A recent report from Cowen claims that fiber-to-the-home (FTTH) has become a mainstay in the broadband market as services have become more widely available and reasonably priced.
According to a survey of more than 1,200 consumers by Cowen, the average household income of FTTH subscribers was around $83,000, compared to about $85,000 for non-subscribers. Income for FTTH subscribers is now lower than income for non-FTTH subscribers for the first time since Cowen started conducting its quarterly FTTH survey in Q4 2020.
Gregory Williams and Michael Elias, analysts at Cowen, claim that the income shift is a sign that providers are laying out more fibre to the entire population rather than just wealthy neighborhoods.
Williams and Elias explained in the study’s findings that in the past two decades, initial target markets for FTTH were “typically in wealthier zip codes that could command higher ARPU to justify the high build costs and otherwise challenging businesses case.”
“We contested that this trend would pivot going forward as FTTH builds target broader markets and more typical populations, and as FTTH plans offer lower rack rate pricing compared to that of Cable,” wrote Elias and Williams.
Frontier, for instance, offers a 1-gig fiber optic plan for $80 per month, whereas cable operators like Comcast and Charter charge over $100 monthly for “similar stand-alone plans,” said Cowen. And Google Fiber, which already offers 1 gig for $70 per month, this month disclosed plans to eventually debut a new low-cost service tier.
Speeds from fiber services are increasing even though FTTH household income has decreased, according to Cowen. According to the survey, FTTH subscribers get an average speed of 579 Mbps, compared to 419 Mbps for non-fiber customers.
According to Cowen’s report, “With the better value proposition, we expect FTTH to take >90% of wireline broadband net to add share over the next three years.” With its longer-term capacity constraints, fixed wireless poses little to no threat to FTTH providers, according to the growth in already superior speeds.
Cable operators aren’t standing still even as fiber takes off more and more. Comcast has been stepping up mid-split upgrades to ease the transition of its network to DOCSIS 4.0. The operator also plans to turn up a 2-gig service across 10 million locations by the end of this month and teased a forthcoming announcement related to fiber.
“It seems clear that Comcast will continue to respond quickly to the threat posed by fiber and fixed wireless providers by evolving its broadband networks to DOCSIS 4.0,” said Dell’Oro Group’s Jeff Heynen in a recent column.