While the consumption patterns may differ from provider to provider, North America’s fiber feast is still going strong.
Indeed, fiber-to-the-premises (FTTP) deployments across the United States and Canada by cable, telco, and fiber providers alike continued full steam ahead last year. And these record-level fiber deployments show few signs of slowing down much yet.
In fact, per the Fiber Broadband Association’s (FBA’s) December 2022 Fiber Provider Study surveying U.S. and Canadian fiber service providers, FTTP networks now pass about 63 million “unique” homes in the U.S., including 48% of the nation’s primary residences and 12% of secondary homes. Plus, about 5 million of those residences are now passed by two or more fiber connections, bringing the total number of fiber-network passings to more than 68 million.
That represents a hefty increase of 13%, up from 7.9 million homes passed by fiber lines just a year earlier. It also marks a substantial 27% hike in homes passed by FTTP lines since the end of 2020.
Moreover, our year-end FBA survey reveals that 28.3 million American households are now connected to fiber lines, up from 25.1 million homes at the end of 2021. This means that fiber providers are achieving better than a 40% penetration rate, which is quite impressive considering they are often the second or third broadband providers to enter a market.
Fiber up north
The story is similar and, if anything, even more pronounced up in Canada. According to our survey results, Canadian FTTP providers are now marketing fiber-enabled services to 10.1 million households, or about two-thirds of the nation’s homes. That total is up 9% from just a year earlier.
Plus, the number of Canadian homes connected by fiber lines rose to 3.9 million at the close of 2022, translating to nearly a 40% penetration rate once again. That’s up from 3.2 million FTTP-connected homes at the end of 2021 and 2.8 million at the end of 2020.
In other words, 2022 was easily the biggest year yet for FTTP deployment in both the U.S. and Canadian markets.
But don’t just take it from me. Let’s hear from a few industry experts.
“They [service providers] still seem very bullish on fiber builds,” noted Michael Render, CEO of RVA LLC Market Research and Consulting, which conducted the fiber provider study for FBA. “There’s just so much pressure to build right now.”
And Render is not the only industry insider who views things that way. Jaimie Lenderman, a principal analyst and research manager at Omdia who covers the broadband access market, recently noted that “North American PON network rollouts [over fiber lines] continue to grow at a fast clip. Driven by tremendous public and private funding opportunity, new fiber-to-the-premise connections show no sign of slowing down during the decade.”
A lot of shovels in the ground
Indeed, FBA’s survey findings are borne out by the deployments made by fiber providers across this considerable land mass. While such major providers as AT&T, Lumen, and Altice USA may not be installing FTTP networks at quite the torrid pace they once set, they are still laying plenty of fiber.
Take AT&T, for example. The telco deployed fiber to 600,000 new locations in the fourth quarter of 2022, after passing fiber to 500,000 locations in the previous quarter. Those moves boosted AT&T’s total new fiber deployments to about 2.5 million locations for the whole year, below its earlier ambitious targets but still quite strong.
Moreover, other major operators, such as Verizon, Frontier Communications, and Consolidated Communications, have been staying on track or have even moved ahead of the pace they set in earlier years.
In the third quarter of last year, for instance, Frontier reported that it added a record 64,000 fiber subscribers, handily beating the 57,000 subs expected by Wall Street analysts. It also built out its FTTP network to a record 351,000 locations in the summer quarter, putting it on a path to pass more than 5 million locations with fiber lines.
That’s halfway towards Frontier’s longer-term goal of passing at least 10 million homes and businesses with fiber by the close of 2025. Thanks to this rapid construction pace, the telco ended Q3 with 1.5 million fiber subs, up 16% from its year-ago totals.
Of course, it’s not all sunshine and lollipops for fiber builds. That just wouldn’t be realistic.
“There may be ups and downs on [individual company] builds,” Render noted. “There are always going to be companies that pull back on building.”
But, even with that caveat, Render doesn’t expect the overall industry totals to deviate that much from the strong growth projections over most of the rest of the decade, even despite such ongoing challenges as materials and labor shortages and rising equipment and labor costs.
“My view is still very bullish over the next five years,” he said. “It will be a very big number…. We are not sure what the ceiling is.”
