A balanced diet should always include a good amount of fiber, and it seems the biggest US telecoms companies agree.

AT&T, Verizon, and T-Mobile have been on a spending spree, snapping up fiber broadband companies to bolster their respective offerings.

Fiber is seen as a natural replacement for legacy copper cables that make up the backbone of many telecoms networks, but rolling out the technology is proving a time-consuming and costly process.

The companies all have ambitious targets for their fiber networks, and achieving these goals is likely to require more M&A in the coming months and years.

Catching up

The telcos focusing heavily hasn’t always been the case in the US. The country has been late to fiber take-up compared to some other markets.

ETNO’s State of Digital Communications 2024 report revealed that FTTH (Fiber-to-the-Home) population coverage in the US was 47.2 percent. For context, this was less than half of China, which reported 98.5 percent, while Japan reported coverage of 81.4 percent.

Other markets, such as the European Union (63.4 percent) and South Korea (59.9 percent), also beat the US comfortably.

It’s worth noting that the same ETNO report did highlight the US as a joint leader with South Korea for 5G population coverage at 98 percent, which suggests the carriers’ priorities may have been elsewhere.

The US is taking steps to change, through initiatives such as the NTIA’s Broadband Equity Access and Deployment (BEAD) program.

BEAD, which was set up by the previous administration and confirmed by Congress in November 2021, is designed to fund projects dedicated to providing Internet infrastructure in unserved locations across the US and its territories. However, the Trump Administration has somewhat reformed the program to push alternatives to fiber, such as satellites.

Jeff Heynen, vice president at Dell’Oro Group, says telcos have ramped up their fiber strategies since before the pandemic in 2020.

“Ever since the pandemic, telcos have been using a combination of their own capital plus government subsidies to help pay for expensive fiber buildouts,” Heynen says.

This has been at the expense of legacy technologies. PwC predicts that cable will lose 6.5 million subscribers by 2029, while fiber subscribers will increase by 50.4 percent, and Fixed Wireless Access (FWA) surges 76.8 percent.

“Telcos have seen that, in markets where they have deployed either fiber or fixed wireless, those technologies are beating cable,” Heynen adds. “So, they feel that the cable operators are finally vulnerable to losing broadband subscribers.

“Given that vulnerability, it makes sense to expand your fiber footprint as quickly as you can, either through buildouts or through M&A.”

The “Big Three” and the fiber frenzy

The three biggest US networks – AT&T, T-Mobile, and Verizon, have been leading the fiber charge.

At present, AT&T has more than 8.5 million fiber customers, while Verizon has around 7.6 million. Meanwhile, T-Mobile, which only launched its fiber Home Internet services in June, has ambitions to reach as many as 15 locations by 2030.

“Everybody wants a piece of this pie, and in the last, I’d say, 12 to 18 months or so, we’ve seen a fever pitch,” says Chris Antlitz, principal analyst, Technology Business Research.

The carriers aren’t content with these numbers and want to deploy fiber to more customers and locations. One way they can do this is through acquisitions, such as Verizon’s $20 billion Frontier Communications deal, which is expected to be completed next year.

Speaking on Verizon’s most recent earnings call, the firm’s previous CEO Hans Vestberg addressed the opportunity: “Our fiber build is tracking ahead of plan, and we’re positioned to deliver 650,000 incremental passings this year, Vestberg told investors.

“Meanwhile, the regulatory approval process for our pending acquisition of Frontier is progressing as planned. We’re encouraged by Frontier’s performance and look forward to closing the transaction to further accelerate our fiber expansion.”

AT&T’s 60 million fiber target

Arguably, the loftiest target has been set by AT&T, which wants to reach 60 million homes with its fiber broadband by the end of the decade.

To help reach this target, it spent $5.75bn to acquire Lumen’s mass market fiber business. The carrier is also adding fiber customers via its Gigapower fiber JV with investment company BlackRock.

An AT&T spokesperson said: “We continue to put more fiber in the ground than anyone else, and we plan to accelerate network expansion efforts to meet increasing customer demand for the best broadband technology available today – fiber.”

The next generation of connectivity is beginning to emerge and will require networks with even greater capacity as data demand grows, the spokesperson added.

“With fiber, we’re at the forefront of enabling emerging AI and IoT use cases, such as AI-native devices, autonomous vehicles, and advanced robotics.”

T-Mobile’s fiber focus

T-Mobile has also been very vocal about its fiber ambitions, striking two high-profile acquisitions in the process.

In April it joined EQT Infrastructure to complete a joint venture (JV) acquisition of fiber provider Lumos. A few months later, T-Mobile finalized its JV acquisition of fiber-to-the-home provider Metronet, working with investment firm KKR. At the time of writing, the company is in the process of snapping up Minnetonka-based U.S. Internet (USI).

“It’s also a way to modernize connectivity in underserved and underpenetrated markets, often replacing outdated copper or legacy cable,” says Allan Samson, chief broadband officer at T-Mobile.

“Together, fiber and 5G connect more people in more places with the right technology for their needs today and the flexibility to grow with them into the future.”

T-Mobile wants to deploy fiber to 12 to 15 million homes by the end of 2030. Samson says the carrier is on track to hit target, with the help of its acquisitions.

“Lumos and Metronet are both respected pure-play fiber providers with proven networks and a track record of building quickly,” he adds.

“By teaming up with experienced fiber partners like these, we can combine their local expertise with T-Mobile’s national scale, brand, and customer experience to bring fiber to millions more homes and small businesses.”

Brightspeed sees the value in fiber

Independent fiber providers also continue to flourish.

