In recent years, cable companies have gained broadband market share against the telcos except in areas where the telcos have upgraded their traditional copper-based network infrastructure to support speeds competitive with the cablecos’ hybrid fiber coax-based service.
But according to researchers at Moffett Nathanson, that’s set to change as telcos, particularly AT&T, get more aggressive about delivering faster broadband speeds.
Moffett Nathanson researchers, led by founding partner Craig Moffett, previously forecast that cable companies would gain a 55% broadband take rate nationwide, but have now reduced that forecast to 51%.
Planned AT&T upgrades “will have the effect of lowering the percentage of the country where cable competes against legacy DSL . . .and raising the percentage of the country where cable competes against fiber-to-the-premises,” researchers wrote.
Broadband Market Share Shifts
Researchers caution that market share shifts are not yet noticeable, in part, because AT&T deployment plans are still underway and are somewhat vague. They note, though, that AT&T targets call for broadband capabilities as follows:
- 30 million customer locations will have speeds below 50 Mbps available to them (via DSL, IP-DSL and VDSL)
- 20 million will have 50-100 Mbps service available (via VDSL)
- 10 million will have “near Gbps” speeds available (via 5G)
- 22 million will have speeds above 1 Gbps available to them (via FTTH, including 14 million residential locations and 8 million business locations)
Overall, telco FTTH and equivalent services offering Gbps speeds will cover about 32% of the country, up from 23% in researchers’ previous forecast. An additional 20% of homes will have speeds between 50 and 100 Mbps available to them from the telco (up from 18%). The portion of the country that telcos serve with speeds below 50 Mbps will fall to 48% from 64%, researchers said.
The impact of telco network upgrades will vary from one cable company to another. But overall, cablecos will face competition from FTTH in 33% of their coverage area and from IP/DSLAM/FTTN in an additional 34% of their territories. according to Moffett Nathanson. Cablecos will face off against legacy DSL in 33% of their service areas.
Cable Isn’t Standing Still
The Moffett Nathanson research note cautions that cable companies are not standing still with regard to technology. The researchers note, for example, that equipment supporting the full-duplex DOCSIS 3.1 standard, expected in mid-2020, will support speeds of 10 Gbps symmetrically.
It’s worth noting, though, that current DOCSIS 3.1 equipment can support gigabit speeds – at least in one direction and at least for a certain number of customers. In addition, at least one cable company – WOW – has further boosted DOCSIS capacity by splitting nodes and deploying deep fiber using a virtualized distributed access architecture (vDAA). And although cable companies have not yet announced specific plans for vDAA, sources say the major cablecos are exploring that possibility.
Even if the Moffett Nathanson report underestimates the near-term capabilities of cable networks, however, the fact remains that telco network infrastructure is poised to be much more competitive against cable than it has been in recent years.
So perhaps the question is not whether we will see broadband market share shift toward the telcos, but what the magnitude of those shifts will be.