This is my annual stab at predicting the major trends in the broadband industry in the coming year.
FCC Mapping Will be a Mess
This might be the least brave prediction I think I’ve ever made. The first iteration of the new map just came out, and there is a lot to like and hate about the new maps. Early reports, like from the State of Vermont, are that the new maps are pretty far off in identifying the locations that can buy broadband. But the more disturbing issue is that the new maps are showing a lot of broadband availability that doesn’t seem to exist – largely due to the FCC still allowing ISPs to report marketing speeds instead of more realistic speeds. I can’t foresee the maps being useful for counting broadband customers for all of 2023.
Supply Chain Inflation Will Slow
The big supply chain issues that caused price spikes in fiber, conduit, and electronics have peaked, and I don’t think we’re going to see component prices continuing to rise. The only wild card that could still impact electronics prices is the continued bizarreness happening in the Chinese economy. Unfortunately, very few vendors will lower prices even if their own supply chain issues are solved, so we aren’t going to see material costs dropping. There will still be labor rate increases since work crews continue to be in short supply and can command premium rates. Increases in Davis-Bacon wage levels will continue to push up the cost of grant-funded labor.
Cable Companies Will Continue to Aggressively Increase Rates
There was some question about how cable companies would react to the fact that broadband customer growth has stagnated. In the second and third quarters of 2022 combined, the big cable companies collectively lost 20,000 broadband customers. Charter decided to raise rates by $5 on November 1, and I think all of the big cable companies will continue to increase rates in 2023. Rate increases bring far more bottom line benefits than any downside from customer losses. If anything, slower growth might make it more imperative to raise rates to satisfy stockholders.
Only a Trickle of BEAD Grant Cycles will Start in 2023
It’s been over a year since the announcement of the BEAD grants, but I don’t think there will be many BEAD grant applications due in 2023. State Broadband offices can request 20% of the BEAD funding after the NTIA approves a State’s initial broadband grant plan, and some of that funding will become available late in the year. There are still major hurdles for States to get the full funding, including workable FCC maps, States developing a broadband grant plan, States getting feedback from stakeholders, and a challenge of the FCC maps used for broadband (which is different than the current challenge about the map fabric). I predict that the bulk of the BEAD grant program awards will happen in 2024, more than two years after the grant program was announced.
FWA Broadband Will Continue to Make Waves.
While the big traditional ISPs are seeing no customer growth, fixed wireless access (FWA) broadband using cellular frequencies is growing explosively. T-Mobile and Verizon together added 816,000 new customers in the second quarter and 920,000 in the third quarter of 2022. These carriers are still in the process of the widespread deployment of the technology, so I expect to see big growth continuing in 2023 to the detriment of other big ISPs.
We’ll Finally Get a Fifth FCC Commissioner
I whiffed on one prediction last year. The Senate never mustered enough votes to confirm GiGi Sohn, and the FCC has been a Commissioner short for two years. I don’t know of anything that has changed, but I’m still optimistic that the Senate will finally muster enough votes to seat the fifth Commissioner. That will lead to redefining the definition of broadband to 100/20 Mbps – two years too late, and when it’s already time to be thinking about an even faster definition.
Real Movement on Solving the Digital Divide
Congress created two large digital divide grant programs aimed at tackling the underlying issues that lead to homes not having broadband. This has activated non-profits, local governments, and others to finally start getting broadband into more homes. There will be grant awards made in 2023 from the two grant programs, but I predict that communities are going to move forward with the effort regardless of winning these grants.