Wall Street analysts appear to have finally started realizing that second tier telcos like Frontier, CenturyLink and Windstream aren’t going to be particularly competitive if they aren’t willing to upgrade their aging infrastructure to fiber. According to a new research note by Wells Fargo analyst Jennifer Fritzsche, CenturyLink needs to either begin upgrading its last mile network to fiber more seriously, or be prepared to make a hard push into the backhaul and special access market to fees those ISPs that actually are.
“With the changing competitive landscape, CTL is somewhat caught between a rock and a hard place,” Fritzsche said. “It either needs to act ahead of this competition with its own fiber push, or be forced to enable it in some ways if special access economics do change and it decides that its copper network is good enough in the areas where it does not yet have fiber.”
While CenturyLink says the company currently offers speeds of 40 Mbps or higher to 30% of its footprint, the vast majority of the company’s customers currently don’t even meet the FCC’s standard definition of broadband (25 Mbps). That problem is only going to accelerate as cable companies deploy gigabit-capable DOCSIS 3.1 upgrades, and companies like CenturyLink are still offering 2002-era DSL speeds and pricing.
As such, “we would expect CenturyLink to take the offensive here and be proactive in pushing out fiber deeper into its network in an attempt to offer its customers faster speeds,” noted the Wells Fargo analyst.
The problem is that while that would make sense in a healthy market, CenturyLink, like Frontier and Windstream, operates in a lot of markets where there’s limited competition, and therefore no serious incentive to upgrade many of these older DSL customers.