2015 Inflection Point in U.S. Fixed Network Business?
It looks as though 2015 could have been an inflection point, where it comes to installed base and market share in the U.S. fixed network high speed Internet access business. Cable TV operators have had the largest market share, and have been steadily taking market share, since at least 2008 or so.
A logical question is “why” the shift is happening, and the logical answers are several. Cable TV has simply been able to upgrade its speeds faster than telcos have been able to do, in large part because the DOCSIS platform largely allows upgrades without full rebuild of the access network, where telcos generally have to rebuild plant (fiber deeper into neighborhoods or all the way to the customer premises) to match cable TV speeds.
The corollary question might be “why” most telcos have not invested more heavily into next generation access infrastructure.
That is a more complicated question. In some cases, requisite capital is not obtainable. In most cases, the business model is questionable or at least difficult.
One might well argue that the telco fixed network business is post-peak and declining. Voice take rates are close to 50 percent, meaning that telcos have lost nearly half their former voice customers.
Linear TV has helped, but now net linear video customer account additions are dropping. And telcos have been losing the high speed access market share battle as well.
Some might argue a rational executive would harvest returns in the fixed network segment to the greatest extent possible, and simply invest elsewhere for revenue growth.
That is not to say the business cannot be sustainable, only that it is not sustainable in the current circumstances, with high fixed costs and declining revenue.
In fact, some would argue, cable TV companies are on a growth path that makes them the dominant “communication” providers in the fixed network segment. Whether telcos or newer providers are the number-two providers in at least some markets is a growing question.