in Texas:

AT&T customers and FirstNet® subscribers in Texas got a big boost in wireless connectivity and fiber access last year. In 2021, AT&T completed nearly 1,000 wireless network enhancements in Texas, including adding nearly 200 new macro sites. AT&T also made fiber available in more than 300,00 new locations in Texas in 2021. These network improvements will enhance the state’s broadband coverage and help give residents, businesses and first responders faster, more reliable service.

From 2018 to 2020, we expanded coverage and improved connectivity in more communities by investing more than $7.7 billion in our wireless and wireline networks in Texas. This investment boosts reliability, coverage, speed and overall performance for residents and their businesses.

And in Amarillo, we expanded coverage and improved connectivity by investing more than $60 million in our wireless and wireline networks from 2018-2020.

References:

https://www.att.com/local/fiber/texas/amarillo

https://about.att.com/story/2022/amarillo-broadband-access.html

https://www.lightreading.com/opticalip-networks/-atandt-partners-with-amarillo-to-upgrade-citys-network/d/d-id/778647?

https://www.fiercetelecom.com/broadband/att-inks-amarillo-fiber-deal-it-chases-more-public-private-partnerships

FTTP build out boom continues: AT&T and Google Fiber now offer Gig speeds to residential/business customers

AT&T CEO John Stankey: 30M or more locations could be passed by AT&T fiber

 

“Fiber is Foundational” as AT&T achieves 37% subscriber penetration rate across its fiber footprint

Will AT&T’s huge fiber build-out win broadband market share from cablecos/MSOs?

AT&T CFO sees inflation as main threat, but profits and margins to expand in 2nd half 2022

 

Clearwave Fiber to build all fiber Internet access network in Kansas

Clearwave Fiber (not to be confused with the now defunct Clearwire WiMAX network provider) will begin building a state-of-the art, all-fiber Internet access network in Lansing, KS.  This latest expansion marks the company’s first network presence in Kansas and underscores its goal to bring the most advanced and fastest Internet available to more than 500,000 homes and businesses across the United States by 2027.  Clearwave Fiber is scheduled to begin construction of the all fiber network in Kansas this month.

Clearwave Fiber’s Vice President of KansasStormy Supiran, stressed the importance of the company’s investment to consumers and the broader local community.

“We are committed to providing underserved communities with the high-speed connectivity that is essential for families, businesses, and local economies; without these essential services, many of the communities we are targeting may struggle to survive,” said Supiran. “We are excited to extend services to Lansing, and we look forward to becoming long-term partners to the community.”

Featuring gigabit download and upload speeds, Clearwave Fiber will bring ten times more speed to consumer doorsteps at a time when fast, reliable Internet is becoming increasingly critical to modern households. “More and more, we see households where multiple bandwidth-intensive activities occur simultaneously and many consumers’ Internet connections just aren’t up to the task,” said Clearwave Fiber’s Midwest President, Byron Cantrall. “The Clearwave Fiber network solves that problem.”

In March Clearwave acquired the assets of RG Fiber, a fiber network provider near Kansas City, Kansas. This was Clearwave’s first entry into Kansas. At the time, the company said that it planned to expand RG Fiber’s network and bring more fiber services to other communities in Kansas that do not currently have access to fiber.

For many consumers, Internet touches every facet of daily life. Remote work, telehealth, and virtual learning all require robust, reliable connections. A 2021 study by Deloitte indicated that 55% of U.S. households include one or more remote workers, and 43% include at least one household member attending virtual classes.

Cable One formed the Clearwave Fiber joint venture in January. Its JV partners include a trio of private equity firms:  GTCR, Stephens Capital Partners and the Pritzker Organization. At the time, Cable One said that the new entity would target deployments of fiber to residential and business customers within and adjacent to its existing markets.

For more information, visit clearwave.com/home.

About Clearwave Fiber Midwest

Clearwave Fiber is an Internet service provider based in Savannah, GA that operates a more than 2,000 route-mile fiber network serving cities across the Midwest and Southeast regions of the United States. Delivering advanced telecommunications solutions with an emphasis on exceptional customer care and community engagement, they provide fiber to business, enterprise, and residential customers in more than 90 municipalities in Illinois and Kansas.  It is a joint venture formed by operator Cable One.

References:

https://www.prnewswire.com/news-releases/clearwave-fiber-begins-buildout-of-fiber-internet-in-lansing-ks-301575710.html

https://www.fiercetelecom.com/broadband/clearwave-fiber-will-expand-fiber-footprint-kansas

Diamond State Networks to invest more than $1.66 billion in fiber infrastructure in Arkansas

A new consortium in Arkansas is leading the way forward for electric cooperatives in the rural U.S. can increase bandwidth and save costs by collaborating on fiber broadband delivery.

