What Businesses Can Expect as Carriers Invest Billions in Broadband Connectivity

It’s possible that the knock on the door isn’t from a marketer wanting you to sign up for solar panels. Instead, it may be a door-to-door salesperson promoting broadband Internet from an unknown supplier.

AT&T and Google Fiber have stated that they would be hitting the streets in an aggressive drive to sell fiber-based goods in new markets and against established incumbent telcos and cable providers.

The fiber expansions will provide high-speed Internet access to assist work-from-home initiatives, virtual education, telemedicine, streaming services, and gaming.

Why the all-out assault? The broadband breakout is well underway, thanks to grants and funds from the American Rescue Plan, the Rural Development Opportunity Fund (RDOF), and the Infrastructure Investment and Jobs Act, which have been added to yearly carrier CapEx spending.

Carriers of all sizes are rapidly updating and expanding their networks to provide quicker services and to un- and underserved areas in order to compete with cable incumbents such as Charter, which is also deploying fiber.

Annual expenditure on fiber upgrades and expansions is expected to continue for at least five years until the broadband breakout slows. Enterprise IT managers must be informed of current and developing fiber deployment initiatives endorsed by governments and carriers.

With numerous service providers of all sorts – new and old – having disclosed their goals and related timetables, IT managers have little control over the actual speed of fiber service rollouts. However, by understanding growing attempts to encourage the use of funding for broadband development, they may get up to speed before they acquire new or better broadband speeds.

“IT managers will want to do their homework and completely assess new providers to ensure they aren’t overextending themselves and also attempting to improve take rates by offering SLA guarantees they can’t necessarily back up,” says Jeff Heynen, Vice President, Broadband Access and Home Networking at Dell’Oro Group, a market research and analysis organization.

AT&T CEO John Stankey stated during an earnings conference that it takes a year from the time it begins engineering work in a new area to the time it can begin selling fiber goods there.

AT&T’s stated objective is to reduce that timescale “significantly” so that its broadband solutions can reach customers sooner. In the fourth quarter of 2021, the company lost 20,000 broadband users as fiber net additions failed to balance DSL and non-fiber losses.

AT&T intends to more than double its fiber presence by 2025. This should help the telco compete with cablecos for all-size corporate business and consumer connections as it continues to push out gigabit speeds and more popular symmetrical offerings. It will also help to promote support for a larger 5G wireless network.

Despite supply chain issues, the fiber network, according to Jeff McElfresh, CEO of AT&T Communications, will reach four million small businesses and one million enterprise sites, as well as more than twenty-five million consumer locations with multi-gig performance. “Our fiber is within 1,000 feet of over 9.5 million commercial client locations across the country.” According to the carrier executive, AT&T has the “weight” in the industry to engage with vendors to overcome any supply chain bottlenecks.

The Fiber Broadband Association (FBA) recently established an Optical Telecom Installation Certification program to help scale fiber technician education, with a test run scheduled to begin on March 29.

The curriculum was created by fiber broadband professionals to fast expand fiber technician education in order to solve the existing fiber skills gap and speed fiber deployments across North America.

The FBA predicts that more fiber will be delivered in the next five years than in the previous 20 years, but the shortage of experienced fiber optic technicians will have a substantial influence on each state’s capacity to provide broadband. The FBA’s OpTIC program gives students the knowledge and skills needed to construct, test, and maintain high-speed fiber broadband networks.

“When we saw the need for an expanded fiber workforce to keep up with broadband demand and growth opportunities, we began development of this intensive training program to ensure that no state falls behind in the digital equity gap,” said Deborah Kish, FBA’s Vice President of Research and Workforce Development.

One possibility that IT managers should be aware of is for county utilities to utilize the cash to develop new fiber and wireless networks that they would control and lease back to ISPs in order to accelerate the delivery of broadband services throughout the county.

Ottawa County, Michigan, is looking at this prospect, having previously erected cell towers for wireless services and then leased them to firms to address dead zones in the town. Companies could not afford to create such infrastructure at the time, and a similar issue has been playing out with internet infrastructure in sparsely populated rural portions of the county.

“It is not fiscally viable to lay fiber to every house and business in the county,” said Douglas Weber, owner of Urban Wireless Solutions, Ottawa County’s project consultant. “If it were, you’d see all of the major internet service providers implementing it by now.” Furthermore, wireless technology has advanced to the point that it can give internet speeds equivalent to fiber while being more cost effective.”

Tennessee announced in March a proposal to spend $400 million in federal subsidies from the American Recovery and Reinvestment Act to help carriers deploy broadband services across the state. The entities can just deliver broadband to Tennessee or they can give nationwide service. Tennessee broadband infrastructure initiatives would target “severely underserved” areas, which are defined as having coverage of less than 25/3 Mbps and 10/1 Mbps.

Broadband providers in Tennessee had until mid-March 15 to submit financing proposals to the Tennessee Department of Economic and Community Development (ECD). Projects must be finished in three years or less. The increased revenue from the ARP has enabled the state organization to forgo its $2 million grant request maximum.

One thing IT managers should keep in mind is that in the rush to expand into new markets and give a competitive option to businesses and consumers, providers may overextend themselves financially.

Is there enough demand to warrant additional fiber constructions in order to attract consumers whose combined spending does not justify the rollouts?

“The essential point of their research is that there is now a lot of overbuilding going on.” In other words, Dell’Oro’s Heynen noted, “expansions into new regions to try to steal internet consumers away from incumbent carriers.” “Operators are taking advantage of the high values of their fiber networks to seek additional finance for these expansion projects.” As a result, I agree that typical take rate assumptions may be too optimistic.”

For the coming years, service providers regard fiber rollouts as a golden opportunity.

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