It’s pretty clear that fixed broadband access is changing. Both CATV and fiber-based operators are raising their speeds, to 2 or even 4Gbps. AT&T, who a year ago wasn’t all that positive on fixed wireless access (FWA) as an option now says that they’re going to retire more and more copper, replacing it with fiber where feasible and with FWA/5G where it’s not. A bunch of smaller access players are getting into the market, usually with aggressive fiber deployments. You’ve got to wonder what’s going on, so let’s find out.
Always start with money. On the revenue side, things have shifted significantly over the last decade. At the start of it, most wireline broadband relied on linear live TV for its consumer draw. Cable companies, of course, were doing that before they were doing Internet at all. Today, streaming TV services are expanding, networks are starting to stream their own content directly, and competition has made TV less profitable. On the other hand, broadband Internet has become a necessity for most consumers, and so broadband Internet is pushing integrated live TV off the podium.
Staying with money but moving to the cost side, fixed access providers recognize that to be in the game at all, they need to deliver tens of megabits at least, which means that standard copper loop is just not going to cut it. They also recognize that once you decide you can’t use the old loop plant, alternative technologies (fiber, CATV, FWA) are all capable of delivering hundreds of megabits to multiple gigabits. “Delivering” here means clocking a consumer interface at the specified speed, not creating an end-to-end path of that speed. The access providers can’t control actual delivery speed since they’re not providing the entire path, but they can advertise interface speeds and compete with others in that numbers game.
The hot question for today’s market is “What alternative technology” to copper loop is best, and that’s proved to be a complicated question. Almost two decades ago, I ran through a lot of modeling and determined that there were publicly available data points that could be combined to create a measure of “demand density”, which was a combination of the revenue potential per unit of service area and the cost likely incurred to serve that area. High demand density favors fiber to the home (FTTH), and in fact the availability and quality of fiber broadband correlates very strongly with demand density. Verizon, whose demand density is at least seven times that of rival AT&T, was quick to embrace fiber broadband…because they could make it pay off.
Demand density is complicated, though. Saying that Verizon has seven times the demand density of AT&T is a bit of an oversimplification. What’s measured, in a sense, by these broad-area numbers is the ratio of territory that can be considered urban, suburban, and rural. Places with high demand density have more urban/suburban areas, and those with lower values have more rural areas. As time passed and we left “regional” deployment of fiber behind, we entered a period where operators (including AT&T) were thinking of their own infrastructure in terms of those three socio-demographic divisions.
While the territory of a “wireline” operator might have a demand density of 1.0 (the value I normalize to as the average across the US), there will be enclaves within the territory where demand densities are five, ten, or even fifteen times that. Those territories could be served with FTTH quite nicely, and so we’re seeing broad-scale operators like AT&T doing more fiber, not as a path toward making fiber universal but for those areas where local demand density will justify it.
We’re also seeing smaller “rural” telcos and players like Google, and even city, county, or state/province governments, getting into the fiber-based broadband game where no major player is prepared to take the necessary steps and risks. Again, this is often played out as an indication that fiber will become universal, but that is simply not the case. Absent subsidies, at least half the locations within low-demand-density territories are forever beyond fiber broadband. AT&T has proved that out by saying that as it retires copper, it will be relying to a degree on fiber (a limited degree, because most of where they can profitably deploy it is already on the plan) and the rest on FWA, which is likely to be 5G in either its cellular form or as millimeter-wave fiber-to-the-node (FTTN).
Generalizations can be dangerous, but my model and data suggest that cities and towns with populations as low as 20,000 can be served by fiber. 5G/FTTN seems to work for all towns and for the average suburban area, where developments have lot sizes lower than about an acre, and for the majority even where household density is as low as one per three acres. For more rural areas, the most effective strategy is to use mobile-network-centric 5G, which will serve areas with household densities as low as one per thirty acres or more, depending on the prevalence of highways where cellular services tend to be justified by transit traffic.
Well over half the territory of some states/provinces and even some countries will not support commercially profitable wireline broadband at rates of 20 Mbps or higher. For these areas, satellite broadband is the only commercial option likely to be viable. Subsidies to provide better terrestrial service to everyone are unlikely to pass the public-policy and politics muster.
The net of all of this is that we are not going to see universal fiber, or universal anything, in terms of broadband access. There’s too much local variation in demand density to allow for a single strategy. There will always be a digital divide, just as there will always be a difference between the distance to the nearest store or restaurant depending on whether you’re living in an urban, suburban, or rural area. What we can hope for, and should strive for, is to accept the need to tune broadband technology to the geography and demography of the service areas, to achieve the optimum broadband the situation allows. We’re not going to get to that by touting universal fiber or anything else, only by embracing different strokes for different folks.