Diamond State Networks (DSN) is a collective of 13 electric co-ops from across the state of Arkansas which are joining forces to deliver wholesale fiber broadband. All in, the cooperative networks’ 50,000 miles of fiber will cover 64% of Arkansas and reach 1.25 million rural Arkansans. The goal for DSN is to serve 600,000 residences and businesses in Arkansas in the next few years, with over 250,000 locations already deployed. Here’s a network coverage map:

The 13 member cooperatives in DSN include: OzarksGo, Clay County Connect, Farmers Electric Cooperative, Petit Jean Fiber, Enlightened by Woodruff Electric, NEXT Powered by NAEC, Wave Rural Connect, Arkansas Fiber Network (AFN), Four States Fiber Internet, empower (delivered by Craighead Electric), MCEC Fiber, South Central Connect and Connect2First.

Doug Maglothin, DSN’s director of operations, says his company  expects to add “a couple more cooperatives” to that list. (The state of Arkansas has 17 electric co-ops, served by a central entity called the Arkansas Electric Cooperative Corporation.)

The collective of co-ops that form DSN are at different phases of their service delivery journey. Some, like Farmers Electric, are in the early planning stages. OzarksGo – the subsidiary of Ozarks Electric Cooperative – is furthest along and nearing 40,000 subscribers. Indeed, Maglothin referred to Ozarks Electric CEO Mitchell Johnson as the “visionary” for DSN, who saw the need for the state’s electric co-ops to get involved with broadband delivery in 2015 and 2016.

But as electric co-ops began entering the space in 2017 and 2018, “pretty quickly, you find out how difficult and expensive it can be to buy connectivity to the global Internet,” said Maglothin. It was “from that necessity” that the plan for DSN was born.

While the consolidated electric cooperative model is unique for the broadband space, other states and communities are deploying broadband as collectives or partners. That includes Utopia Fiber’s municipal, open access fiber delivery network in Utah as well as California’s planned open-access statewide middle-mile network. And this week, a group of rural telcos and an electric cooperative in Indiana announced plans to launch HoosierNet, a “multi-year, multi-million-dollar” statewide fiber network.

Maglothin said DSN is collaborating with other states looking for a similar solution and that Diamond State has “kind of become a beacon for cooperative middle mile,” as it offers a model that allows electric co-ops to control their costs.

“The more bandwidth you grow, the more content you collect, the more powerful your voice is in negotiating pricing to get to these big anchor points for your network,” said Maglothin. “So we feel like there’s a potential future for cooperative companies working together like this where we become one of the largest bandwidth aggregators probably in the country.”

The 13 member co-ops are investing more than $1.66 billion in fiber infrastructure for DSN. According to Maglothin, less than 20% of that funding is from federal and state grants. But he expects that DSN will be eligible for Broadband Equity, Access, and Deployment (BEAD) and Middle Mile grant funding, federal programs worth $42.45 billion and $1 billion, respectively.

According to Broadband.Money, a platform connecting local providers and networks with funding opportunities, Arkansas is estimated to receive $1.4 to $1.6 billion for broadband through the Infrastructure Investment and Jobs Act (IIJA). But those numbers are still to be determined by federal broadband mapping data that officials say will be released later this year.

Notably, while existing FCC broadband data is widely understood to undercount the digital divide in the US, a recent presentation by the Broadband Development Group at the Arkansas Rural Connect Broadband Forum revealed that the state’s broadband gap may now be smaller than the FCC’s count shows. While federal data puts Arkansas’ digital divide at 250,000 households or 21% of the population, BDG’s analysis brought that to 209,000 households (17%).

Maglothin attributes this increase in broadband access to the work electric co-ops have done in recent years. “It’s because of the rapid onset of cooperative fiber being pushed out,” he said.

For this reason, and with more funding coming down through the BEAD program, Maglothin thinks that Arkansas can go from being among the lowest-ranked states in the US for connectivity to the highest.

References:

https://www.diamondstatenetworks.com/

https://www.diamondstatenetworks.com/thirteen-arkansas-electric-cooperatives-come-together-to-create-new-wholesale-broadband-provider%ef%bf%bc/

https://www.broadbandworldnews.com/document.asp?doc_id=778063&

https://www.diamondstatenetworks.com/network/

“Fiber is the future” at Frontier, which added a record 54K fiber broadband customers in 1Q-2022

Frontier Communications added a record 54,000 fiber broadband customers in the first quarter of 2022, a 20% gain over the previous record set in Q4 2021 and somewhat higher than expectations coming in to the quarter.  These fiber customer adds are coming from both new and existing fiber markets. Frontier’s data continues to track nicely: 22% penetration at the 12-month mark for its 2020 cohort and 18% for its larger 2021 cohort, and 44% at the 24-month mark for its (admittedly small and probably not broadly representative) 2020 cohort. Base market penetration was up 50 basis points in the quarter and 90 basis points over the past two quarters.

Frontier’s aggressive fiber network buildout and a record low churn of 1.19%, enabled the telco to offset copper losses and add 20,000 net broadband subs for Q1 2021.  That’s a record nearly two times higher than that set in the prior quarter. Frontier ended the quarter with 1.38 million residential fiber broadband subs, up 11% YoY.

