As one of the largest broadband equipment providers, Adtran is keen to see its service providers start network builds driven by the Broadband Equity Access and Deployment (BEAD) funding program.
While the program has been criticized for moving slowly, three states—Delaware, Louisiana, and Nevada—have all secured BEAD funding and are proceeding with broadband projects.
Speaking to investors during the 27th Annual Needham Growth Conference, Adtran's CEO Tom Stanton said BEAD impacts its customer base in multiple ways.
“The way BEAD will impact us is a direct flow of dollars from the stimulus program to our customers and from those customers onto us, but that has not started happening yet in any material way,” he said. “We expect some dollars this year, but nothing material because it will take time to normalize and get through all the building milestones.”
He added that any indirect flow of those dollars is possible, as it would give its carrier customer base more certainty.
“Many carriers are sitting on the fence asking if this program is going to work or not and what are the hurdles are to get it done,” Stanton said. “Once those dollars start flowing, it frees up direct and indirect dollars, where people wait on the fence to see if they want to start pulling dollars from their internal capital.”
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Fiber momentum continues
While speculation exists that the new Trump administration could materially impact the BEAD funding allocations, the interest in fiber-based broadband remains high.
According to RVA LLC research, including the number of homes with more than one fiber pass, there are now 88.1 million homes passed with fiber in the U.S., and continued growth is expected over the next five years.
Thus far, the disbursement of BEAD funds has not been affected by the Unleashing American Energy executive order. On January 21, the Office of Management and Budget issued a memorandum clarifying the EO.
Regardless of the BEAD program, momentum around fiber continues to ramp.
“Money will flow, and it will be predominantly for fiber,” Stanton said. “Even without BEAD, it was going to be built out.”
Copper to fiber migration
One factor that’s making Adtran confident about the fiber rollouts is the fact that more providers are retiring copper and replacing those facilities with fiber.
The inevitable and ongoing phasing out of aging copper-based networks is a global phenomenon.
“If you look at what’s happening, it’s not just the US, it’s also Europe,” Stanton said. “The copper infrastructure installed 80 to 100 years ago, is now being displaced by fiber.”
He added that there are " whole-country initiatives, including the U.S., to convert to fiber, and BEAD is a stimulus.”
According to the FTTH Council Europe’s new Copper Switch-Off tracker, Portugal, Sweden, and Spain are ahead of the pack when phasing out legacy copper networks. This tracker examines the progress 27 EU member states (and the United Kingdom) are making toward adopting full-fiber broadband infrastructure.
BT, the UK’s incumbent provider, aims to build fiber to 24 million homes by the end of 2026. Likewise, Germany aims to reach 22 million homes with fiber.
“The copper-to-fiber migration is happening all through Europe,” Stanton said.
FTTH customer pickup
Adtran sees the fruits of service providers' FTTH labor in Europe and the US.
Today, 85 percent of its revenues come from the U.S. and Europe. The vendor sees an opportunity to be a
“Europe has been fairly strong and has grown as a higher percentage mainly because of fiber to the premises rollouts in Europe,” Stanton said. “We have added several new large customers that will come on this year.”
Additionally, Adtran has been gaining momentum with competitive European service providers.
“We have a segment called alternative carriers in Europe centered in different countries,” Stanton said. “The biggest area is in the UK, where we have 60 percent of the market and a large share in Germany.”
However, Stanton added that these smaller businesses are going through consolidation. “As you can imagine, these businesses are focused on beating the incumbent carrier, which is an expensive proposition,” he said. “There has been some restructuring so that’s slowed the business down.”
Adtran serves large carriers like Lumen, Charter, and Windstream in the US. “Many of these players have announced big plans,” Stanton said.
But the large providers aren’t the only fiber broadband players in town.
A growing base of emerging players, such as Brightspeed, GoNetspeed, IQ Fiber, Metronet, and Ziply, is building fiber broadband in various markets.
“You have this new entry of providers, some of which are private equity backed, going out to build fiber quickly and monetize it,” Stanton said. “That is a very active segment right now.”
Alternatively, growth in the Tier 3 telco market, a 30-40 percent growth segment for Adtran, has been flat.
“The Tier 3 space, predominantly what people think about being the biggest recipients of BEAD funding, slowed down last year,” Stanton said. “The general thought is they are waiting to see how the BEAD program will play out.”
For related articles, visit the Broadband Topic Center.
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.
To stay abreast of fiber network deployments, subscribe to Lightwave’s Service Providers and Datacom/Data Center newsletters.
Sean Buckley
Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.