One of these, Apollo-backed Brightspeed, was formed in 2022, after it acquired an ILEC (incumbent local exchange carrier) business from Lumen for $7.5bn, covering 20 US states.

An ILEC is a local telephone company that held a regional monopoly on landline service before the market was opened to competitive local exchange carriers.

Brightspeed director Tom Maguire says: “We thought it was important to purchase an ILEC more than just go straight in and be an overbuilder, because we realized that it’s a very competitive marketplace, and to have things like rights of way and pole attachment agreements and an embedded customer base was something better to have than not.”

So far, Brightspeed has passed more than 2.3 million premises with fiber, and is building at a rate that is only bettered by AT&T and Frontier, claims Maguire. It has raised $5.9bn in the last year, and hopes to win sizeable BEAD contracts.

The FWA success story

There are alternatives to fiber, however, that the market should also consider.

Fixed Wireless Access (FWA) in particular, has been one of the few success stories of 5G. Unlike fiber or cable, FWA delivers broadband Internet to a fixed location using radio signals. It’s often used in locations where it’s difficult to lay physical cables.

According to Antlitz, who uses FWA himself, the technology is a credible contender to technologies such as fiber.

“FWA is the killer use case for 5G,” says Antlitz. “The telcos that have embraced FWA are making a lot of money with it, taking market share, mostly, but also some overreach to people that maybe didn’t have good broadband before, or any at all.”

Dan Hays, a principal at PwC who specializes in the telecoms industry, says: “In many locations, FWA is a lower cost, more flexible solution, particularly when you’re talking about the less dense suburban and rural markets.

“Fixed wireless becomes quite an attractive proposition that largely eliminates a lot of the fixed cost of fiber deployments, and hence we’ve seen fixed wireless picking up quite a lot of market share across the United States.”

One company looking to push FWA is Twist Broadband. Mark Chinn, founder and COO, Twist Broadband, says that FWA should be considered as an alternative to fiber where possible.

“We think that there are potentially synergies for FWA to extend the fiber footprint,” says Chinn.

“We want to compete head-to-head on speed with cable and fiber, meaning that with the technology we have, unlike some of the legacy stuff, we can provide speeds up to about a gig per second, and our uplink, while it’s not synchronous, like fiber is, typically, exceeds what cable can deliver,” he says.

So far, Twist has passed 160,000 premises with its FWA rollout in San Jose, California, but has plans to expand to 500,000 in the city.

Chinn has also identified an opportunity to make an impact in other metropolitan areas across the country.

“There are still lots of big cities here in the states where the fiber overbuild has stalled at 50 percent or less of homes covered, which means that the other 50 percent only have cable as an option. So what we’re doing is we’re looking at finding those cities,” he says.

“We’ve already identified 50 of those cities in the top 200 metros here, where the fiber overbuild has stalled.”

What about satellites?

Satellite Internet broadband is also an option, with companies such as Elon Musk’s SpaceX, via its Starlink subsidiary, and Amazon Kuiper touting for business.

President Trump’s decision to reform the allocation of BEAD funds to no longer prioritize fiber leaves the door ajar for satellite operators to play a role in the broadband rollout.

Satellites could indeed be preferable in areas where building fiber is difficult or near impossible.

Hays sees it playing out like this already. “Low Earth orbit (LEO) satellite constellations have made broadband access a reality in locations that just are not economically feasible for fiber,” he says.

“When you look at many of these rural locations, satellite broadband makes a ton of sense, and we’ve seen that uptake already starting, and in some ways it is encroaching on the addressable market for fiber.”

Are the numbers achievable?

AT&T’s ambition to roll out fiber services to 60 million locations by the end of the decade is a headline grabber.

While some believe a lack of skilled workers to lay the fiber will make such a target unachievable, Heynen believes it can be hit, but says carriers need to be sensible.

Operators must have “a good plan to mitigate potential fiber and equipment shortages, labor constraints, and additional costs associated with tariffs and inflation,” Heynen says. “Those factors certainly have the potential for preventing fiber providers from achieving their rollout goals.”

PwC’s Hays is concerned that overbuilding, where several companies put their fiber infrastructure in the same place, could be an issue.

“There’s a fundamental economic question about just how many fiber networks we want passing an individual home or business,” he says.

“At some level, more than two starts to feel like a waste of infrastructure spending, and so it is really quite difficult to justify the notion of overbuilding fiber networks where there are already viable alternatives.”

However, Antlitz told DCD, he’s not convinced the target is achievable.

“The numbers and the time frames that are given are outside of reality,” he says. “There are not enough skilled people in the States to do all of these builds. There are not enough people who know how to do this or who want to do that type of work.

“You’re talking about climbing towers, people digging trenches, and using specialized machinery; it’s a very construction-heavy type of work. And then you have the technical expertise to do the splicing of the fibers and set up the physical equipment for these builds.”

Buy to build

Further M&A in the fiber market will likely be necessary if the big carriers are to hit their targets. After all, it is often cheaper to buy a ready-made network than build one from scratch.

Although AT&T is tight-lipped on future M&A opportunities at present, T-Mobile’s Samson says the carrier is open to doing deals.

“We’ll always evaluate opportunities that fit our strategy and help us expand our broadband offering in the right way,” he says. “What we’ve seen in our early expansion is that there’s real demand for T-Mobile Fiber, and our joint ventures with Lumos and Metronet give us a strong model to build on.

“That said, we’ll be prudent and selective. If the right assets come along in the right markets, at the right price, we’ll take a close look.”

With high targets to achieve in the next few years, the carriers may well agree that buying ready-made fiber assets makes a lot of sense.