Broadband Investments in a Slump

Carl Weinschenk
Slide Show

Demystifying the Language of Uptime: 7 Types of Availability Solutions

Reports suggest that spending could continue to be tight among broadband carriers. Bloomberg, for instance, suggests that 2016 could be a more-of-the-same year after a slowdown of 8.1 percent in 2015. A good case in point is AT&T. Seeking Alpha reports that Evercore predicts that the carrier’s wireless investments this year may end up being 21 percent lower than in 2014.

The Bloomberg story suggests that a couple of things are happening. The first is that 2013 and 2014 saw healthy spending, so a lot of the major projects are now done. An even bigger element may be that the switch to software-driven technologies – the story doesn’t name them, but it is referring to network functions virtualization and software-defined networks (NFV and SDN) – is causing disruption.

The switch to software-dominated networks likely is having two effects. The first is uncertainty: Carriers of all types are not quite sure what the technology will look like and how they should proceed. In other words, lots of FUD (fear, uncertainty and doubt). The related issue is that no matter how things turn out, a change out of equipment will be necessary. Thus, investing in gear that supports legacy approaches is bound to be depressed.

A second wildcard that could affect investment is the continuing, and seemingly never-ending, battle over net neutrality. Arguments on the topic were heard earlier this month before the U.S. Court of Appeals for the District of Columbia. That court eventually will decide, and the loser almost certainly will request the case be heard by the Supreme Court.

It is a common thought that the uncertainty until the case is decided will chill spending and that that slowdown likely will continue if the Federal Communications Commission’s (FCC) position prevails. The Telecommunications Industry Association’s CEO Scott Belcher put it this way at the beginning of the month:

If the FCC’s efforts to regulate the Internet like a utility are allowed to stand, investment in broadband upgrades and deployment will be impeded. Uncertainty and the advent of new costly regulatory requirements discourage this necessary investment and innovation.

That may or may not be so. The reality is that whatever is decided, the players will have the same ground rules, whatever they are, and the same number of subscribers will be using the same amount of capacity. Long-term impact on investment may be a real concern to the carriers and vendors, or it may simply be a useful talking point.

One area in which investment will be healthy is in the distributed antenna sector (DAS) sector, which is an important element of strategies to keep up with the massive increase in mobile traffic. Market analysts iGR said that the cost from last year to 2019 for building and operating these systems in commercial buildings and multi dwelling units (MDUs) will be $19.7 billion.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at and via twitter at @DailyMusicBrk.

Add Comment      Leave a comment on this blog post

Post a comment





(Maximum characters: 1200). You have 1200 characters left.



Subscribe to our Newsletters

Sign up now and get the best business technology insights direct to your inbox.