Broadband investment and deployment is being spurred on by government funding, including grants at the federal and state level of multiple countries worldwide. To this end, DZS Inc, a solutions provider for broadband connectivity, noted at their recent Investor Day that up to $125bn in government stimulus funding is being made available around the world and that the addressable market for broadband connectivity is growing at a 20% compound annual growth rate (CAGR) through 2024.

Government Funding of Broadband – Key Programs

Globally, 4k+ broadband providers are seeking to make investments and deployments to upgrade their fixed-line access networks to optical fiber-to-the-home (FTTH), for residential subscribers, and fiber-to-the-premises (FTTP) for business subscribers. In terms of technology, many of these broadband providers are aiming to deliver multi-gigabit services by transitioning from a 1-gigabit passive optical network, known as GPON, to a 10-gigabit symmetrical passive optical network, known as XGS-PON.

Below Dgtl Infra highlights key government funding initiatives, including grants at the federal and state level, which are driving broadband investment and deployment in the United States, Canada, and Europe. Additionally, we provide examples of key fiber providers building the infrastructure in these markets.

United States and Canada – Government Funding for Broadband

In the United States and Canada, several federal broadband funding programs and grants have been made available in order to bridge the digital divide and provide broadband access to unserved and underserved areas. Specifically, the United States and Canada support fiber-to-the-home (FTTH) deployments through the following programs:

  • Broadband Equity, Access, and Deployment (BEAD): $42.45bn of funding set aside as grants in the Infrastructure Investment and Jobs Act, which will be administered by the National Telecommunications and Information Administration (NTIA), a federal agency
  • Rural Digital Opportunity Fund (RDOF): $20.4bn total for Phase 1 and 2, of which $9.2bn was allocated in Phase 1. RDOF provides capital expenditure subsidies in support of high-speed broadband, at speeds of 25 megabits per second (Mbps) downstream and 3 Mbps upstream, to unserved and underserved areas of the United States
  • Secure and Trusted Communications Networks Reimbursement Program: $2bn to secure the communications supply chain and protect the national security of the United States by reimbursing network providers for the removal, replacement, and disposal of communications equipment and services
  • Canadian Radio-television and Telecommunications Commission (CRTC) Broadband Fund: $3bn to assist in extending high-speed broadband connectivity into underserved rural and remote locations of Canada

Broadband Support Readiness by State

As shown below, in the United States, 30 states have a centralized office responsible for managing or coordinating broadband efforts. This is particularly important as it relates to the Broadband Equity, Access, and Deployment (BEAD) program, because a $100m minimum allocation will be made per state.

States With and Without a Centralized Office for Broadband Projects

Investors in Fiber Broadband

In the United States, broadband stimulus funds will benefit unserved and underserved communities. Seeking these broadband stimulus funds are a wide array of companies involved in broadband investment and deployment, including incumbent local exchange carriers (ILECs), fiber overbuilders / alternative network operators (AltNets), electric cooperatives, utilities, and municipalities.

Examples of large U.S. fiber-to-the-home (FTTH) providers and their plans include:

  1. Altice USA: targeting 6.5 million fiber passings by the end of 2025 across its Optimum and Suddenlink footprint
  2. AT&T: coverage of 30 million customer locations by year-end 2025, including 25+ million consumer locations, 4 million small businesses, and 1 million enterprise locations
  3. Brightspeed (Apollo): plans to pass 3+ million consumer and business locations with fiber-to-the-premises (FTTP) over the next 5 years, as part of a $2bn+ investment program
  4. Cincinnati Bell / altafiber (Macquarie): intends to upgrade existing footprint, which passes more than 1.3 million homes with both legacy copper and fiber infrastructure
  5. Consolidated Communications: plans to upgrade 1.6 million passings to fiber by 2025, of which more than 1 million passings will be upgrades within its northern New England service areas
  6. Frontier Communications: anticipates passing an incremental ~6 million locations with fiber, resulting in total fiber locations of 10 million by year-end 2025
  7. Lumen (Quantum Fiber): targets 12+ million total passings long-term (around 2027), which represents an incremental 9.3 million passings
  8. MetroNet / Vexus Fiber (Oak Hill, KKR, Pamlico): expanding newly merged company’s fiber service to more than 1 million homes and businesses across the United States
  9. Windstream (Elliott Management): plans to connect millions of homes with fiber broadband service over the coming years
  10. Ziply Fiber (Searchlight): plans to build/upgrade 900k premises to fiber, bringing its network footprint to 1.4 million fiber passings by 2024

Europe – Government Funding for Broadband

In Europe, fixed broadband subscriptions are expected to increase by 25 million, from 260 million in 2021, to 285 million by 2026. Presently, DSL is the most common transmission technology in Europe. However, fiber is anticipated to become the dominant technology, growing from 30% of subscriptions in 2021 to over 50% of subscriptions by 2026.

