Tag Archives: RVA LLC

The Continued Growth of Fiber

The Fiber Broadband Association announced the results of a fiber deployment survey from RVA LLC Market Research & Consulting. That firm has been tracking the deployment of fiber across the U.S. for many years. The survey was for the year ending in September 2024.

The survey reports the following:

  • ISPs built fiber to pass 10.3 million homes in the last year, a new all-time high. That includes 8.4 million new passings that got fiber and 1.9 million passings that got an additional fiber connection.
  • RVA estimates that fiber now passes 56.5% of U.S. homes.
  • Fiber ISPs are increasing penetration rates on fiber over time, with an overall take rate of 45%. ISPs are achieving a 20% penetration more quickly than in the past.
  • RVA claims that cable company penetration rates in fiber neighborhoods have fallen by 33%, with the other new fiber passings coming from customers that previously had DSL or other technologies.

The remaining fiber market is still immense, with almost 149 million homes that don’t have fiber. RVA estimates this at:

  • Densely populated mid to high-income areas – 90.6 million.
  • Densely populated low-income areas – 21.5 million.
  • Small towns / rural – 29.2 million.
  • Second homes – 7.3 million.

The following graph from RVA that shows fiber construction over time is interesting.

The early fiber growth from 2005 – 2008 mostly came from Verizon FiOS. No other large ISPs climbed on the fiber wagon for many years. The fall-off of fiber construction during the pandemic is dramatic, with over 3 million fewer new homes being passed with fiber in 2020.

There are a lot of different entities building fiber. The biggest market share is held buy the large telcos and their affiliates (63.8%). Next comes smaller tier 2 and 3 telcos (11.6%), fiber overbuilders (10.2%), cable companies (9.3%), municipalities (2.7%), and electric cooperatives (2.4%).

Comcast and Charter Stocks Drop

The stock market punished Charter and Charter last week after the two companies reported small customer losses in the fourth quarter of 2024.

First the facts. Charter reported a loss of 177,000 broadband customers. With a customer base of almost 30.1 million customers at the end of 3Q 2024, that’s a 0.59% loss of customers – just over one-half of one percent. The stock market reacted by dropping Charter stock from $361.22 to $326.78 – a drop of 10%.

Comcast reported a loss of 139,000 broadband customers. With a customer base of over 31.8 million customers at the end of 3Q 2024, that’s a 0.44% loss of customers – less than one-half of one percent. The stock market reacted by dropping Comcast stock from $37.54 to $32.58 – a drop of 13%.

On the surface, this seems like an extreme overreaction to small losses. Textbook stock valuations would not concentrate on something like the customer counts but on overall earnings. Consider Charter, which released its fourth-quarter earnings. While the company lost 177,000 broadband customers, Charter also:

  • Added 529,000 cellular customers in 4Q 2024.
  • Fourth-quarter revenues are up 1.6% over the previous year.
  • Fourth-quarter EBITDA was up 3.4% from the previous year.
  • Charter bought back $1.3 billion of its shares, which is supposed to increase stock value.
  • On the bad news side, Charter lost 1.23 million cable TV customers during 2024, a trend that has been happening for years. That’s a little higher than the 1 million cable customers lost in 2023.

Comcast results are similar for the fourth quarter. In addition to losing 139,000 broadband customers,

  • Comcast added 307,000 cellular customers in 4Q 2024.
  • Fourth-quarter revenues are up 0.2% over the previous year.
  • Fourth-quarter EBITDA was up 3.5% from the previous year.
  • On the bad news side, Comcast lost 1.58 million cable TV customers during 2024. That’s an improvement over the 2 million cable customers lost in 2023.

Perhaps the drops are recognition of the long-term trajectories for cable companies. Both companies told investors in 2024 that they had weathered the storm to offset losses due to FWA wireless. However, AT&T, T-Mobile, and Verizon had another great quarter and added 960,000 FWA customers.

Cable companies are also seeing increased competition from fiber overbuilding. RWA LLC recently issued a report that fiber overbuilders passed 10.3 million total homes for the year ended September 30, 2024. Over 9% of that new fiber is being built by cable companies. RVA says that in neighborhoods where fiber has been in place for several years, cable companies lose an average of 33% of their customers.

It’s actually amazing that the cable companies have maintained customers over last year while fending off FWA and fiber overbuilding. The fact that customer losses are small is a success story. However, there is a darker side to the story – they’ve kept customers by cutting prices. While Charter and Comcast both had broadband rate increases in 2024, both have been keeping customers by lowering rates.

It’s likely that the size of the stock price drops were exaggerated due to the craziness that happens in markets in times of economic uncertainty. These are not the only companies getting punished in the stock market. But maybe this is an overdue adjustment due to changes in the underlying fundamentals of the businesses.