A U.S. fiber investment forecast from RVA LLC calls for service providers to spend $125 billion over the next five years, exceeding the total amount that has been invested in fiber since providers first began deploying it.
The $125 billion includes money allocated in government programs, said Michael Render, RVA owner and principal analyst, in response to an email inquiry from Telecompetitor.
The largest of these programs is the BEAD program created in the infrastructure act adopted late last year. But although that program has a budget of $42.5 billion to go toward broadband deployments in unserved, primarily rural areas, Render noted that RVA doesn’t expect deployment from the BEAD money to become significant until 2024, and “a good portion of the spending will not occur until after 2026.”
Importantly, RVA notes in a press release that “strong fiber deployment is expected to continue well into the 2030s.”
This observation offers an interesting counterpoint to a note from telecom and broadband financial analysts at MoffettNathanson issued late last week. The analysts expressed concern that we may be heading for a period of overinvestment in fiber that could create a fiber bubble akin to the one that occurred around the year 2000. According to their analysis, some new fiber projects may not generate a sufficient return on capital due to high deployment costs, strong competition from cable companies and market saturation.
U.S. Fiber Investment Forecast
RVA expects fiber deployment to grow for several years and then level off, but according to Render, “we do not expect any significant pullback in fiber deployment during the next 10 years.”
“We believe there is overwhelming evidence that end-to-end fiber has the best performance of any internet delivery method, and that the majority of providers now realize it is in their best interest to build fiber as quickly as possible.”
Strong fiber performance was the focus of previous RVA research released last year.
According to the new U.S. fiber investment forecast from RVA, telephone companies “continue to lead the charge” on fiber deployment but cable companies also are increasing their fiber investment, as are rural electric cooperatives, private competitive companies and to some extent, municipalities, Render said in his email to us.
And despite MoffettNathanson’s skepticism, other financial analysts are more bullish about fiber. Render notes, for example, that Jonathan Chapman with New Street Research has said that the company values fiber lines at close to $4,000, while copper lines are valued at $1,100.
Although he did not provide specifics, Render noted that the new RVA fiber investment forecast shows the percentage of rural builds rising over the five-year forecast period – and the average deployment cost rising as well.