Moreover, it’s not just the big service providers like Frontier, Verizon, and Consolidated that are accelerating their fiber rollouts. Smaller broadband players have steadily been getting in on the action as well.
Indeed, the FBA survey reports that Tier II and Tier III providers account for about 26%, or slightly more than one-quarter, of all U.S. homes passed by fiber. “It’s been fairly consistent,” Render said.
FTTP vendors prosper
In addition, the major fiber vendors continue to report healthy financial results amid strong demand for fiber products despite some quarterly fluctuations in orders from service providers.
For instance, STL, a large fiber vendor based in Mumbai, India, reported in late January that its revenues soared 28% higher on a year-to-date basis in the fiscal quarter ending December 31, as well as jumped by 46% on a year-to-year basis. The vendor attributed the revenue increases largely to surging demand for its optical products in the United States and Europe.
In response to this robust global demand for fiber, Corning, the fiber industry’s leading supplier, is now teaming up with its biggest customer, AT&T, to build a new fiber manufacturing plant in Gilbert, AZ, outside Phoenix. The plant, which is slated to open in 2024, is expected to double the amount of fiber cabling that Corning can churn out, complementing its recently opened plant in North Carolina.
“The industry continues to experience a large, multiyear wave of growth for passive optical networks, and we continue to increase our capacity to support this growth,” said Corning CEO Wendell Weeks, speaking on the company’s third-quarter earnings call in November. Despite some “lumpiness” in quarterly results due to a temporary slowdown in orders from AT&T, he noted, “macro demand in optical is incredibly strong.”
Even a couple of Wall Street analysts who have expressed some concerns about the possible emergence of a fiber bubble are not exactly bearish about FTTP’s future growth prospects. All they have done is slightly trim back their previous growth forecasts for fiber lines, which were extremely bullish.
Take the analyst team at Wells Fargo. The bank’s broadband market analysts now project that service providers will extend fiber lines to 10 million new U.S. locations in 2023, up from an estimated 8 million locations last year. While that 2023 estimate is down from the bank’s earlier projection of 11 million new fiber locations this year, it would still amount to the nation’s highest annual FTTP buildout yet.
Or take Craig Moffett, a principal analyst at MoffettNathanson (which is now a unit of SVC Securities). Although he warned in a recent report of a possible fiber bubble developing because of such emerging economic trends as materials and labor shortages and rising costs, he acknowledged that fiber buildouts will likely proceed at a strong pace until at least the second half of this decade.
In fact, Moffett sees a 20% rise in fiber deployment as “reasonable” to expect over the next two to three years. So, even the most skeptical industry analysts do not expect the current fiber fever to subside for a few more years.
It’s easy to see why the fiber building boom is likely to continue for some time to come. For one thing, there are the record bundles of public subsidies that various U.S. and Canadian government agencies are currently investing in fiber and other broadband platforms.
In the United States, for instance, the federal government is now starting to shell out nearly $42.5 billion in broadband subsidies under the new Broadband Equity, Access, and Deployment (BEAD) Program. Much, if not most, of those funds will support fiber buildouts in unserved and underserved areas of the country, with the network builds starting to pick up this year and next.
For another, fiber lines offer so many advantages over other types of access networks. As I have pointed out in my earlier BTR columns, those advantages include faster download and upload speeds, lower latency and jitter levels, less environmental waste and pollution, lower energy usage, greater economic benefits, more positive social impacts and, not surprisingly, higher net promoter scores.
Our new FBA survey report documents and details many of those benefits. Take data download and upload speeds. Zeroing in on consumers, the study found that fiber subscribers reported enjoying download speeds more than one-third higher than other broadband subs and upload speeds at least three times higher than their counterparts.
That’s just one more reason why it makes sense for cable operators to keep adding more fiber lines to their HFC plant as quickly, efficiently, and effectively as possible.
Fortunately, we can help cable operators make the pivot to fiber. For instance, the FBA now offers a comprehensive training and certification program for fiber technicians and installers, known as FBA OpTIC Path. We are teaming with community and technical colleges and veteran programs to offer this program throughout the United States.
With the aid of programs like these, the FTTP drumbeat should only get louder as time goes on. “Barring a breakthrough in physics, fiber is the ultimate answer,” Render noted.
Gary Bolton is president and CEO of the Fiber Broadband Association.