Telcos' FTTH Growth 'Significant Threat' to Cable: S&P

Fiber-to-the-home from telco operators will cover about 55% of the U.S. by the end of 2025, up from about 35% today, providing "a significant competitive threat" to incumbent cable operators, S&P said in a note Thursday. It said wireline telcos have undertaken their FTTH investments because of their restructured balance sheets and third-party private investments. It said FTTH's ultimate penetration will depend on variables including returns on capital and the use of aerial vs. buried fiber, it said. Cable will likely lose "some" market share to telcos' FTTH overbuilds, slipping from an average 60%-65% penetration for its copper-based services to 50%-55% in three to four years, it said. The biggest impact on cable might be in eliminating existing growth opportunities from telco customers that would otherwise switch to cable, it said. S&P said helping in the competition with telco overbuilds is that cable operators have heavily invested in their networks over time and most can deliver 1 Gbps download speeds across their footprints, as well as cable operators' pricing flexibility. It projected cable operators can increase subscriber numbers at around 2% annually through 2024, with that growth coming from new home formation and footprint edge-outs as competition grows and the market matures. It said cable operators will likely be active bidders in the broadband equity, access and deployment program as government-subsidized rural markets present a growth opportunity.