Perspectives from FSF Scholars

January 19, 2023

The 2022 Communications Marketplace Report:

Timely FCC Action Could Accelerate Next-Gen Broadband Deployment

 by

Seth Cooper

[Below is a condensed version of this latest FSF Perspectives. A PDF of the full, complete Perspectives is here.]



The Federal Communications Commission released the latest iteration of its Communications Marketplace Report on December 30, 2022. The report cites numerous data points from 2020 and 2021 demonstrating that next-generation network services such as 5G mobile, fixed wireless access, cable-cellular hybrid wireless, and fiber broadband services are competitive and being rapidly deployed to Americans. Importantly, developments in 2022 that are not reflected in the report confirm the broadband market's vibrancy.

The FCC should promote continued competition and deployment. The Commission should focus efforts on repurposing the lower 3GHz band and other spectrum for commercial services. It also should impose fee caps and shot clocks on wireline infrastructure buildout in state and local rights-of-way. And in its Digital Discrimination rulemaking proceeding, the Commission should not adopt a rule that determines whether equal access exists based on disparate outcome rather than discriminatory intent. If it did so, this likely would have the effect of deterring investment and harming all Americans, including those who are the intended beneficiaries of the digital discrimination prohibition.

The FCC's Communications Marketplace Reports track developments within fixed terrestrial, mobile wireless, and satellite broadband market segments. Data points for 2020-2021 contained in its latest report show that innovation, investment, and competition have benefitted consumers of high-speed broadband services enabled by network upgrades and new deployments:

• Deployments have increased Americans' access to broadband. The number of fixed terrestrial residential connections capable of 100 Mbps download speeds increased from 66.4 million to 82.9 million, a 25% increase. And about 64% of households are located in census blocks with at least two options for services at 100/20 Mbps. Since 2018, the number of residential fixed connections in the U.S. has increased over 14%.

• Strong fiber network growth. Between the end of 2019 and the end of 2021, fiber-to-the-premises (FTTP) connections grew from 16.3 million to 24.2 million, up 49%. Also, between 2017 and 2021, households with access to FTTP rose from 29.3% to 44.7%.

• Significant cable broadband network growth. Between the end of 2019 and the end of 2021, residential cable connections climbed from 67.1 million to 71.8 million.

• Rapid expansion of 5G network coverage. At year's end 2021, 98% of the population was covered by at least one 5G services provider, 88% were covered by at least two providers, and 58% were covered by at least three. T-Mobile covered 94% of the population, AT&T covered 78%, and Verizon Wireless covered 67%. Plus, 97% had access to 5G services with speeds of 35/3 Mbps, up from 71.4% from a year earlier.

• Rapid Expansion of 5G fixed wireless access (FWA) services. At the end of 2021, residential terrestrial FWA connections increased from 1.5 million to 2.7 million, up 76%. Since 2018, terrestrial FWA services grew over 100%. Also, as of December 2021, 84% of the population lived in a census block that had access to terrestrial FWA, compared to 42% in December 2017. Remarkably, T-Mobile jumped from no population coverage in December 2019 to 60% population coverage in December 2021 through FWA, covering more of the population than any other fixed provider.

• Promising growth for cable wireless MVNOs. Subscribers to cable mobile virtual network operator (MVNO) services increased in 2021, with Xfinity Mobile attaining 4 million subscribers, Spectrum Mobile 3.6 million, and Altice USA attaining 186,000.

• Significant rise in broadband speeds. Ookla reported mean upload/download speeds for fixed broadband of 195.5/72.9 Mbps at the end of 2021, with mean upload speeds having risen from 150.5 Mbps a year earlier. For 5G, mean download/upload speeds were 187.7/23.5 Mbps at the end of 2021. Additionally, terrestrial FWA speeds have increased as the percentage of the population in census blocks with access to download speeds between 25 Mbps and 50 Mbps had more than quadrupled.

• Broadband has been backed by strong private market investment. CTIA figures indicate that mobile wireless service providers' capital investment totalled $34.7 billion in in 2021, up 16.2% from $29.9 billion in 2020. UBS data shows wireless provider capital investments of $34.8 billion in 2021. USTelecom reported that U.S. fixed broadband providers' capital expenditures reached $86 billion in 2021, up from $80 billion in 2020.

An obvious limit on the 2022 Communications Marketplace Report's efficacy is that its time focus ends at 2021. Industry and analyst data – not captured in the FCC's report – shows that the positive market trends continued in 2022:

• Strong fiber network growth in 2022. In the third quarter of 2022, AT&T Fiber had 338,000 net subscriber additions, for a total of 6.93 million. Verizon gained 61,000 FiOS subscribers, for a total of 6.68 million. Lumen added 31,000 fiber subscribers and raised its total to 889,000. And Frontier added a company record 75,000 fiber subscribers in the fourth quarter of 2022, with 17% more fiber subscribers than it had at the end of 2021. Fiber is continuing to be deployed to reach many more potential subscribers. AT&T Fiber has the ability to serve 18.5 million customer locations, and Frontier has built fiber to 5 million fiber locations, halfway to its target of 10 million by 2025.

• Rapid expansion of 5G network coverage. By the end of 2022, the three nationwide wireless providers had sunset their 3G networks in order to repurpose more mid-band spectrum for their growing 5G networks. Also, AT&T and Verizon began putting C-band licensed spectrum into use for 5G networks, enabling increased capacity and speeds.