Frontier plans to expand its fiber-to-the-premises (FTTP) footprint to 10 million locations by 2025 – a figure that includes the company’s “Wave 1” and “Wave 2” builds. Frontier built fiber out to another 211,000 locations in the first quarter of 2022, and says it’s on track to add more than 1 million FTTP locations for all of 2022, and another 1.6 million in 2023.

Frontier passed another 211K locations with fiber in the quarter, up from the ~190K level of the prior two quarters, a nice accomplishment in light of the disruptions associated with Omicron early in the quarter (100K of the 211K passings were achieved in March alone). Management continues to expect to add at least 1M fiber locations in 2022, and it seems on track to meet or exceed that target.

“Positive net adds is the new normal,” Nick Jeffery, Frontier’s president and CEO, declared on Friday’s earnings call.  The CEO continued:

“We gained momentum in business and wholesale, reaching a key inflection point in SMB and we made progress improving our employee engagement. And last week, we unveiled our new Frontier brand. A year ago, we said we will take a long and hard look at our brand and its future and after a thorough data-driven evaluation I am delighted with the results. Our new brand is modern, more relevant, more tech-oriented, and reflects our commitment to relentlessly being better in our business and for our customers.   We also gained customers in our mature fiber market, what we refer to as our base fiber footprint. In our base fiber footprint, penetration increased 50 basis points sequentially to 42.4%. And our base fiber footprint serves as a target for where we expect to drive penetration in our expansion fiber footprint and we expect to steadily grow penetration to at least 45% over time.

In our expansion fiber footprint, we are also making excellent progress. At the 12-month mark, our 2021 build cohort reached penetration of 18%, consistent with our target range of 15% to 20%. And at the 24-month mark, our 2020 build cohort reached penetration of 44%, significantly outperforming our target range of 25% to 30%. As larger builds are pulled into our 2020 cohort throughout the year, we continue to expect penetration of 25% to 30% at the 24-month mark.”

Indeed, Frontier’s operations and service levels have improved dramatically over the past two years. Our colleague Nick Del Deo at MoffettNathanson wrote in a research note to clients:

By some measures, Frontier is now operating at as high a level as key competitor Charter in the California market. And this is having an effect on its customer perceptions and market traction. Its American Consumer Satisfaction Index scores are slowly moving up, while its net promoter score has surged, especially where it has rolled out FTTH. Churn has fallen, as have customer care call volumes.

Frontier’s post-emergence management team has taken a data-driven approach to running the business and making key decisions. Put simply, the choice to refresh the company’s font and logo rather than totally rebrand is further evidence that changes to the business are working.”

To reiterate, 1Q-2022 fiber penetration rates rose to 42.45% in the company’s  base fiber footprint. Frontier expects to reach penetration rates of at least 45% over time.

In the expansion areas, Frontier realized a penetration rate of 12% at the 12-month mark in its 2021 fiber build cohort – within its target range of 15%-20%. In the 2020 FTTP build cohort, Frontier is seeing a 44% penetration rate at the 24-month mark, outperforming its target range of 25%-30%.

Source: Frontier Communications Q1 2022 earnings presentation

CEO Jeffery said Frontier’s fiber-powered services are taking share from incumbent cable operators, but didn’t elaborate on how much damage Frontier is inflicting.  He also acknowledged that fixed wireless access (FWA) could present an attractive option in rural areas where fiber isn’t present. Jeffery also believes fiber represents “a fundamentally different proposition” over FWA, given current data usage trends. In March, the average Frontier fiber subscriber consumed about 900 gigabytes of data, up 30% from pre-pandemic levels, with a portion consistently consuming more than 1 terabyte per month.

Significantly, Frontier gained new customers in areas where fiber is being built out.  “This is critical because we know our future is fiber and fiber customers are the ones that will drive our growth in the years to come,” said Jeffery, a former Vodafone UK exec who took the helm of Frontier in March 2021.

For the full 2022 year, Frontier is targeting adjusted EBIDTA of $2 billion to $2.15 billion, and capital expenditures in the range of $2.4 billion to $2.5 billion, the same as guidance issued last quarter. This implies $2,003M for the remainder of the year at the midpoint. Management continues to target FTTH builds in 2022 of at least 1,000K vs. 638K built in 2021.

References:

https://s1.q4cdn.com/144417568/files/doc_financials/2022/q1/Frontier-First-Quarter-2022-Results.pdf

https://s1.q4cdn.com/144417568/files/doc_financials/2022/q1/Frontier-First-Quarter-2022-Earnings-Presentation-(1).pdf

https://seekingalpha.com/article/4508042-frontier-communications-parent-inc-fybr-ceo-nick-jeffery-on-q1-2022-results-earnings-call

https://www.lightreading.com/opticalip-networks/net-broadband-subscriber-adds-new-normal-at-frontier-ceo-says/d/d-id/777365?

