FTTP and FWA Momentum in the US Grows, but MSOs (Mostly) Stick to Cable

Emir Halilovic – Principal Analyst

Summary Bullets:

• Despite growing fiber and FWA momentum in their home market, US cable MSOs are still mostly sticking with cable as their current and future network technology.

• This insistence on staying the course is natural, given cable’s “value for money” ratio, but the technological superiority of fiber and flexibility of FWA may increasingly endanger the very core of the MSO’s business.

Recent announcements coming from major US telcos indicate new enthusiasm for fiber and FWA investment. AT&T is forging on with its plan to add 30 million new locations to its fiber network, and has introduced XGS-PON into its network, enabling 2Gbps and 5Gbps services. Verizon has (finally) started offering 2Gbps service on its NG-PON2 network in New York City. Smaller operators like Frontier, Ziply, Vexus Fiber, and Hotwire have mostly jumped on the XGS-PON bandwagon and offer multi-gig services as well.

AT&T, T-Mobile, and Verizon are also at the forefront of FWA deployments. FWA, though usually seen as less reliable and offering lower performance than HFC, can in some cases outperform cable, while at the same time its deployment economics and speed can allow mobile operators to be very aggressive with pricing and service availability.

All these developments have so far had limited impact on cable MSOs’ strategic network transformation plans:

Operator Network Development Strategy
Comcast No aggressive fiber overbuild or coax-to-fiber replacement plans. Immediate network upgrades rely on DOCSIS 3.1, and Comcast is investing into high-split architecture (to boost upload on HFC) and expects to move to DOCSIS 4.0 with up to 10Gbps download in the future. Its HFC (hybrid fiber-coax) infrastructure does include EPON, and Comcast is using it to offer EPON-based FTTH to select customers. However, FTTP service is expensive (roughly $1,000 to install, $300 a month) and the availability is in select locations across its footprint. Customers’ testimonials also point to a lengthy and complicated installation process.
Charter Almost solely reliant on HFC, offers FTTP only as a custom solution to larger businesses and government entities. Counting on DOCSIS 4.0 to be able to offer 10Gbps symmetrical services “in the next 5-10 years” (CEO comments, September 2021). Plans to invest in high-split architecture tactically.
Cox Invests into cable and fiber selectively. Cox acquired fiber operator Segra in 2021, giving it FTTP footprint in Virginia and North Carolina. Cox executives said that the MSO is increasing its FTTP buildouts, in parallel with HFC investment. Cox CEO noted in October 2021 that the MSO has passed 600,000-700,000 homes with fiber and expects to see “more fiber in the mix.” Meanwhile, Cox is doing trials with a high-split architecture, and expects another 20 years of lifetime for HFC.
Altice USA Probably most aggressive in replacing cable with fiber, with a focus on overbuilds in Verizon Fios areas. The operator has likely passed 1.5 million homes with FTTH in 2021. The overbuild strategy is especially crucial in areas where it competes with Verizon and Frontier. Altice intends to accelerate fiber buildouts in those areas with 3.5 to 4 million homes passed with fiber as soon as possible and reach 6.5 million locations covered with fiber by the end of 2025. Although the strategy itself is proactive (as Altice started talking about moving to fiber some six years ago) in some cases it’s reactive as well. Altice recorded some net customer churn in 2021 and feels the pressure from fiber operators (like Verizon). Aims to start providing 10Gbps service at an undefined point in time in 2022.
Mediacom Predominantly focuses on growing HFC footprint but has also started deploying FWA using CBRS spectrum. Mediacom FWA deployment started in August 2021 and aims to cover 500,000 new locations. It has no public FTTP deployment plans.

With the exception of Altice and Cox (to a degree), it seems that cable MSOs largely intend to double down on their commitment to HFC as their technology of choice for the immediate and foreseeable future. However, the comparison of HFC to competing technologies – FTTP and FWA – should make MSOs think long and hard about their competitive positioning. FTTP has – with XGS-PON widely available – reached a point where it clearly outperforms DOCSIS 3.1 and will likely be superior to the emerging DOCSIS 4.0 as well. FWA can in many cases compete with DOCSIS 3.1 on performance and has a strong disruptive potential with unbeatable economics in less dense suburban and rural areas.

This significant increase of competition in the US will inevitably increase pressure on cable MSOs, not only in their core residential market segment, but also in adjacent SME and wholesale connectivity markets. The cocktail of high-performance fiber connectivity, and flexible FWA offerings can increase customer churn in highly competitive and lucrative urban and suburban markets while FWA curtails cable MSOs’ edge-out potential in rural areas. Looking at their overall footprint, US cable MSOs’ network strategy has not changed significantly in reaction to the new wave of fiber and FWA investment. This can put the cable industry in a dangerous position, and threaten its dominance of the US broadband market.

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