The US fibre market is facing a challenging few years. According to a recent study by the Fibre Broadband Association, an enormous 50% of the country will still not have access to fast broadband technology by 2025.
Around 39 million properties in the US, out of a total of 127.6 million, are currently without access to fibre broadband. This is around 30%, which lags woefully behind other nations such as Spain, Portugal and Japan – which all have impressive fibre access figures of 90% or above.
The biggest challenge facing the industry at present is clearly funding. It is estimated that it would require at least $52 billion for the US to hit a target of 80% of properties rather than 50% by 2025. To match the likes of South Korea and Norway, investment would need to be boosted by a further $18 billion.
Some sources put the amount of funding required far higher. Deloitte Consulting LLP’s analysts believe that the US will need to invest at least $130 billion in critical infrastructure over the next five to seven years in order to overcome significant obstacles. These challenges include broadband competition, wireless densification and crucially, rural coverage. Around 40% of Americans living in rural areas lack access to even basic broadband.
This isn’t to say that investment isn’t happening, primarily by ISPs such as the market-leading AT&T, but experts at Deloitte among others believe it isn’t happening fast enough. The current model, which follows a ‘private-led investment’ path, could also be slowing things down. Deloitte believes a far more ambitious approach is needed to catch the US up with the rest of the world.
Analysts has also identified other challenges facing the US fibre industry, including:
- Limited incentives within the current wireline industry to deploy fibre, despite the many obvious benefits. Wireline carriers are worried about the upfront costs and may only take the plunge if a short payback period can be guaranteed.
- The complexity of upgrading to fibre, especially when imposed on IP services by cumbersome IT systems and legacy product requirements
- The temptation to invest in other areas, where telecoms companies increasingly spending on advertising, advanced business services and satellite TV rather than deploying fibre
- Limited assistance and leadership from US policymakers – Deloitte recommends that regulatory barriers to carriers should be eliminated along with regulation that limits innovation and crucially, the sharing of infrastructure among communications networks.
And of course, US telecommunications and broadband firms need the right people in place to drive ambitious fibre deployment projects forward.
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