I took a pause the other day to think about the big issues facing the telecom industry. When I’ve done that in past years I always came up with a few major issues and more smaller ones. But we are in such turmoil right now that I rattled off the following list quickly. I can’t remember a time when our industry was wrangling with so many major issues at the same time. The performance of the industry over the next decade is going to depend upon how we handle these issues.
Supply Chain. AT&T said recently that it wasn’t going to make its targeted fiber builds this year due to supply chain issues. A few large telcos like Frontier and Windstream said that the supply chain is not a bad issue right now, but I have small ISP clients that are already seeing some dreadful delivery times on fiber and electronics, probably because they are last in priority in the industry. Regardless of the state of today’s supply chain, there is no doubt that the supply chain collapses if we come close to meeting RVA’s estimate that the collective industry plans to build 61 million fiber passings by the end of 2025. How badly might the big telcos miss targets within a few years if there isn’t enough fiber? How will the huge government grants deal with awarded projects that can’t find the materials or crews needed to construct in a timely manner?
Cable Companies and Competition. If the ISPS collectively build fiber past 61 million homes and businesses, the cable companies are going to start seeing some significant competition. Cable companies have enjoyed unprecedented growth while they’ve been killing DSL, but competing against fiber is a different story. How will Wall Street react if cable companies start losing customers? Will cable companies react by upgrading to DOCSIS 4.0, migrating to fiber, or biding their time and doing nothing?
New Technologies. We see the birth of new technologies like low orbit satellites and millimeter-wave broadband (like Starry). How disruptive will these technologies be? Which new technologies will have the legs to thrive and survive?
Future of Cable TV. How long will it take the big cable companies to walk away from traditional cable TV? The industry lost almost 6 million traditional cable households last year. Traditional cable TV viewing has dropped significantly to now be only 39% of the total hours of video viewing.
Gigabit Applications. OpenVault reported at the end of the first quarter than 10% of all US households are subscribing to a gigabit broadband product. Does this finally create the market for developing products that use huge bandwidth like telepresence? The bigger question is how ISPs will handle large-bandwidth streaming – networks have not been designed to handle a lot of large simultaneous streams?
Digital Divide. The Senate infrastructure bill provides huge new funding to subsidize low-income broadband. This will transform the urban ISP market and could attract investments in poor neighborhoods if ISPs feel confident that the subsidies will continue long enough to cover the borrowing costs to build infrastructure. This is as close as we’ve ever come to solving the urban digital divide – but how can we give assurances to ISPs to enable them to make investments to modernize inner-city broadband networks?
Gigantic Grants. We are probably looking at a one-time opportunity to upgrade broadband across the country. The federal government has never shown the capacity to efficiently hand out huge amounts of broadband money, and there were a lot of problems with the ARRA and the RDOF programs, the two biggest funding programs to date. Will we spend this money efficiently so that broadband gets to everywhere it’s needed, or will there still be significant pockets of homes that get bypassed by the funding?