Consolidated says its costs to deploy fiber are lowest in industry

Consolidated Communications' leadership believes that its costs to deploy fiber, or cost per build for each home passed, is significantly lower than its peers. Speaking at the Cowen Communications Infrastructure Summit today, Consolidated’s President and CEO Bob Udell said that it costs the company between $450 to $500 per home passed to deploy fiber. That figure is low, Udell said, because the company has a strong core network, which it inherited as part of its purchase of FairPoint Communications for $1.5 billion in 2016, and its proximity to its customers. But perhaps the biggest reason it is able to keep its costs lower than other fiber providers is that currently 80% of its fiber network in New Hampshire uses aerial fiber, which is installed on poles instead of underground.

However, Udell noted that the $450 to $500 per home cost will increase as they deploy more underground fiber and move to more rural areas. In fact, he estimates in the next 18 months that cost will increase and then it may decrease depending upon the labor market because labor alone accounts for about 55% to 60% of those deployment costs.

For comparison, Frontier Communications recently revealed that it estimates its cost per build for the first 4 million homes that it passed is about $500 to $600 each. The remaining 6 million homes that Frontier plans to pass with fiber, will be more expensive, costing between $900 to $1,000 each.

RELATED: Consolidated accelerates fiber build in 2Q, outfits 76K more locations

Udell reiterated the company’s plan to bring fiber to 1.6 million homes by 2025 and said that Consolidated is on pace to reach its goal of 300,000 new fiber locations this year.

However, the company’s 2022 goal to deliver fiber to 400,000 new locations may be surpassed, Udell said, because of the number of public-private partnerships it is currently working on. “Because of the public-private partnerships we could go beyond the 400,000 that we have planned for 2022,” he said.

The company has completed five public-private partnership builds and has won bids for 16 municipal partnerships. It has said that these partnerships make it feasible to bring high-speed broadband to communities that otherwise would not be possible.

2-Gig is possible
Udell also said that the company expects to achieve about a 40% to 45% penetration rate in its markets and added that it can upgrade to 2-Gig services fairly easily if there’s demand for it. “2-Gig is on our plate but we do not need to do it soon,” he said, noting that 60% of new customers are taking the 1-Gig product. Frontier recently said that it was planning to deploy 2-Gig services in 2022. 

During the company’s second quarter earnings call last month, Udell said that the company’s penetration rate in 1-Gig-capabile markets was 14%, which is up from 12% at the end of first quarter.