Analysts think copper is likely to linger in US despite fiber frenzy

AT&T and Verizon talked up copper retirement plans at their respective investor day events last month, but analysts told Fierce the technology is likely to stick around in the U.S. at least until the end of the decade. That’s in part because copper is deeply entrenched in the country.

There’s no question operators are eager to move away from copper and for good reason. In a recap of its recent Fiber-to-the-Future Conference, New Street Research’s Jonathan Chaplin noted “All the ILECs we spoke to seemed to agree that there are significant opex and maintenance capex savings to be gleaned from either replacing copper with fiber or FWB [fixed wireless broadband].” But Chaplin added Verizon executives said the regulatory process around retirement “isn’t straightforward” and he concluded “mass copper retirement is not right around the corner.”

Part of the problem is the sheer scale of the transition. NSR’s Blair Levin pointed out in a separate note Verizon still has approximately 12 million locations served with copper. Meanwhile, the team at MoffettNathanson noted copper subscribers account for around 60% of AT&T’s consumer wireline business. AT&T’s copper footprint currently covers around 60 million locations and while the operator is looking to cut that figure to 30 million by 2025, that would still leave it with 30 million locations to go. Chaplin deemed AT&T’s plan “optimistic” given the short timeline and regulatory challenges Verizon has encountered.

Operators like AT&T, Frontier Communications, Lumen Technologies and Brightspeed (assuming their acquisition of assets from Lumen is approved later this year) have all unveiled plans for major fiber deployments. But Dell’Oro Group VP Jeff Heynen told Fierce these won’t come fast enough or cover enough ground to spell the end of copper before the decade is out. He noted Dell’Oro is forecasting that by 2026 there will still be 400,000 DSL CPE units and around 130,000 new ports shipped in North America, which will be used for copper network maintenance.

“All of these operators have plans to overbuild with fiber, but it’s going to be around until the end of the decade. The thing is you can’t build out fiber that fast,” he explained. “When you’re doing fiber you’ve got far more labor and permitting that can extend the timeline, so in the meantime you’ve got to continue to rely on copper.”

Heynen continued “You’re not going to shut off a customer just because you haven’t gotten to them with fiber yet.”

If operators weren’t constrained by limitations on the fiber itself, conduit, electronics and labor, then Heynen said it might be possible that the U.S. could see the end of copper before the decade is out. But with the way things currently stand, that’s not likely.

Tyler Cooper, editor-in-chief for ISP comparison site BroadbandNow, told Fierce there’s one more element to the copper retirement equation that relates to replacement services.

“We’re rapidly approaching the time where, whether or not no one subscribers to copper, it’s going to be completely outmoded, it’s going to no longer serve the average American for even basic usage,” he said. “The conversation that’s going to grow out of this over the next few years is going to centered on how and with what technology we sort of replace those connections, especially in areas where traditionally it’s been really hard to wire them. Is that going to be a wireless solution, is it going to be 5G, low-earth orbit satellite?”

Some U.S. agencies like the National Telecommunications and Information Administration and Department of Agriculture recently increased speed requirements for broadband grant recipients. Cooper said it’s possible that the Federal Communications Commission could move in a similar direction and use the Rural Digital Opportunity Fund (RDOF) Phase II auction – once it is scheduled – to incentivize replacement of slower copper networks. However, he noted it’s unclear at this point how it might accomplish that.