 

Altice USA transition to fiber access; MoffettNathanson analysis of low population growth on cablecos broadband growth

Altice USA recently disclosed a plan to overbuild its hybrid fiber-coaxial (HFC) network to blanket 6.5 million locations with fiber by 2025.  The NYC based cableco/MSO operates the Optimum and Suddenlink brands, which it plans to rebrand under the Altice USA name.

During a New Street Research investor conference, Altice USA EVP of corporate finance and development Nick Brown said the decision to make that move was a “no brainer” for the company, but acknowledged that it’s in a slightly different position than fellow cable giants Comcast and Charter Communications.  Brown stated Altice USA’s own experience and that of its sister companies in Europe gave it better insight into what the transition to fiber would look like in terms of costs and returns, leaving it unafraid to take the leap. But it also already faces “a lot of fiber-based competition relative to others,” especially from Verizon Fios in its legacy Cablevision footprint in the eastern part of the country.

Altice has already upgraded its head ends and backbone rings with fiber. Since DOCSIS would require it to push fiber deeper and deeper into the network anyway, Brown said it made sense to go all-in to pull forward the benefits full fiber has to offer.  “The FTTH end-to-end glass network that we’re deploying here in the U.S. for us is pretty much the end state, the logical end state, of a coax upgrade anyway,” Brown argued.

Brown said the move to fiber will allow Altice USA to save in the “low hundreds of millions” of dollars in operating expenses and “materially” reduce its capital expenditures over time. It’s also expected to help Altice more effectively compete by allowing it to offer a better product, reduce churn and improve network reliability.  He also pointed out it’ll make future network upgrades easier. Today, it has around half a million active components in its coax network, nearly all of which need to be touched for a DOCSIS upgrade. But with fiber “the equivalent is about 1,000 to 2,000 pieces of equipment that you would need to upgrade to go to next generations of fiber technology as we’re doing this year as we’re moving to XGS-PON,” he said, noting its current fiber footprint of more than 1 million locations was originally built with GPON technology.

“I think it’s just a lot more scalable, a lot more future-proof in our mind, and a lot more cost effective to move to future broadband technologies,” Brown concluded.

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………

To determine which operators might have been most negatively affected by low population growth (and therefore likely low household growth) from July 2020 to July 2021, and which might have been net beneficiaries of the fastest growth, analysts at MoffettNathanson aggregated the population by county in each cable operator’s footprint using FCC Form 477 data as of Q4 2020. Using those totals, we calculated a weighted average population growth for each operator’s total footprint based on the county-level annual estimates published by the Census Bureau.   The weighted-average population growth implies a meaningful headwind to Altice USA (at -0.4% growth), and a significant tailwind to Cable One (at 0.7% growth).

Craig concluded:  “Again, there’s a lot more at work in broadband subscriber growth rates than just population (new household formation) growth or starting penetration. Different operators have different demographics. They face different overlaps with fiber, and some will face more FWA than others. They have different pricing strategies.”

References:

https://www.fiercetelecom.com/telecom/altice-usa-exec-fiber-logical-end-state-coax

FTTP build out boom continues: AT&T and Google Fiber now offer Gig speeds to residential/business customers

 

Altice-USA FTTH network to reach 1M homes by 2018

“Fiber is Foundational” as AT&T achieves 37% subscriber penetration rate across its fiber footprint

During its annual Analyst & Investor day virtual presentations today, AT&T said that Fiber is Foundational for the company’s growth.  It is the critical asset in making AT&T the most pervasive and scaled broadband network provider.  According to the company, that fiber foundation includes: Multi-gig capable speeds, Symmetric and low latency connectivity, Sustainable, and Enabling critical technologies.

“To us, fiber is foundational to our entire network. Wherever fiber goes, wireless follows,” Jeff McElfresh, CEO of AT&T Communications, said.  McElfresh is confident that AT&T has the heft and deals in place to execute on the plan in the face of supply chain constraints and increasing demand and costs for labor.

“We are a very large fiber overbuilder,” he said. “We’ve got scale and we’ve done it before. That scale translates to things like supply chain agreements that are long in tenure and have really good protections for both us and our suppliers.”

Furthermore, AT&T experienced 37% service penetrations across its entire fiber footprint, including new-build areas, last year.

In markets such as New Orleans, Miami and Louisville, where AT&T is now building FTTP rapidly, penetrations are “well north of 30% after only 12 months of fiber deployment,” Jenifer Robertson, AT&T’s EVP and GM, mobility, said during AT&T’s annual analyst and investor day.

About two-thirds of AT&T’s fiber adds are new to AT&T, Robertson added. With a nod toward service bundling, AT&T is also seeing a 50% boost in wireless market share in its fiber footprint.

AT&T is targeting small and medium businesses with its FTTP deployments.  That’s depicted in this graphic:

AT&T built about 2.6 million new fiber locations in 2021. The company reiterated a plan to build out a footprint of 30 million-plus locations (25 million residential, 4 million small businesses and 1 million enterprise locations) by 2025. It will build in the range of 3.5 million to 4 million locations per year in the coming years to hit that mark. AT&T also expects to spend $3 billion to $4 billion per year to fulfill its fiber buildout mission.

