Yesterday, today and tomorrow in FTTP

 2000-2020

• Incumbents slow walk, cherry pick FTTP buildout; business models cannot accommodate capex need.
• Publicly owned FTTP emerges as lower cost business model alternative, built by some municipalities in densely settled areas and handful of private operators and utility coops in rural areas.
• Some limited interest by private infrastructure funds (Macquarie) and Euro pension funds as sources of more patient capital to finance FTTP construction.

2020-2030

• COVID public health measures spotlight need for more FTTP as knowledge work, education, medicine and retail increasingly virtualize online. Investment community realizes incumbents unable to meet demand and seriously explore investment opportunities.
• Increased interest on part of private infrastructure funds (e.g. BlackRock joint venture with AT&T), private equity firms and Euro infrastructure funds in investing in privately held FTTP. They provide more patient and copious capital with 8-10 year time horizon than incumbent capex with ROI standard of 5-7 years. High existing debt loads also severely limit in house debt financing. These alternative investment sources have stronger motivation to invest vs. incumbents with risk premium payday opportunity at end of 8-10 year investment cycle when consolidator buys their stakes.
• Interest in public bond debt financing also growing with publicly owned regional FTTP players looking for bond capital to finance growth (i.e. UTOPIA, ECFiber and other Vermont CUDs, Golden State Connect Authority.)
• Both private and public investment will be limited to urban and suburban areas with some limited investment in exurban greenfields and PUDs. But more capital available for private investment, drawn by shorter investment cycle (10 vs. 20+ year public bond maturity).
• BEAD will facilitate some rural FTTP but will be largely limited to incremental edge outs by large telcos and cable companies.
• With limited FTTP investment in rural areas, LEOs will assume dominant position. WISPs will struggle to survive over next 8-10 years, unable to compete with LEOs.