Communications industry financial analysts at MoffettNathanson Research expect to see continued cable broadband market share gains, which have accelerated as bandwidth demand climbs during the COVID-19 pandemic. The researchers’ “equilibrium” forecast calls for DSL market share to drop to zero. And “mid-tier” telco broadband increasingly is becoming “just as obsolete,” the researchers said.

“Broadband is increasingly a two-horse race between cable and telco FTTH, where it exists,” MoffettNathanson argues in a new research note.

The COVID-19 Impact
MoffettNathanson isn’t the first research firm to note that cable made major broadband gains in the first quarter of 2020. Leichtman Research Group noted that the top cable broadband additions were up 122% over the same quarter of 2019, while the top telco broadband providers had a net loss of about 65,000 subscribers, compared to a net gain of about 20,000 in the first quarter of 2019.

Like LRG, MoffettNathanson attributes these changes to increased bandwidth demand as people spend more time at home during the COVID-19 pandemic.

“The increased level of usage was enough to convince many customers that they needed higher speeds to handle the number of simultaneous users in their home,” MoffettNathanon wrote.

The MoffettNathanson researchers also noted another dimension to the cable broadband market share gains. New household formation was quite high in the first quarter of 2020 – at least until the COVID crisis hit.

The implication of that finding is that cable’s broadband long-term gains may not be quite so impressive – and that telco losses likely would have been even worse were it not for new households ordering broadband.

Cable Broadband Market Share
MoffettNathanson defines “mid-tier” telco broadband to include fiber-to-the-node (FTTN), IP-DSLAM and VDSL technology supporting speeds as low as 10 Mbps and as high as 75 Mbps but with speeds that generally don’t exceed 25 Mbps.

“The pressures on broadband networks laid bare by the coronavirus crisis make it clear that market share will now migrate even faster in this large cohort,” the researchers argue. “As with legacy DSL, it is increasingly clear that this segment is simply not competitive anymore. Equilibrium market share in this cohort, if one looks out far enough, is 100/0.”

In the near term, the researchers expect to see cable companies take an 85% share of broadband connections in markets where they compete against mid-tier telco broadband. Even more negative for telcos, MoffettNathanson no longer sees telcos having an advantage against cable in FTTH markets. In the past, the researchers expected to see telcos gain 60% of broadband connections in markets where they had deployed FTTH but that projection was later reduced to 50/50. And according to today’s note, the researchers don’t envision that changing any time soon.

“It is . . . no longer sensible to argue that fiber has a technological advantage over cable,” the researchers argue. “With the coming advent of DOCSIS 4.0 (likely to be called ‘10G’), cable operators will be able to deliver 10 Gbps symmetrically. One has to look out well beyond 4K video to full virtual reality, and perhaps even holography, for applications that would make a 10 Gbps service insufficient.”

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4 thoughts on “Research: It’s a Two Horse Broadband Race Between FTTP and Cable Broadband, FTTN/DSL Headed to Zero

  1. Well, the two previous posts have some truth. Fixed wireless will be used in certain cases because it can be quicker to deploy and it generally costs less to deploy than FTTH. Cable systems are terrible on upload speed. Cable system operators are typically unwilling to extend their service footprint to areas with fewer houses per mile. In southwestern NH, six towns have been working with Consolidated Communications in public-private partnerships to build or overbuild FTTP to every address in town. The towns are Chesterfield, Dublin, Harrisvile, Rindge, Walpole, and Westmoreland. The Chesterfield FTTP network is completed. The latter five towns have approved bonds to have CCI build their FTTP GPON networks which will be completed by early 2021 with speeds up to 1Gbps. Broadband subsubscriber infrastrcture fees collected by CCI will be used to repay the principal and interest on the bonds. CCI covers any shortfalls in the infrastructure fees collected. No local taxes will be used. The towns will own the last-mile fiber and Consolidated will own the CPE, and optronics and electronics in the CO and will have a 20-year master services agreement with each town.

  2. I can drop full-duplex gigabit speeds to a whole neighborhood with fixed-wireless gear for less than 1/3 the cost of fiber, while the Telco is still negotiating right-of-way and doing pole prep work. Fiber is economically non-competitive in the last mile.

    Oh, and for those who care about their community, it keeps the money circulating there instead of whisked off to the pockets of some megacorp.

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