Is U.S. Home Broadband on Cusp of Major Change, or Not?

The U.S. home broadband market has been dominated by cable operators for two decades. Depending on the source, cable operators have held close to 70 percent of the installed base of accounts and have had up to 100 percent of net new additions (market share) in many years. 

Many believe that now will change, though there is disagreement about how much change is possible. 

U.S. telco fiber-to-the-home (FTTH) lines will pass 82 million American households by 2027, nearly double the 44 million households passed today, Cowen predicts. 

Led by AT&T, the four biggest telcos (AT&T, Verizon, Frontier and Lumen) will account for the lion's share of those deployments, together passing more than 71 million homes with fiber.

source: S&P Global Market Intelligence

U.S. cable operators will pass another five million homes with fiber lines over the next six years as well, largely deployed by Altice USA. Cable operators have deployed five million FTTH lines already, says Cowen. 

By 2027, telcos will get adoption by about 43 percent of homes passed by the FTTH networks, Cowen predicts. The issue is the percentage of those new FTTH lines that are market share neutral upgrades by existing telco digital subscriber line customers, and what percentage will come from market share taken from other providers. 

Cowen believes relatively small amounts of market share will actually be taken from cable operators. Cable operator market share is expected to decline from 61 percent today to 58 percent in 2027.

Telco share, meanwhile, will climb from 25 percent to 27 percent in 2027. The magnitude of the shift is where there is disagreement. - 

Some might call the Cowen share forecasts too conservative. Moffettnathanson, for example, believes a 50-50 split of the installed base between telcos and cable operators is possible. 

Telco executives, for example, believe they will do better than Cowen suggests. Frontier, for example, expects to reach about 45 percent of the installed base when it completes its FTTH upgrades.

Some telco executives also believe  fixed wireless will play a role in their share gains. Altogether, observers predict some shift of installed base and market share as telcos go up tempo on FTTH upgrades and 5G fixed wireless gets marketed. How much change could happen is the issue.