In the End, Value Matters More than Physical Media

We often assume that people using fiber-to-home networks is mostly a matter of supply: build the networks and demand should be obvious. In other words, build it and they will come. It is rarely that simple. Even where FTTH is available, take rates are lower than many of us would have predicted. 

In many European markets as well as the United States, take rates approach 40 percent of holmes passed, and that only after a few years worth of marketing. Analysys Mason analysts estimated take rates at about 41 percent in Europe in 2020, for example.  

source: Analysys Mason 

AT&T has approached 40 percent take rates for its FTTH footprint in 2022. In some markets, including the United States, where cable operators have 70 percent of the installed base, and have, for two decades, gotten nearly all the net new account additions. FTTH purchases are lower because other viable options exist. 

The point is that customer demand also matters, not simply supply. Policymakers might well content themselves to drive policies that make FTTH available, or that make capacity available, irrespective of the platform. 

Rarely, if ever, are goals set for specific levels of adoption. That makes sense, if one assumes the government policy interest in precisely in ensuring availability of services, not forcing people to buy. It literally is up to internet service providers to make the case for value.  

source: Statista 

But physical media and platform statistics are only so valuable. What arguably matters more are actual value propositions, as only a small percentage of potential customers actually buy the fastest-available or most-expensive service packages. 

According to Openvault, even where gigabit-per-second service is widely available, about 15 percent of U.S. households actually buy it. Most customers buy service at lower speeds. As the headline speed increases to multi-gigabit ranges, that will likely remain the case. At first, only single digit percentages of customers will buy the fastest tier of  service. 

Most customers will continue to buy service someplace in the middle: not the slowest, nor the fattest speeds. 

At some point, where it comes to optical access infrastructure, we will stop focusing on availability and we will pay more attention to the actual services customers buy over that platform, or any other competing platforms. 

In the end, physical media will not matter. We will care about demand for capacity at various levels, and the value and revenue that generates.