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What Enterprises Can Expect as Carriers to Spend Billions on Broadband Rollouts

The knock on the door might not be a marketer asking you to sign up for solar panels. Instead, it may be a door-to-door salesperson pitching broadband Internet from a provider you may not have heard of.

AT&T and Google Fiber have confirmed that they are taking it to the streets in an aggressive effort to sell fiber-based products in newly entered areas and against entrenched incumbent telcos and cable companies.

The fiber forays will deliver high-speed Internet service to support work-from-home efforts, virtual education, telemedicine, streaming services, and gaming.

Funding fuels deployments

Why the full-court press? Flush with grants and funding from the American Rescue Plan, the Rural Development Opportunity Fund (RDOF), and Infrastructure Investment and Jobs Act, added to annual carrier CapEx spending, the broadband breakout is well underway.

Carriers large and small are aggressively upgrading and expanding their networks to offer faster services and to un- and underserved areas to take on cable incumbents such as cableco Charter, who are also adding fiber.

Fiber forecast and IT guidance

It is anticipated that annual spending on fiber upgrades and expansions will continue for at least five years before the broadband breakout slows. Enterprise IT managers need to be aware of new and emerging efforts embraced by states and carriers to drive fiber deployments.

IT manager prep

With many service providers of all types – new and old - having stated their plans and associated timelines, there is not much IT managers can do to influence the actual speed of fiber service rollouts. But by understanding emerging efforts to drive the use of funds for broadband deployment, they can get up to speed before they get new or faster broadband speeds.

“IT managers will want to do their homework and make sure to fully vet new providers to make sure they aren’t overextending themselves and also trying to boost take rates by offering SLA guarantees they can’t necessarily back up,” advises Jeff Heynen, Vice President, Broadband Access and Home Networking at Dell’Oro Group, a market research and analysis firm.

AT&T operational challenges

Speaking on an earnings call, AT&T CEO John Stankey said it takes a year from the time it begins engineering work in a new market to the time it can start selling fiber products there.

AT&T’s stated goal is to cut that timeframe down “substantially” so it can get its broadband products to consumers faster. The carrier lost 20,000 broadband customers in Q4 2021 as fiber net additions failed to offset DSL and non-fiber losses.

The type of things to come

AT&T plans to double its fiber footprint by 2025. That should help the telco in its ongoing rollout of gigabit services (including multi) and increasingly popular symmetrical services to better compete with cablecos (pushing DOCSIS 4.0) for all-size enterprise business and consumer connections. It will also drive support for an expanded 5G wireless network.

Supply chain challenges notwithstanding, the fiber network will cover four million small businesses and one million enterprise locations, and more than twenty-five million consumer locations with multi-gig performance, according to Jeff McElfresh, CEO of AT&T Communications. “Nationwide, more than 9.5 million business customer locations are within 1,000 feet of our fiber.” The carrier exec said that he believes AT&T has enough “weight” in the industry that it can work with vendors to overcome any supply chain delays.

Addressing the skills gap- Optical installers get smarter, faster

The Fiber Broadband Association (FBA) recently launched an Optical Telecom Installation Certification program to help scale the education of fiber technicians, with a pilot run that was set to start on March 29.

Fiber broadband experts designed the program to quickly scale fiber technician education to fill the existing fiber skills gap and accelerate fiber deployments across North America.

The FBA forecasts that more fiber will be deployed in the next five years than has been deployed in the past 20 years, but the need for skilled fiber optic technicians will significantly impact each state’s ability to deploy broadband. The FBA’s OpTIC program teaches the knowledge and skills required to properly install, test, and maintain high-speed fiber broadband networks.

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

The FBA is engaged with twenty-three states to roll out this fiber optic technician training program with their community college systems and fiber optic broadband service providers. Its stated goal is to reach all fifty states and U.S. territories by the end of the year.

Build, own and lease to ISPs - Michigan

One such option IT managers need to be aware of is for county utilities to use the funding to build new fiber and wireless networks, which they would own, and leaseback to ISPs to speed the introduction of broadband services throughout the county.

Michigan's Ottawa County is exploring this opportunity, having built cell towers for wireless services this way before and then leased them to companies to cover dead zones in the town. It was not economically feasible at the time for companies to build that infrastructure, and a similar situation has been playing out with internet infrastructure in sparsely populated rural areas of the county.

“It is not economically feasible to lay fiber to every home and business across the county,” said Douglas Weber, president of Urban Wireless Solutions, Ottawa County’s consultant on the initiative. “If it were, you would have seen all the major internet service providers doing so already. Furthermore, wireless technology has improved to the point where it is delivering internet speeds comparable to fiber and can be deployed in a more economically prudent manner.”

The statewide grant approach with rules - Tennessee

The State of Tennessee detailed in March a plan to spend $400 million in federal funds from the American Rescue Plan for carriers to deliver broadband services in the state. The entities can be solely broadband providers to Tennessee, or they can include nationwide coverage. Broadband infrastructure projects in Tennessee will prioritize "severely underserved" communities, which it defines as serving those that have coverage below 25/3 Mbps and 10/1 Mbps.

The Tennessee Department of Economic and Community Development (ECD) broadband providers had until mid-March 15 to submit applications for funding. Projects must be completed within three years. The additional funding from the ARP has allowed the state entity to waive its $2 million maximum request amount for grants.

Too fast and furious?

One aspect for IT managers to consider is that in a race to reach new areas and provide a competitive alternative to businesses and consumers, providers may overextend themselves financially.

Does the demand justify new fiber builds to attract customers’ whose collective spend does not cost-justify the rollouts?

“The key part of their analysis is that there is [plenty] of overbuilding going on right now. In other words, expansions into new areas to try to grab broadband subscribers away from incumbent providers,” explained Dell’Oro’s Heynen. “Operators are using the high valuations of their fiber networks to secure more funding to cover these expansion projects. Because of that, I do agree that traditional take rate assumptions might be a bit rosy.”

For the foreseeable future, service providers see fiber rollouts as an opportunity knocking loudly.

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