Each country in Europe will experience varying degrees of fiber upgrades given that certain countries (e.g., Spain) already have high fiber penetration rates, while other countries (e.g., Germany) are severely underpenetrated by fiber. To this end, below is a forecast of fiber upgrades to households in major European countries through 2026:

Households Passed in Millions (left) and % Change in Fiber Passings (Right)

Below are the major federal government funding initiatives and grants fueling this fiber broadband growth in Europe:

  • United Kingdom – Project Gigabit: £5bn, of which £1.2bn has been released from the budget. Project Gigabit plans to bring 1-gigabit broadband speeds to more than 1 million hard-to-reach homes and businesses in the UK
  • Germany – BMVI Nationwide Gigabit Plan: €12bn made available by the federal government to promote fiber-optic networks. Specifically, these funds will be used to cover 50% to 70% of the costs of the gigabit roll-out
  • France – PFTHD (Plan France Très Haut Débit): aims to cover the entire national territory of France, including all homes, companies, and administrations, with high-speed broadband by 2025. The total cost of the PFTHD is estimated at €21bn, with public investment comprising €13bn to €14bn
  • Italy – Italia a 1Giga Plan: allocates a budget of €3.8bn with the goal of providing connectivity at download speeds of 1 gigabit per second and upload speeds of 200 megabits per second, in gray areas by 2026
  • Austria – Symmetric Gigabit: European Commission approved a €2bn aid scheme for Austria, made available through the Recovery and Resilience Facility (RRF), to roll-out passive infrastructure for fixed broadband access networks in areas of the country where there is no current or planned network able to provide at least 100 megabits per second (Mbps) download speed

United Kingdom

In the United Kingdom, targets have been established for 85% gigabit-capable broadband connectivity by 2025 and nationwide (100%) gigabit-capable broadband connectivity by 2030. Examples of large UK fiber-to-the-premises (FTTP) providers and their plans include:

  1. BT Group (Openreach): plans to reach 25 million homes and businesses across the UK by December 2026
  2. CityFibre (Antin, Goldman Sachs, Mubadala, Interogo): targets having its fiber network pass 8 million UK homes across 285 cities, towns, and villages by year-end 2025
  3. Community Fibre (Warburg Pincus, DTCP, Amber): network build target to pass 2.2 million homes and businesses in London by the end of 2024
  4. Hyperoptic (KKR): target for its fiber network to pass 2 million homes by year-end 2023
  5. Virgin Media O2 (Liberty Global, Telefónica): in the process of forming a joint venture and plans to upgrade its entire fixed network of 15.7 million homes passed to fiber-to-the-premises (FTTP) by 2028

Germany

In Germany, only 5.4% of households have access to fiber broadband. With 8.3 million fiber connections targeted, fiber coverage will increase to 17.7% by 2025. To this end, €43bn has been allocated for fiber broadband deployments in Germany through 2025, including a €12bn commitment from the government and €31bn from private capital sources. Examples of large fiber-to-the-home (FTTH) providers in Germany include:

  1. BBV Deutschland: backed by Infracapital, the infrastructure investment division of M&G Investments
  2. Deutsche GigaNetz: majority-owned by InfraRed Capital Partners
  3. Deutsche Glasfaser: 51%-owned by EQT Infrastructure; 49%-owned by OMERS
  4. Deutsche Telekom: plans to roll-out 2.0 million FTTH passings in Germany in 2022
  5. DNS:NET: 60%-owned by 3i Infrastructure
  6. Glasfaser Nordwest: 50%/50% joint venture between Deutsche Telekom and EWE
  7. GlasfaserPlus: 50%/50% joint venture between Deutsche Telekom and IFM Investors
  8. goetel: funded by Basalt Infrastructure Partners
  9. Liberty Networks Germany: 50%/50% joint venture between Liberty Global and InfraVia Capital Partners
  10. UGG: joint venture between Telefónica Infra (40% stake), Telefónica Deutschland / O2 (10% stake), and Allianz Capital Partners (50% stake)

France

France’s mutualization model has made it a rapidly growing fiber broadband market, with significant deployments and investments from both telecommunications operators and alternative network providers like Altitude Infra and Axione. Examples of large fiber-to-the-home (FTTH) providers in France include:

  1. Bouygues: markets to 25.7 million FTTH locations, with a target to reach 35.0 million premises by the end of 2026
  2. Iliad: 49% ownership in a joint venture with InfraVia Capital Partners, which has a 51% stake, to bring FTTH roll-outs outside very densely populated areas of France, representing ~26 million households
  3. Orange: through Orange Concessions, a joint venture with CNP Assurances and EDF Invest, Orange will complete 23 Public Initiative Networks (PINs), representing over 4.5 million built or to-be-built fiber lines
  4. XP Fibre (SFR FTTH Network): alternative FTTH infrastructure wholesale operator in France, with a target of 5 million homes passed in the coming years

Italy

In Italy, ~2 million fiber-to-the-home (FTTH) passings will be made each year for the next 4 years. Critical to the country’s fiber broadband deployment success are investments from two joint ventures:

  • FiberCop (TIM, KKR, Fastweb): targets covering 56% of homes in Italy, equivalent to 16.5m FTTH passings, by 2025
  • Open Fiber (Macquarie, CDP): intends to pass ~24 million total households with fiber infrastructure, equivalent to 90%+ household coverage in Italy, by 2031

Austria

Presently, Austria has less than 5% coverage with fiber. However, as federal broadband grants have become available, significant funding commitments have been made by institutional investors to Austria’s fiber-to-the-home (FTTH) market, including:

  • Allianz Capital Partners: committed €1bn of equity to roll-out FTTH networks to up to 1 million households in Austria by 2030
  • Meridiam: investing €100m+ to build-out a fiber network to 50k+ homes in 29 municipalities of Liezen District, in the state of Styria, Austria
  • Infracapital: plans to connect 500k+ buildings in Austria through its rural fiber broadband operator, Speed Connect Austria
Jonathan Kim covers Fiber for Dgtl Infra, including Zayo Group, Cogent Communications (NASDAQ: CCOI), Uniti Group (NASDAQ: UNIT), Lumen Technologies (NYSE: LUMN), Frontier Communications (NASDAQ: FYBR), Consolidated Communications (NASDAQ: CNSL), and many more. Within Fiber, Jonathan focuses on the sub-sectors of wholesale / dark fiber, enterprise fiber, fiber-to-the-home (FTTH), fiber-to-the-premises (FTTP), and subsea cables.

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