AT&T Finalizes FTTH Joint Venture, Joins a Growing List of ISPs Doing So

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. 

Joint Ventures	Number of Locations
AT&T and BlackRock	1.5 million
Cox Communications and Google Fiber	2 million
CenturyLink and DigitalBridge	1.2 million
Frontier Communications and Google Fiber	2 million
T-Mobile and Nokia	10 million

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 Initial FTTH Build Areas
Nashville	Midtown, East Nashville, West Nashville, Sylvan Park, Green Hills, Belle Meade, Forest Hills, Brentwood, Franklin	100,000
Atlanta	Midtown, Buckhead, Downtown, Morningside, Virginia-Highland, Decatur, Sandy Springs, Alpharetta, Roswell	200,000
Charlotte	Uptown, Dilworth, Myers Park, South End, NoDa, Plaza Midwood, Ballantyne, Huntersville, Cornelius	150,000

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.

Tier 1 Cities	Tier 2 Cities	Tier 1 Attributes	Tier 2 Attributes
New York City, Los Angeles, Chicago, Houston, Phoenix, Philadelphia, San Antonio, San Diego, Dallas, San Jose	Atlanta, Austin, Boston, Charlotte, Cincinnati, Cleveland, Denver, Detroit, Indianapolis, Jacksonville	Large population, major economic center, strong job market, high cost of living, diverse population, cultural and educational institutions, international airport	Smaller population, growing economy, moderate cost of living, less diverse population, fewer cultural and educational institutions, regional airport

Urban-Rural Connectivity Gaps Will Persist, But So Will Lots of Other Gaps

When critics complain about disparities between urban and rural home broadband availability or performance, they often are correct. Many times, rural coverage and network performance are not close to resembling what is possible in urban areas.

But many of us would point out that the same is true for virtually all other indices of availability. We might note that the state of Montana does not have a single Whole Foods store. We might point out that Thai restaurants are harder to find in rural areas, as are large Asian grocery specialists. 

There are always fewer small, mid-sized or enterprise businesses--on a percentage basis-- operating in rural areas, compared to urban areas. All of that is because dense urban areas create more possibilities for human activity of all kinds. 

So we should not be at all surprised that population density has a huge impact on the cost of building new networks, mobile or fixed, but especially fixed networks.  

U.S. population density is quite thin across most of its geography. That directly affects the cost of building broadband networks, as hefty subsidies are required to reach the last one percent or two percent of remote locations. 

And the United States has a huge percentage of its land mass that is thinly settled, if at all settled. 

In Canada, 14 percent of the people live in areas of density between five and 50 people per square kilometer. In Australia, 18 percent of people live in such rural areas.

In the United States, 37 percent of the population lives in rural areas with less than 50 people per square kilometer.

Put another way, less than two percent of Canadians and four percent of Australians live in such rural areas. In the United States, fully 48 percent of people live in such areas.

Coverage is an issue in such rural areas. About six percent of the U.S. land mass is “developed” and relatively highly populated. Those are the areas where it is easiest to build networks. 

But about 94 percent of the U.S. land surface  is unsettled or lightly populated, including mountains, rangeland, cropland and forests. And that is where networks are hardest to build and sustain.

Difficult, but not impossible. The latest survey survey data from NTCA suggests matters have improved dramatically. 

The NTCA’s latest poll of its members indicates 61 percent of residents can buy service with downstream speeds of at least 1 Gbps, up from 55 percent in 2021,  45 percent in 2020, and 25 percent in 2019. 

source: NTCA 

To be sure, the NTCA survey likely omits the smallest service providers as well as those whose performance might not measure up. One should not expect a private business to voluntarily  disclose data that is unfavorable.

Still, the point is that population density (or lack thereof) is a reason networks are hard to build, expensive to build and take longer to build in thinly-settled areas than in urban areas. 

So, yes, there is, and might always be, differences between network performance or availability in very-rural areas. But that is true for virtually anything we might measure.