• Continued rapid expansion of 5G FWA services in 2022. For the third quarter of 2022, Verizon Wireless reported an impressive 342,000 fixed wireless net additions, and T-Mobile reportedly 578,000 – record numbers for both providers. 

• Cable speed boosts in 2022 and 10G rollouts announced for 2023. In fall 2022, Comcast and Charter each announced plans to roll out its 10G multi-gigabit cable broadband services across their footprints nationwide, starting in 2023.

• Continued growth for cable wireless MVNOs in 2022. Xfinity Mobile and Spectrum Mobile posted record subscriber additions for their MVNO services in the third quarter of 2022, adding 330,000 and 396,000 each for a total of 4.95 million and 4.7 million. On January 5, 2023, the launch of Cox Mobile's MVNO offering was announced.

• Broadband speeds increased further in 2022. In the fourth quarter, Ookla found mean fixed broadband speeds of 256.36/94.05 Mbps and mean mobile broadband speeds of 147.62/15.95 Mbps. For the third quarter, OpenVault found the percentage of customers taking speed tiers offering 200-400 Mbps doubled year on year, driving average upload/download speeds up from 253.9/17.7 Mbps to 347.8 Mbps/23.5 Mbps.

In 2023, satellite broadband is likely to be a significant factor in the enhancement the market's competitiveness and reaching Americans previously unserved by high-speed broadband. The report noted the "the rapid expansion of LEO [low earth orbit] satellite constellations and the emergence of new players in the commercial satellite industry," enabled by reduced launch costs and other innovations. According to the report, 98% of satellites launched in 2021 were deployed into LEO to provide Internet access. More have taken place since 2021, with OneWeb announcing the successful launch of 40 additional satellites as recently as January 9, 2023. And more launches are in the works, with the Commission issuing a December 2022 order authorizing SpaceX to launch and deploy up to 7,500 more satellites for Starlink. Additional satellites enable more users to access broadband with better capacity and speeds, as well as with improved latency over prior generations of satellite Internet service.

The 2022 Communications Marketplace Report lists some steps or general areas for policy action to encourage continued broadband competition and infrastructure deployment to more Americans. But here are some more specific actions that are needed to put the broadband market on the best footing to benefit consumers in 2023 and beyond:

• Prioritize the lower 3 GHz band and other spectrum bands for repurposing for commercial services. The Commission's most immediate spectrum priority should be helping to repurpose more spectrum in the lower 3GHz band for commercial licensed use pursuant to a competitive bidding auction. The agency also ought to pursue spectrum repurposing opportunities in the 4 GHz and 7 GHz bands.

• Adopt fee caps and "shot clocks" on deployments of wireline facilities in state and local rights-of-way. The FCC should amend rules by limiting fees that state and local governments can charge for deploying infrastructure in rights-of-ways to reasonable estimates of costs. Additionally, the Commission should set "shot clocks" within in which state and local governments must decide on permit applications involving rights-of-ways. These actions would reduce costs and delays, speeding deployment of infrastructure. 

• Ensure equitable access to broadband by prohibiting intentional discrimination, and not by imposing disparate impact liability. In its Digital Discrimination rulemaking proceeding, the Commission should bar intentional discrimination in broadband marketplace practices. But it should not impose disparate impact liability on facially nondiscriminatory practices that are claimed to have unintentionally resulted in different outcomes in broadband access among protected groups. If the Commission were to impose disparate impact liability, it likely would have the effect of deterring investment and harming all Americans, including the intended beneficiaries of the digital discrimination prohibition. The Commission should direct subsidy support to any identifiable areas where there are gaps or disparities in broadband access or adoption.

By taking those actions, the FCC would help ensure that the broadband market remains vibrant, with consumers benefiting from faster and more capacious services as well as new competitive choices enabled by next-gen broadband services like fiber, 5G FWA, and cable MVNO wireless.

* Seth L. Cooper is Director of Policy Studies and a Senior Fellow of the Free State Foundation, a free market-oriented think tank in Rockville, MD. The views expressed in this Perspectives do not necessarily reflect the views of others on the staff of the Free State Foundation or those affiliated with it.

Read the full, complete Perspectives, with footnotes, here.

In case you missed it…please see:

• Letter to Senator John Thune Regarding Oversight of Broadband Subsidies, by Free State Foundation President Randolph May

• Innovation Will Protect Consumers From Illegal Text Messages Better Than New FCC Rules, by Seth Cooper,Free State Foundation Director of Policy Studies and Senior Fellow

• Thinking Clearly About Speaking Freely: Combatting Cancel Culture With a Reinvigorated Constitutional Culture, by Free State Foundation President Randolph May

• A Trio of “Sleeper” Nondelegation Doctrine Challenges, by Free State Foundation President Randolph May

• The Ninth Circuit Should Uphold Preemption of State Rate Controls on Wireless Services, by Seth Cooper,Free State Foundation Director of Policy Studies and Senior Fellow

• FCC Broadband Map Paves the Way for BEAD Grants, Better Oversight, by Andrew Long, Free State Foundation Senior Fellow

• FCC Should Rely on Pro-Deployment Actions to Avoid Digital Discrimination, by Free State Foundation President Randolph May and Seth Cooper, Director of Policy Studies and Senior Fellow