At some point in the future, we will be able to assess the extent to which multiple fiber-to-home and gigabit-per-second networks can survive in any single residential area, as we are reaching a point where some areas might have three to four suppliers of gigabit-per-second internet access.
The general issue is whether three or four providers is sustainable long term, as a general rule of thumb is that sustainable operation requires an installed customer base of at least 20 percent of passed locations, with operating costs scaled to match.
And the number of suppliers is growing, including a number of joint ventures whose business models are based on reducing costs, boosting market share potential, or both.
The Gigapower optical fiber joint venture between AT&T and BlackRock’s Diversified Infrastructure unit announced in December last year, is among the latest entrants. The venture has been finalized (the deal has closed), AT&T says.
The joint venture is the latest to be formed by incumbent service providers in the U.S. market. Among the largest efforts is Nuvia, a joint venture between T-Mobile and Nokia, which aims to pass about 10 million locations by 2025.
Atlanta, Charlotte, and Nashville are the areas where Nuvia expects to have its network operating by the end of 2023. It appears Nuvia is building first in “underserved” areas of those communities.
One might argue about whether the strategy is to reach “underserved” neighborhoods or “most lucrative” neighborhoods where the demand is highest, irrespective of the number of existing ISPs serving those areas.
The Buckhead area of Atlanta already is served by gigabit-per-second networks owned by Cox Communications and AT&T, with Google Fiber serving some parts of Buckhead as well. So Nuvia would be the fourth gigabit provider and the third FTTH provider. It is hard to say Buckhead actually is underserved.
Nuvia is T-Mobile’s first facilities-based effort to enter the fixed networks business as a FTTH supplier.
Gigapower is intended to serve customers outside of AT&T’s traditional 21-state wireline service footprint. The original indications were that some 1.5 million new locations would be served by the wholesale network, open to other customers.
In addition to Las Vegas, Gigapower now expects to expand beyond its previously announced fiber deployment in Mesa, to the Chandler and Gilbert areas of Arizona.also plans to build fiber in parts of Northeastern Pennsylvania (including Wilkes-Barre and Scranton) as well as parts of Alabama and Florida that are outside AT&T’s current service areas.
AT&T itself will be the initial anchor tenant. “Recently our first wholesale customer, AT&T, activated end-user customers on the Gigapower fiber network in Mesa,” AT&T Gigapower CEO Bill Hogg.
Much of the current activity seems targeted at “tier two” cities.
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