Time to Market, Risk Reduction, Revenue: Choose any Two

Infrastructure joint ventures to build home broadband infrastructure have grown more common since 2020. And while it certainly makes sense to reduce the amount of capital investment--especially when speed is of the essence--it also might be pointed out that such joint ventures also reduce the incumbent ISP’s share of revenue gains and profits. 

But revenue and profits are not the only consideration. Speed and risk reduction arguably are more important, as many believe the first supplier to deploy a fiber-to-home network, for example, could have twice the market share of the second supplier.

Then there is the matter of risk. Where FTTH networks once assumed per-customer consumer revenues of $130 per month or more, some ISPs now believe consumer revenue will be as low as $50 to $70 per month.

Couple that with significant competition and the risk of deploying arguably is higher than it was two decades ago. So many ISPs now are viewing joint ventures more favorably, even if, traditionally, full ownership and control was preferred.

So joint ventures have become more common. Telefonica, for example, has used such joint ventures in South America.  

The key advantage is time to market, as a limited amount of capital can be leveraged to build out more locations, faster. To the extent that the estimated financial return is risky, the joint ventures allow ISPs to reduce the amount of risk and stretch their capex budgets to reach more potential customers. 

Of course, revenue and profit shares also are reduced.

Venture	Percentage of Ownership by Telco or ISP	Projected Share of Revenue	Projected Share of Profits
Google Fiber	70%	60%	50%
Comcast-Charter	50%	50%	50%
Verizon-Frontier	50%	50%	50%
Astound Broadband	50%	50%	50%
Broadband Infrastructure Partners	50%	50%	50%
CityFibre	40%	40%	30%
Openreach	50%	50%	50%
Voyager	50%	50%	50%

But speed matters, to the extent that the first FTTH supplier might be able to gain twice the share of the second network provider. So even if full ownership and control might be desirable, risk reduction and time-to-market seem to matter more.