Perhaps you can argue that the CenturyLink acquisition of Level 3 Communications actually is not so much transformative as deepening a transformation that already had happened. But the proposed transaction still represents an important change.
Before the transaction (assuming it is approved by regulators), CenturyLink already was earning 64 percent of total revenues from business customers.
After the transaction, CenturyLink will earn fully 76 percent of total revenues from business customers, not the consumer segment.
Compare that to Verizon and AT&T. Verizon earns about 66 percent of total revenue from business customers.
AT&T earns about half its revenue from business customers, in large part because it is much more involved in the entertainment video business.
So after the acquisition, CenturyLink will be the service provider most reliant on business customer revenues. Of the three firms.
That should indicate fairly clearly why, even as it upgrades consumer internet access services, CenturyLink might not be able to justify a full “fiber to home” strategy. It is doubtful CenturyLInk can, at this point, recover its costs, as all consumer revenues combined amount to less than a quarter of total.
Verizon, which upgraded much of its consumer network to fiber already, alread had halted consumer fiber to home deployments, and appears now to be preparing a fiber distribution strategy that relies as much on wireless services as fixed network support.
AT&T, on the other hand, has much more reliance on mobile and satellite platforms to support its mobility and video services, and seems clearly to believe that mobile access is the foundation for the next wave of on-demand video entertainment.
So one reason telcos have been losing market share in consumer internet access to cable operators is because they are, indeed, investing elsewhere for growth. That is rational. At this point, none of those three firms likely could recover their costs if they invested heavily in consumer fiber-to-home access. There simply is not enough revenue to be gained, by doing so, as consumer revenues no longer represent the bulk--in some cases, overwhelming bulk--of revenues.
Targeted builds, in some neighborhoods, have a different payback, and might make good sense. But we are likely past the point where ubiquitous fiber to home makes financial sense.
That inevitably means these telcos will lose market share in consumer fixed network services, including internet access accounts. But it is rational to assume that is inevitable, and to focus growth efforts elsewhere.
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