There is a reason much of the attention in the consumer internet access business now is focused on varieties of wireless access (balloons, low earth orbiting satellites, fixed wireless, bonding of licensed and unlicensed spectrum, 5G and millimeter wave).
Though the economics of fiber to the home have gotten better over the last few decades, the business model also has been under pressure from substitute products, the impact of competition on financial returns and the maturation of all legacy revenue models.
In the U.S. market, rival platforms already have had a huge effect, with cable companies using hybrid fiber coax platforms capturing all the net growth in the consumer segment of the internet access market.
The top cable companies netted 122 percent of the broadband additions in 2016, increasing gains from the 106 percent they gained in 2015 and the 89 percent they got in 2014. To be sure, the leading telcos (AT&T, Verizon, CenturyLink) now have stepped up fiber-to-home deployments. But Verizon’s experience also suggests that that ubiquitous fiber deployment results in market share of about 40 percent to 45 percent.
The top telcos, in contrast, lost 600,000 accounts in 2016, compared to a loss of about 185,000 subscribers in 2015. As the consumer internet access market is mostly a zero-sum gain, cable gains are at the expense of telcos.
In other words, under perhaps the best of circumstances (dense urban markets, lots of capital, marketing muscle), a big telco still loses leadership of the internet access market to cable competitors. To be sure, all-copper digital subscriber line services are where telcos mostly lose the battle to cable.
That scenario might remind you very much of Sprint, back in the days when it was bleeding former Nextel accounts, even as legacy Sprint accounts grew slightly, or lost just a bit of share. In other words, some segments of the customer base are more susceptible to predation.
Telcos face great difficulties in rural areas and less-dense suburban areas, where FTTH costs arguably would not produce a clear financially-positive result. Cable company networks always were built for low-cost access, always were broadband and now are easier to upgrade incrementally than telco networks.
All of that means there is a market opportunity, for all competitors to cable companies, in new platforms (mobile, Wi-Fi, LEO satellites, balloons, unmanned aerial vehicles, fixed wireless, 5G) now are getting serious attention to FTTH.
ISPs
|
Subscribers 4Q 2016
|
Net Adds
|
Cable Companies
| ||
Comcast
|
24,701,000
|
1,372,000
|
Charter
|
22,593,000
|
1,604,000
|
Altice*
|
3,907,000
|
122,000
|
Mediacom
|
1,156,000
|
71,000
|
WOW (WideOpenWest)**
|
718,900
|
20,600
|
Cable ONE
|
513,908
|
12,667
|
Other Major Private Company^
|
4,790,000
|
90,000
|
Total Top Cable
|
58,379,808
|
3,292,267
|
Phone Companies
| ||
AT&T
|
15,605,000
|
(173,000)
|
Verizon
|
7,038,000
|
(47,000)
|
CenturyLink
|
5,945,000
|
(103,000)
|
Frontier^^
|
4,271,000
|
(243,000)
|
Windstream
|
1,051,100
|
(44,000)
|
FairPoint
|
306,624
|
(4,506)
|
Cincinnati Bell
|
303,200
|
15,800
|
Total Top Telco
|
35,519,924
|
(598,706)
|
Total Top Broadband
|
92,899,732
|
2,693,561
|
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