According to a new report by Cowen Financial Analyst, as telecommunications companies continue to install fiber optic cables at an extremely fast rate, the number of fiber optic homes and users in the United States will soar in the next five years.

This comprehensive report written by the Cowen analyst team predicts that by 2027, telecommunication fiber-to-the-home (FTTH) lines will cover more than 82 million U.S. homes, almost twice the number of homes Passed for today’s 44 million. The four major US telecommunications companies (AT&T, Verizon, Frontier, and Lumen), led by AT&T, will account for the largest share of these deployments, and will provide fiber optic services to more than 71 million households in total.

And telecommunications companies will not fight alone in the fiber frenzy. Cowen’s report also predicts that cable operators will allow fiber optic lines to cover another 5 million homes in the next six years (mainly Altice USA is currently vigorously promoting fiber optic deployment in the New York metropolitan area to compete with Verizon’s Fios). Currently, the number of fiber-optic households covered by cable TV operators is approximately 5 million.

In general, Cowen estimates that the current fiber optic home coverage in the United States is about 50 million, of which telecommunications companies account for the majority.

  Telecom company’s FTTH users will more than double

In addition, the report predicts that by 2027, telecommunications companies will have 35 million fiber-optic home users, up from the current 16 million, and fiber-optic users will account for 75% of the total new broadband users. Therefore, within five years, FTTH’s share of the broadband market will soar from today’s 14% to 26%, even if the Total Addressable Market (TAM) continues to expand.

Cowen analysts said that large, medium and small telecommunications companies will participate in this large-scale deployment of optical fiber, using FTTH to reverse the flow of users to cable TV operators in the past 20 years. For example, they expect the largest telecommunications company in the United States to add a total of 7.7 million fiber optic users in the next five years.

The analyst wrote: “As far as the FTTH upgrade of telecommunications companies is concerned, the next few years will have historical significance. They provide consumers with a speed of 1Gbit/s, narrow the digital divide, expand the total addressable market and achieve’Gigabit The United States’. After years of subscriber loss, we expect large telecom companies to stop this trend…”

  But cable TV operators will also hold their ground

However, it is worth noting that the report predicts that telecom companies will realize these user revenues mainly by upgrading their remaining 15 million DSL users to FTTH, rather than by taking away broadband users from cable TV operators.

Analysts wrote: “The dominance of cable operators in stealing DSL shares is over. By 2024, telecom companies will surpass cable companies in terms of benefiting broadband subscribers. With the focus on defense, cable operators will steal The era of DSL users is over, although only a small share has been lost (DSL bears the brunt).”

In fact, analysts believe that cable TV operators will do their best to lock in users through long-term contracts, reduce prices, provide mobile bundling, increase speeds to 10Gbit/s, upgrade to Fiber Deep and, in some cases Next, deploy all-optical networks in green and brownfield areas. As a result of these initiatives, analysts expect cable TV operators’ broadband market share to drop slightly from the current 61% to 58% in 2027, while the share of telecommunications companies will climb from the current 25% to 27% in 2027.

Analyst pointed out: “For cable TV operators, this is far from doom and pessimism. Through their effective marketing plans and speed upgrades, the vast majority of subscriber losses will come from 15 million DSL users, not cable broadband users.”

Cowen team also predicts that by the middle of this century, fixed wireless access (FWA) will play an important role in the US broadband market. The share of high-speed data customers in the entire 2020s will be small but will continue to rise.

  The total broadband market will continue to expand

Overall, Cowen analysts believe that due to the blockade caused by the pandemic, the government’s huge investment in broadband (over 130 billion U.S. dollars), and the decline in capital costs, U.S. service providers will add a total of 17 million broadband users by 2027. The penetration rate of households (that is, households with persons) and the penetration rate of overall households reached 97% and 90%, respectively, higher than today’s 90% and 82%.

In fact, analysts believe that the penetration level of broadband in public utilities can reach 98%, just like the peak of wired telephone service in the last century.

All these fiber optic expenditures will be a boon for equipment suppliers. Specifically, Cowen analysts listed Calix, ADTRAN, Ciena, Cisco, MasTec, Nokia and Juniper as possible beneficiaries.

Analysts also see the potential for further market integration. Some scenarios they envisioned include: Charter acquiring Altice USA’s Suddenlink business, Charter or Altice USA and T-Mobile merge, becoming the third integrated player in the US market.