It is a reasonable question to ask when U.S. telco access lines (including all broadband and narrowband connections) will stop falling, a process that began in 2000 and has continued unabated since then, driven in part by a shift of voice consumption to mobile networks and market share lost to cable operators and other independent Internet service providers.
In 2000, there were more than 180 million access lines in service, and telcos supplied nearly all of them, either on a retail or wholesale basis.
Technology Futures, which has been a remarkably accurate forecaster in this regard, thinks it is conceivable U.S. telcos ultimately will find a stable base at around 100 million access lines, on the assumption telcos collectively get and keep about half the number of U.S. high speed access lines.
Precisely how to measure “lines” is a bit subjective, though. These days, service providers prefer to cite “product units” or “services” rather than “lines” as the appropriate metric, where units of video entertainment, voice or high speed access all are counted as discrete units.
Still, the total number of active connections does matter, as it is difficult to impossible to sell additional units to a household that does not already buy at least one product. Competition from cable operators or independent ISPs such as Google Fiber is one reason. But most primary consumer voice demand also has shifted to mobile networks.
The net result is a market where any single fixed network services provider might well expect to sell at least one service to only about 30 percent to 35 percent of all homes in any market, at best.
In that framework, it is conceivable that U.S. telco homes served could dip as low as 63 million or so, calculated as 35 percent of 180 million homes served in 2000.
JSI Capital Advisors has estimated there could be just 40 million U.S. telco access lines in service by 2020.
Some might argue that is possible if one counts only narrowband voice lines in service. For example, Technology Futures has estimated U.S. telco narrowband lines could dip to as few as 50 million by 2020.
To some of us, that forecast of remaining narrowband lines seems too high, as it suggests half of all U.S. telco lines will be narrowband in 2020. That just seems unlikely in the medium term, and virtually impossible in the long term, as legacy time division multiplex networks are decommissioned in favor of Internet Protocol networks.
Though it will remain possible for a narrowband copper connection to handle 2020 IP services, it will be difficult. Nor, in practice, will telcos struggling to reach lower costs want to maintain two separate networks.
The bottom line is that it is reasonable to argue that U.S. telco fixed network service providers might eventually reach a “stable” base of between 63 million to 100 million homes, each home buying at least one service.
One might note that U.S. cable operators had in 2013 about 57 million video accounts in service. Taken together, one might therefore guess that total fixed lines in service could be between 100 million homes and 120 million homes, about 66 percent of the 2000 level.
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