Fibre broadband rollouts and fixed-wireless access have seen significant investment and rapid subscriber growth in the US in recent years, lending fresh impetus to the broadband market. This growth saw the 50% milestone exceeded for homes passed with fibre by late 2023, providing big promise for continued future expansion.
Yet while fibre deployments continue apace, David Gray, founder of telecoms consultancy GrayMatter Advisory, warns of significant upcoming challenges for which US broadband providers must find answers and innovate to remain competitive.
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For a start, cable operators have seen subscriber losses in the past couple of years, while growth in fibre take-up, as well as fixed-wireless broadband, has slowed.
Furthermore, Gray says many markets with high-density populations have already been “overbuilt” with fibre. “That leaves lower-density markets to be built, which implies higher costs per home passed and less opportunity per mile of build,” he says. “This means making a return on investment on new rollouts becomes more challenging.”
Housing factor
Although cable broadband may see some turnaround in fortune due to a lessening impact from the aftermath of the country’s Affordable Connectivity Program ending last June, Gray highlights another concern that exacerbates current issues for broadband players rolling out fibre: declining new household formation caused by factors including an ageing population.
Household sales in the country dropped to their lowest level in nearly 30 years in 2024. Meanwhile, the Joint Center for Housing Studies at Harvard University predicts the creation of 8.6 million new households between now and 2035, slower than household growth in the past three decades.
“When household formation slows down, suddenly it’s a harder game,” says Gray. “I think that’s not always fully appreciated as a major factor in overall broadband growth.”
Strategic thinking
Nevertheless, he emphasises that this is far from saying all is lost, but instead that players must be smarter and more effective in their strategies. “In the absence of strong tailwinds from new household formation, coupled with rising costs and other market pressures, broadband service providers need to sharpen their go-to-market strategies and their execution to ensure programmes deliver results,” says Gray.
That can mean a review of pricing and packaging, competitive surveillance and response, optimising direct sales teams, and performing audits of direct marketing programmes to root out inefficiencies and waste. It can also mean focusing on addressing the causes of ‘soft spots’, or areas of underperformance.
“One thing I frequently hear when it comes to smaller and mid-market fibre providers, for example, is about limited brand awareness relative to competitors,” says Gray. “There’s a need to cost-effectively drive recognition and awareness to accelerate the consideration and purchase process.”
Firing on all cylinders?
Gray says that further new challenges await, such as the growing potential challenge from low-Earth-orbit satellite providers in rural areas given remaining uncertainties about the allocation of the $42.5 billion in funding from the country’s Broadband Equity, Access and Deployment Program.
He expects mergers and acquisitions to also play a significant part in the way the market evolves, pointing to the likes of T-Mobile’s moves for fibre players Lumos and Metronet, and Verizon’s move for fibre internet provider Frontier.
While many questions remain on how things will ultimately shake out, operators need to be sure they are executing effectively and efficiently against their go-to-market plans, says Gray. “Now is a great time to take a look out there and ask, ‘are we really firing on all cylinders, or is there more that we can be doing?’,” he says.
David Gray founded GrayMatter Advisory in 2024, bringing 35 years of telecom industry expertise to the firm. Having held leadership roles at Charter Communications and Time Warner Cable, he offers deep insights into go-to-market strategies, business turnarounds and operational growth. GrayMatter Advisory can help service providers navigate challenges and unlock new opportunities.