In tandem with the aggressive fiber buildout, AT&T expects broadband revenue to grow by 6% or more in 2022, and in the mid-to-high single-digit range in 2023. Total annual capital expenses are poised to hit $24 billion in 2022 and 2023, up from $20.1 billion in 2021.

McElfresh outlined the data growth the company expects in coming years that will take advantage of fiber-level speeds. While consumer data consumption has reached the neighborhood of 0.9 terabytes (TB) today, the company expects that to climb to 4.6 TB by 2025. AT&T expects to see big gains in its small- and medium-sized (SMB) and enterprise segments. It also anticipated that the average number of devices connected to the home network will triple, to about 40, by 2025.

“We’re not attempting to serve terabytes of monthly consumption over wireless,” McElfresh said, implying such high data consumption would be via fiber.

Commenting on future networking trends, AT&T CEO John Stankey said:

We conservatively project a 5x data increase on our network over 5 years. A couple of examples. The evolution of social interaction, gaming and experiential alternate realities will consume huge amounts of real-time, low latency 2-way data.

Dramatically improving collaboration tools will enable more effective distributed work environments that will take traffic off of corporate lands and onto robust distributed WANs. Improved health care outcomes and lower cost to address an aging population will rely on access, telemetry and observation to address the challenge of rising cost curves and the list goes on. Some worry and ask, will we get paid for this new rule? History has shown us that sound policy will, in fact, provide returns and solutions.

In the lab, software and hardware will mature rapidly and efficiently. As has been the case since the advent of compute, distributed networking will be running to keep pace. We exit the pandemic with a credible real-world testimony to the value of reliable and pervasive connectivity.

In order to meet the bandwidth and latency needs of broadband applications “nothing is going to top fiber,” he added, noting that AT&T is making a “longer term bet” with its fiber buildout plan.

Separately, U.S. fiber investment forecast from RVA LLC calls for service providers to spend $125 billion over the next five years, exceeding the total amount that has been invested in fiber since providers first began deploying it.

………………………………………………………………………………………………………….

References:

https://investors.att.com/~/media/Files/A/ATT-IR-V2/events-and-presentations/11mar22-presentation.pdf

https://video.ibm.com/recorded/131492715

https://seekingalpha.com/article/4495026-t-inc-t-ceo-john-stankey-hosts-2022-and-t-analyst-and-investor-day-transcript

https://www.lightreading.com/opticalip/atandt-notching-37-subscriber-penetration-rates-in-fiber-markets-/d/d-id/776000?

AT&T CEO John Stankey: 30M or more locations could be passed by AT&T fiber

Fiber Investment Forecast to Surpass $125 Billion Over Next Five Years

MoffettNathanson: Robust broadband and FWA growth, but are we witnessing a fiber bubble?

According to a new comprehensive, market research report from MoffettNathanson (written by our colleague Craig Moffett), Q4 2021 broadband growth, at +3.3%, “remains relatively robust,” and above pre-pandemic levels of about +2.8%.

Meanwhile, the U.S. fixed wireless access (FWA market) captured ~ 38% share of broadband industry net adds in the fourth quarter of 2021.  Approximately half of Verizon’s FWA customers are coming from commercial accounts, T-Mobile has indicated that about half its FWA customers are coming from former cable Internet subscribers.  FWA’s strong Q4 showing left cable’s flow share at just 66%, about the same as cable’s share of installed US broadband households. “In other words, Cable likely neither gained nor lost share during the quarter, and instead merely treaded water,” Moffett noted.  FWA “has gone from low-level background noise to suddenly a major force, with Verizon and T-Mobile alone capturing more than 300K FWA subscribers in the fourth quarter,” Craig noted.  However, he isn’t sure that wireless network operators will allocate enough total bandwidth capacity for FWA to fully scale.

In 2020, a year that witnessed a surge in broadband subs as millions worked and schooled from home, the growth rate spiked to 5%. Here’s a snapshot of the broadband subscriber metrics per sector for Q4 2021:

Table 1:

Sector Q4 2021 Gain/Loss Q4 2020 Gain/Loss Year-on-Year Growth % Total
Cable +464,000 +899,000 +3.8% 79.43 million
Telco -26,000 +21,000 -0.4% 33.51 million
FWA* +302,000 +81,000 +463.9% 869,000
Satellite -35,000 -35,000 -6.6% 1.66 million
Total Wireline +437,000 +920,000 +2.8% 112.95 million
Total Broadband +704,000 +966,000 +3.3% 115.48 million
* Verizon and T-Mobile only
(Source: MoffettNathanson)

U.S. broadband ended 2021 with a penetration of 84%  among all occupied households. According to US Census Bureau data, new household formation, a vital growth driver for broadband, added just 104,000 to the occupied housing stock in Q4 2021, versus +427,000 in the year-ago period. Moffett said the “inescapable conclusion” is that growth rates will continue to slow, and that over time virtually all growth will have to stem from new household formation.

