2023 was a big year for fiber-to-the-home (FTTH) deployments as Tier 1 and a growing base of alternative providers expanded their reach across diverse markets.
According to the Fiber Broadband Association’s 2023 North America Fiber Provider Survey, performed by RVA LLC Market Research & Consulting (RVA), 2023 saw the highest annual growth, with nine million homes passing with fiber.
“Previously, we hit some other peaks--4 million in 2008 and 7.2 million in 2019,” said Michael Render, CEO and co-founder of RVA, during the Fiber Broadband Association’s Fiber for Breakfast series. “Now, we surpassed all of that to 9 million.”
The survey uncovered several trends.
FTTH homes passed and being marketed to consumers in the U.S. grew 13% in 2023 to 78 million homes. Fiber broadband now passes nearly 69 million unique U.S. homes (excluding second or third passings of the same home). Fiber providers in the U.S. are experiencing a 45.4% average take rate versus unique homes passed, and some report significant first-year take-rate improvement in 2023.
Render noted, "The fiber broadband industry has come a long way from having only 9,000 homes passed with fiber.”
As fiber is made available to new homes, adoption times can vary. “When growth accelerates, it takes a while to complete those home passings completed,” Render said. “We’re on the rise again to about 45.4 percent average passings.”
Fiber passings of primary homes connected are at 50%. “This was a long-term goal for the Fiber Broadband Association, and we have now passed that,” Render said. “The fiber industry is passing more homes faster than copper and coax.”
RVA estimates that there are 140 million more addressable households for fiber broadband. “This opportunity for addressable homes includes primary and secondary homes,” Render said.
Diverse player mix
RVA noted that fiber broadband has passed the halfway point in the quest to provide fiber to all U.S. homes and now passes 51.5% of primary homes in the United States. Fiber broadband also passes a growing percentage of second homes or short-term rentals.
The research firm estimates the total available market remaining for FTTH may be over 100 million homes, including second and third passings in many areas, and there is likely a decade of deployment at or above the current momentum.
The entry of new players like rural electric cooperatives building out consumer and business fiber networks over the past five years drove the uptick in the number of homes passed.
While the overall share of homes passed is currently the smallest at 2.2%, rural electric providers have quickly entered the fiber broadband market and now almost match homes passed by municipalities at 2.7%.
Unsurprisingly, incumbent telephone Tier 1 and derivative fiber providers still lead with 64.7% of homes passed; incumbent telephone tier 2 and 3 providers have 11.3% of homes passed; private competitive providers/CLECs have 9.9%; and MSO/Cable operators have 9.1%.
“All of these groups are important,” Render said. “They have all played an important role in the rollout of fiber from the rural electric cooperatives, municipal providers, the Tier 2 and Tier 3s, which have been very important in the history of fiber and their Tier 1s.”
Equipment digestion, labor challenges
While the fiber broadband industry’s progress is notable, 2023 was challenging for equipment providers.
During the pandemic, service providers bulked up on network equipment. These providers are going through a digestion phase to deploy new network equipment.
“There was a massive bubble at the end of 2021 and 2022,” Render said. “This occurred because there had been a shortage of supplies, and people were building up to ensure they had the weapons in their storehouse to go forward.”
He added, "It’s an inventory correction issue that has come into play.”
Vendors in the fiber broadband ecosystem could start seeing a rebound in 2024. However, Render said that it depends on the type of vendor.
“It could be turning around now or the first of the year,” he said. “It depends on the type of vendor. “There are differences in excess supply for fiber cable versus outside plant enclosures.”
Besides the vendors, the challenges also extend to smaller providers, which often lack the capital or staff of larger operators.
One of the biggest challenges is labor availability and quality of contractors, followed by rising construction costs, materials concerns, permitting and BEAD regulations.
“Workforce labor is the number one concern for mid-sized to small providers,” Render said. “This was followed by cost, materials and regulatory issues like permitting and pole access.”