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USA Fibre Investments Encouraging Further Operator Expansion

According to data from the FttH Council, the number of homes passed with fibre in the US increased 13% in 2015, year-on-year, to 26 million. Combined with Canada and Mexico, the number of passed homes has reached 34 million. The take-up rate is excellent by international standards, at more than 50%. Commonly operators look to about 20% to 30% take-up before work can begin on new fibre infrastructure to communities. Yet once the cable is in place a greater proportion of people tend to sign up to services when the improved experience of fibre, against DSL and cable alternatives, is understood and broadcast to other potential customers, often by word of mouth.

The Council has suggested that some 1,000 FttP providers in North America expect to offer a 1Gb/s by 2020.

Certainly the Google factor is important in this market. The company has set in train a number of projects with municipalities to develop a 1Gb/s fibre networks that would connect hundreds of thousands of people in a number of areas across the country. The first Google Fiber city was Kansa City, the second Austin, Texas, announced in 2013.

During 2015 Google has worked on expanding Google Fiber to Atlanta, Nashville, Salt Lake City, Phoenix, Portland, San Antonio, San Jose and the North Carolina towns of Charlotte and Raleigh-Durham. Also benefiting will be more than a dozen smaller towns in the surrounding vicinity of these conurbations. In July this year Google Fiber received a license from the Texas Public Utility Commission (PUC) to operate as an ISP in San Antonio. Here, the company aims to lay at over 4,000 miles of fibre cabling throughout the city. At the same time it also received a licence from the city council of Tempe, Arizona, to build a similar network.

Each time Google becomes involved in telecommunications, it gets international media coverage, and each time it stimulates a familiar response from telcos. These operators had for long been content to provide customers with services which they deemed adequate, but which customers themselves by and large considered inadequate. Operators could coast along knowing that they had their customers over a barrel, because there was no effective competition in their licensed areas.

Google changed this by encouraging municipal involvement in broadband infrastructure. Now there is growing pressure from municipalities across the country to override restrictive State-level laws which prevent them becoming involved in telecom services. These communities often club together, as happened recently in Colorado where 26 cities and towns and 17 counties—43 communities—all voted overwhelmingly to give themselves authority for the provision of telecom services. In Colorado the measures reflected years of frustration with the poor services offered by the incumbent telcos.

In general, the telcos’ response has been in two forms. On the negative side they have used their lobbying strength to curtail municipal involvement. This looks to be a losing battle. On the positive side they have strengthened their own investment in extending gigabyte services. This really reflects the recognition that they must swim with the tide rather than be borne down by it.

So now we are seeing the Verizons and AT&Ts of the market adding cities to their gigabyte footprints at a considerable rate, while smaller operators are doing likewise. As an example, the regional cableco Cable ONE will extend its gigabyte service across more than 200 towns during 2016, making it available to the majority of its customers by the end of the year. This work is an extension to the residential sector of the 1Gb/s service already offered to business customers, and is a response to customer demand as much as to the general direction that the sector is taking.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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