U.S. Companies Not Investing Nearly Enough in Fiber Infrastructure

Will need to invest between $130 billion and $150 billion in fiber deployments over the next five to seven years, according to Deloitte September 11, 2017

NEW YORK — U.S. cable and telecom companies have indicated further fiber infrastructure investments will be made throughout the US. Let’s take a look at the reality of the situation.

Those companies will need to invest between $130 billion and $150 billion in fiber deployments over the next five to seven years, according to an estimate by Deloitte, as reported by lightreading.com. However, AT&T’s capex budget is roughly $22 billion for 2017, and that covers spending for all types of infrastructure and other initiatives, not just fiber. AT&T lists software-defined networking, security, smart city initiatives, IoT and wireless among its investments, and therefore actual fiber deployment will account for just a fraction of its overall spending plans.

Verizon has a deal with Corning Inc. to spend at least $1 billion for fiber optic material by 2020; not an insignificant amount, but a “drop in the bucket” compared to the more than $100 billion total that Deloitte cites in its report, according to the same article. Corning has said that it's forecasting an increase in sales in its optical business to $5 billion by 2020, up from $3 billion in 2016.

Cable companies are also investing in fiber networks: Both Comcast and Altice are expanding fiber networks. Altice has committed to deploying fiber to the home across nearly its entire US footprint by 2022.

Perhaps the reality of the cost-benefit analysis is sinking in though. As we reported last year, Google’s parent company Alphabet has greatly diminished work on the Google Fiber project, which had reached just six metro areas as of last summer. After having spent hundreds of millions of dollars digging up streets and laying fiber-optic cables in order to offer web connections 30 times faster than the U.S. average, Alphabet Chairman Eric Schmidt said at the company’s shareholder meeting in June of 2016 that wireless connections can be “cheaper than digging up your garden” to lay fiber. 

 

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