Factoring in competition and other elements impacting the broadband market, MoffettNathanson also adjusted its subscriber forecasts for several cable operators and telcos out to 2026. Here’s how those adjustments, which do not include any potential incremental growth from participation in government subsidy programs, look like for 2022:

  • Comcast: Adding 948,000 subs, versus prior forecast of +1.25 million
  • Charter: Adding 958,000 subs, versus prior forecast of +1.22 million
  • Cable One: Adding 39,000, versus prior forecast of +48,000
  • Verizon: Adding 241,000, versus prior forecast of +302,000
  • AT&T: Adding 136,000, versus prior forecast of +60,000

Are we witnessing a fiber bubble?

“The market’s embrace of long-dated fiber projects rests on four critical assumptions. First, that the cost-per-home to deploy fiber will remain low. Second, that fiber’s eventual penetration rates will be high. Third, that these penetration gains can be achieved even at relatively high ARPUs. And fourth, that the capital to fund these projects remains cheap and plentiful.

None of these assumptions are clear cut. For example, there is an obvious risk that all the jostling for fiber deployment labor and equipment will push labor and construction costs higher. More pointedly, we think there is a sorely underappreciated risk that the pool of attractive deployment geographies – sufficiently dense communities, preferably with aerial infrastructure – will be exhausted long before promised buildouts have been completed.

Revenue assumptions, too, demand scrutiny. Cable operators are increasingly relying on bundled discounts of broadband-plus-wireless to protect their market share. What if the strategy works, even a little bit? And curiously, the market’s infatuation with fiber overbuilds comes at a time when cable investors are growing increasingly cautious about the impact of fixed wireless. Won’t fixed wireless dent the prospects of new overbuilds just as much (or more) as those of the incumbents.”

Moffet estimates that about 30% of the U.S. population has been overbuilt by fiber over the past 20 years, and that the number is poised to rise as high as 60% over the next five years. But the big question is whether there’s enough labor and equipment to support this magnitude of expansion.  “Our skepticism about the prospects for all of the fiber plans currently on the drawing board is not born of doubt that there is enough labor to build it all so much as it is that the cost of building will be driven higher by excess demand,” Moffett explained. “There are already widespread reports of labor shortages and attendant higher labor costs,” he added.

“The outlook for broadband growth for all the companies in our coverage, particularly the cable operators, is more uncertain than at any time in memory. IMarket share trends are also more uncertain that they have been in the past. Cable continues to take share from the telcos, but fixed wireless, as a new entrant, is now taking share from all players. Share shifts between the TelCos and cable operators are suppressed by low move rates, likely due in part to supply chain disruptions in the housing market. This is likely dampening cable growth rates. In at least some markets, returns will likely be well below the cost of capital,” Moffett forecasts.

References:

U.S. Broadband: Are We Witnessing a Fiber Bubble?  MoffetNathanson research note (clients and accredited journalists)

https://www.lightreading.com/cable-tech/fwa-nabbed-38-of-broadband-share-in-q4-as-possible-fiber-bubble-forms/d/d-id/775819?

Lumen Technologies tops Vertical Systems Group’s 2021 U.S. Wavelength Services Leaderboard

Lumen Technologies finished first in Vertical Systems Group’s (VSG)  2021 U.S. Wavelength Services Leaderboard [1.].  Lumen, previously known as CenturyLink, has the benefit of a fiber footprint that expanded greatly with its Level 3 acquisition.  Lumen’s 2016 acquisition of Level 3 for $34 billion combined assets covering 200,000 miles of fiber, which included 64,000 route miles in 350 metropolitan areas and 33,000 subsea miles.  The service provider’s on-net buildings increased by about 75% to 75,000, including 10,000 buildings in EMEA and Latin America.
…………………………………………………………………………………………………………………………………………………………..
Note 1. A Wavelength Service is a large bandwidth connection providing high-speed Internet or data service delivered over lit fiber-optic lines using Dense Wave Division Multiplexing (DWDM) to create wavelengths or optical channels.
…………………………………………………………………………………………………………………………………………………………..
The top eight wavelength services providers were: Lumen, Zayo, Verizon, AT&T, Arelion (formerly Telia Carrier), Windstream, Crown Castle and Cox Communications. This new benchmark measures U.S. market presence for wavelength providers selling retail and wholesale services.  Most of the companies on the leaderboard are US-based service providers with a significant number of fiber-lit buildings in the US, with the exception of Arelion, which is headquartered in Stockholm, Sweden.
LEADERBOARD companies each have a one percent (1%) or higher share of U.S. wavelength circuits. A wavelength circuit provides a PHY layer dedicated bidirectional gigabit-speed optical fiber connection between two sites using DWDM.
“U.S. demand for wavelength services is rising to support mission-critical applications that require assured performance, deterministic latency and gigabit speed connectivity,” said Rick Malone, principal of Vertical Systems Group. “Our forecasts show double digit growth this year, driven by high demand for 100 Gbps wavelength circuits.”U.S. Wavelength LEADERBOARD Research Highlights:

  • Customer demand for retail wavelength circuits exceeded wholesale deployments in 2021.
  • Revenue for U.S. Wavelength Services is projected to grow at a 13% CAGR between 2021 and 2026. This projection incorporates the effects of the COVID pandemic, including installation disruptions and chip shortages.
  • Six providers on the U.S. Wavelength Services LEADERBOARD also hold a rank position on the latest U.S. Fiber Lit Buildings LEADERBOARD – Lumen, Zayo, Verizon, AT&T, Crown Castle and Cox. Additionally, Windstream achieved a Challenge Tier citation.
  • Five U.S. Wavelength Services LEADERBOARD providers are also top ranked on the Mid-2021 U.S. Ethernet LEADERBOARD– Lumen, Verizon, AT&T, Windstream and Cox. Zayo has a Challenge Tier citation.

For year-end 2021, Market Players include the following wavelength providers (in alphabetical order): Altice USA, Armstrong Business Solutions, Astound Business Solutions, Colt, Consolidated Communications, C Spire, Comcast, DQE Communications, Epsilon, Everstream, Exa Infrastructure (formerly GTT), ExteNet Systems, Fatbeam, FiberLight, FirstLight, Frontier, Great Plains Communications, Logix Fiber Networks, LS Networks, Midco, Ritter Communications, Segra, Shentel Business, Silver Star Telecom, Sparklight Business, Spectrum Enterprise, Syringa, T-Mobile, TDS Telecom, Unite Private Networks, Uniti, US Signal, Veracity, WOW!Business, Ziply Fiber and others.

………………………………………………………………………………………………………………………………………………………………………………….

This is VSG’s first Wavelength Services Leaderboard.  The market research group has previously published leaderboards for markets such as Ethernet and SD-WAN. VSG describes a wavelength circuits as providing a “Layer 1 dedicated bidirectional gigabit-speed optical fiber connection between two sites.”

While wavelength technology is about 20 years old, it’s experiencing a “rebirth because of the demand for very high speeds,” Malone said, adding that VSG clients have asked for an assessment of the market.

“The past five years or so, we’ve seen many more enterprises, cloud providers and hyperscalers buying up circuits. Now we’re in a phase where enterprises use it for data center interconnect, cloud connections and specific applications that require high bandwidth,” said Malone.

He thinks that AT&T (#1 in fiber-lit buildings) and Verizon (#2 in fiber-lit buildings) have focusing more on the mobile market, rather than wavelength services.   “If you looked at maybe Verizon and AT&T, their strategic focus over the years is more focused internationally, integrating their mobile operations with their other business units, and not as much focus on just high-speed connectivity between two pairs of sites for some of these networks,” Malone said.

Here is VSG’s latest fiber-lit buildings leaderboard, published in April 2021:

………………………………………………………………………………………………………………………………….

References:

2021 U.S. Wavelength Services LEADERBOARD

https://www.lightreading.com/opticalip/verizon-atandt-lag-behind-lumen-on-wavelength-services-leaderboard/d/d-id/775651?

VSG LEADERBOARD : AT&T #1 in Fiber Lit Buildings

 

Lumen Technologies Fiber Build Out Plans Questioned by Analysts

Lumen Technologies is one of a large and growing number of telecom companies counting on a broad expansion of its fiber network. The Fiber Broadband Association (FBA) recently reported that the fiber industry is entering its “largest investment cycle ever” thanks to the efforts of companies like AT&T, Verizon and Lumen.

Lumen hopes to build its fiber network to 12 million new locations over the coming years. But it won’t be easy, according to Lumen CEO Jeff Storey.

“Supply chains are stressed, and we continue working very closely with our diverse and valued suppliers to mitigate risk as we execute on our growth objectives,” Storey said this week during his company’s quarterly conference call, according to a Seeking Alpha transcript. Others have issued similar warnings.

“I don’t want to overstate the issue, but it’s something that we are really paying attention to and working with vendors. We are starting to see some companies hold off on taking new orders. And as we see that, then we are working to put in our mitigation plans to make sure it’s factored into our build plan. But it is an issue that I will highlight as a real one that we have to mitigate.”

Lumen Technologies reported fourth-quarter results and 2022 expectations that generally fell below the forecasts of some financial analysts.

“Lumen’s 2022 guidance will fuel concerns that the company will have no choice but to eventually let leverage rise to inappropriate levels, dial back on investment, cut the dividend, or choose some combination thereof,” wrote the financial analysts at MoffettNathanson. “In particular, 2022 EBITDA [earnings before interest, taxes, depreciation, and amortization] guidance was noticeably below expectations at a time when capex will be elevated.”

“Results at this stage don’t give investors confidence in the company’s ability to earn an adequate return,” wrote the financial analysts at New Street Research.

