September 28, 2021

Broadband Industry Outlook – interview with Rick Talbot, ACG Research

The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch

Craig Corbin:

Welcome to The Broadband Bunch at Fiber Connect 2021 and I am pleased to be joined by Rick Talbot with ACG Research. Rick, welcome.   It’s nice to be in person at Fiber Connect versus what it’s been for the last 18 months.

Rick Talbot:

Someone told me that it’s a little bit like coming back to school at the end of summer. Everyone’s back. Hey, what have you been doing?

Craig Corbin:

Let’s get your impressions so far of what you’ve seen transpire at this addition of Fiber Connect.

Rick Talbot:

There has been a surprising amount of confidence in the marketplace. In the past, there’s been, how do we get over the objections, the blowback, but in this conference, it’s all about how do we take advantage of the opportunities?

Craig Corbin:

When you look at the phenomenal array of speakers, the panel discussions that have transpired already, what’s been the highlight in that regard from your perspective?

Rick Talbot:

Really, it’s been across the board, there hasn’t been one highlight. One of the things I think most people point at is the art off and I know that’s a great opportunity, but the overall investment in Fiber is just much broader than that. And so if we thought it was just that one program, that’s kind of a mistake.

Broadband Funding Opportunities

Craig Corbin:

Well, let’s talk about that. We’re in a situation now where we’re entering what many would call sort of a golden age of funding opportunities for people across the spectrum within the industry. How do you view the various different sources of funding?

Rick Talbot:

Well, that actually was surprising to me. I think, a year ago I was looking at the man and could see that that was going to be, oh, spike, really, but the question was, where would the funding come for it? I had a real concern that the economy was going to slow down quite a bit and that the service providers would really struggle to do the funding. Part of this would be a shift of the funding where other parts of their business, would put it into access because there’s so much opportunity there, but the economy has rolled on and this recovery is opening up funding for the service providers. And so they’re actually able to take advantage of this great demand.

Craig Corbin:

And knowing that so many over this past 18 months have really focused on filling in the gaps within their service areas, do a phenomenal job. To use an example, mobile hot spots that have been incorporated to assist in providing connectivity for those that don’t have it, that is a tremendous area of focusing on going forward.

Rick Talbot:

There is the technology that’s improving the capacity of these hotspots. Though, I’ve got to say that the demand just in general for taking Fiber out to the residences is so great that I’m really seeing that is the first big push and that some of the other wireless technologies, particularly 5G, really are going to be supported by what is being deployed right now.

The Future of Broadband

Craig Corbin:

We look at the immense complexity that comes along with getting into the broadband game, the service provider game, and many of the people here at Fiber Connect are pondering that. They’re evaluating pursuing that in the future, knowing that you’ve got a situation with funding opportunities, a wonderful variety of sources for educating themselves at something like this. How do you look at the next, let’s say, five years for potential new players in the world of broadband?

Rick Talbot:

I think that really is there. There are so many communities. Already, we see some of this and it’s surprising. I mean, they’re Fiber providers who formerly had, let’s say, interconnected data centers, and then maybe they interconnected some large business parks, but they’re extending beyond that. They’re going into smaller and smaller neighborhoods. They might not be quite residential yet, but they are going out to places where you can have launch points from there to go to the residence.

Craig Corbin:

That’s such an interesting point because many providers are having to utilize hybrid approaches just based on many considerations with regard to how you deal with various parts of the country. I’m curious from the standpoint of what you expect to see with regard to knowing that not only is there funding that’s available, but there are requirements that come along with it. It’s not just a blank check, here you go, have fun and good luck, but there are thresholds that must be met in many cases by those who have been on the receiving end of the funding. Talk about that if you would.

Rick Talbot:

Well, particularly when we have these hybrid provisions in multiple companies involved in it and there’s technology to enable them to work together, but it’s relatively new technology and it’s really all software-based. We talk about open networks and this is really where it comes to bear. In one respect, open networks are for any one provider. They can get equipment from different vendors to work together, but this next challenge is how do multiple providers work? It opens up a new market in, for instance, wholesale provision. Whereas in the past, you only have one provider who’s providing everything in an area, and now you have multiple providers, and then many times the primary provider is selling connectivity to someone else.

Open Access Broadband Networks

Craig Corbin:

Rick, when we look at what you were just talking about with regard to open networks. That was a topic yesterday, a panel discussion I was privileged to be able to moderate and so many different approaches to the concept of open access networks. One of the members of the panel, Roger Timmerman with Utopia Fiber, just a phenomenal growing footprint all over the Western half of the country, Medina County, Ohio, with a focus primarily on the commercial end of things, serving the businesses. Now, they are adding the residential component with a relationship with lit communities. They’re also a big player in that. And then of course, Grant PUD in Washington State for two decades has been a leader in open access.

The concept of open access has been widely embraced in other parts of the world, including New Zealand, Australia, Singapore, Sweden. Finally, in the last couple of decades, the US is getting with the program. That’s a concept that to me makes so much sense for potential prospective new players in the industry. Your thoughts there.

Rick Talbot:

Well, part of what happens is in a country with free enterprise is we start off with the question of how do you extend these networks? In many of these other countries, the government is much more involved with the process. So they set out, here’s how we’re going to do it. So they specified competition and then they could mandate how the network is to be deployed. In the US, it just doesn’t work that way. We have free enterprise and then further, yes, the incumbents have a very strong message of, I can only do this if I’m guaranteed success, essentially in saying if you’ll do regulations that are favorable to, and they won’t say, prevent competition, but to allow me to reap the rewards of my investment, then I’ll invest. As you can imagine, that acts absolutely opposed to competition.

About ACG Research

Craig Corbin:

Interesting topic, and one that we will follow in the months and years ahead, no doubt. For those, Rick, that might not be familiar with your organization, ACG Research, give us the 30,000-foot overview.

Rick Talbot:

We are an analyst firm. We take a look at both the IT and the telecommunications industry across the spectrum. So we have both hardware expertise that we look at. For instance, in my case, it’s looking at fiber optics, optical networking. It goes into the access areas also, but we also have routing and switching and those things, but we also have a very strong practice in the software area. In fact, some of the development we’ve been doing lately in terms of practice has been in what we call domain control and optimization or orchestration, I’m sorry. That’s a DCO. Yeah, that’s where we play.

Broadband Future Trends

Craig Corbin:

From your perspective, what trends should we be on the lookout for in the coming months and years?

Rick Talbot:

Really, look at how services can be provided. I know you’ve got to start off with, how do we get the infrastructure put into place, but you also have services, and these are services that many if you get away from the large incumbent providers, they’re services that they really have not been providing before. It’s a whole new area for them to go into.

And so there, once again, you have the question of, are they going to use one vendor to do everything because that’s the best way they can get that support? Or are there other vendors who from an orchestration standpoint are experts at integrating the systems and they depend on that vendor to do that? Certainly, if you have multiple vendors providing it from end to end, that’s going to be difficult to say, well, we need all of the operators to use the same vendor equipment.

Craig Corbin:

We greatly appreciate being able to visit with you here at Fiber Connect. Phenomenal events. So glad to be back in person here. Closing thoughts about what you’re looking for in the balance of this year’s Fiber Connect.

Rick Talbot:

Well, I’m looking at really how the operators are beginning to organize themselves, to take advantage of these opportunities, and how the vendors are arranging themselves to support these next steps.

Craig Corbin:

Awesome. Rick, we greatly appreciate being able to visit with you. Look forward to a future visit down the road, right here on The Broadband Bunch.

Rick Talbot:

Well, I appreciate being here. Thanks for the opportunity.

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