Lumen and other fiber providers like Frontier Communications and AT&T are moving forward with their fiber buildout plans. Some, like AT&T and Frontier, are reporting big gains in the number of their new fiber customers. But others, like Lumen, are not.

“The past few quarters have been relatively weak for broadband net additions for Lumen, even for its higher-speed fiber offering,” MoffettNathanson said of Lumen’s consumer broadband business. “This quarter’s broadband net adds were at the low end of what the company has reported over the past few years and were shy of consensus estimates.”

The financial analysts at Evercore wrote that Lumen’s business segment drives three-quarters of the company’s revenue, and that too remains stressed. “The jury remains very much out on the company’s prospects in this sector,” they wrote, noting that sales in the company’s business segment declined slightly in the fourth quarter when compared with the third quarter of last year.

New Street analysts say a key metric for Lumen will be the percentage of customers in a given area who opt to purchase its new fiber optic access. If Lumen gets 40% of potential customers to sign up, the company likely will generate profits. “At 30%, the company would likely destroy value,” they warned.

Lumen CEO Storey stated that the company has already managed to get an average of around 29% of customers in its new fiber markets to sign up for its service. And that, he said, is with relatively little marketing.

He expects that number to be above 40% in the months and years to come. “If you look at the quality of the product that we have, we have a very effective competitive product and even with the limited marketing, we are doubling our penetration rates in our traditional copper areas,” Storey said.

New findings from the financial analysts at Cowen are supportive of Lumen’s fiber optic build out plans.  The Cowen analysts recently conducted a nationwide survey of more than 1,000 respondents and found that fiber-to-the-home (FTTH) “take rates” reached 56% among those surveyed.

“Take rate, or more specifically, market penetration, is a key driver of the FTTH business case,” they wrote. “We have previously noted that a penetration rate of 30-35% is the typical minimum break-even threshold when underwriting FTTH projects. When there is one broadband competitor, fiber penetration can approach high-50s and even 60% penetration levels in mature markets.”

Lumen CMO Shaun Andrews said: “One of the things that really differentiates us right now is our focus on fiber as part of the core infrastructure to an edge experience versus a distraction with 5G or content.  And being able to look an enterprise in the eye and say ‘Not only do we have these capabilities, but we will build the fiber to you where you are.’ That resonates with customers, and I think that’s a differentiator.”

…………………………………………………………………………………………………………………………

Last month, Lumen reported that they secured a massive $1.2 billion contract with the U.S. Department of Agriculture (USDA), setting it up to give one of the biggest government agency networks a major makeover.

Under the contract, Lumen will “completely transform” the USDA’s network covering 9,500 locations across the country. It will provide a range of services, including SD-WAN, managed trusted internet protocol, zero-trust networking, edge computing, remote access, virtual private networking, cloud connectivity, unified communications and collaboration, contact center, voice-over-internet protocol, ethernet transport, optical wavelength, and equipment and engineering.

References:

https://www.lightreading.com/opticalip/analysts-fret-over-lumens-fiber-plans/d/d-id/775229?

https://www.fiercetelecom.com/telecom/lumen-reels-12b-contract-overhaul-usdas-legacy-network

https://www.fiercetelecom.com/telecom/lumen-cmo-we-think-differently-about-fiber-than-our-competitors

Lumen’s big fiber roll-out push from 2.5M to 12M locations passed in the next few years

Lumen Technologies to empower customers to set up the wavelength subnetworks

CenturyLink rebrands as LUMEN for large enterprise customers; adds Quantum Fiber

Deutsche Telekom expands its fiber optic network in 78 cities and communities

Deutsche Telekom said it has expanded its fiber optic network for almost 7,000 companies in 78 cities and communities. Telekom is providing the companies with up to 1 Gbps speeds. The German based telco has connected industrial parks in the municipalities of Ahrensburg, Deggendorf, Lastrup, Lauf, Mainz and Mannheim among others.

Telekom is laying 560 km of fiber-optic networks to carry out the project and to connect the companies. It is using a trenching process to expand its fiber network.

“Telekom is Germany’s digital engine. That is why we are building our network seven days a week, 24 hours a day. In the city as well as in the countryside. We are massively accelerating our roll-out. In the coming year, we will go one better and invest around six billion euros in Germany. By 2030, every household and every company in Germany should have a fiber-optic connection. We will build a large part of this. But our competitors are also in demand,” said Srini Gopalan, Member of the Board of Management of Telekom Deutschland.

He also commented on the new German government’s plans in terms of digitization: “The new coalition is focusing on FTTH as THE technology of digitization. We explicitly welcome this. Faster processes – including for applications and approvals – will also help us to speed up fiber roll-out. We support the digital set off in our country. Digital networks should bring people together. Their roll-out should no longer be stuck in paper files.”

References:

https://www.telecompaper.com/news/deutsche-telekom-expands-network-for-7000-companies–1413189

https://www.telekom.com/en/media/media-information/archive/turbo-for-fiber-and-5g-643014