U.S. service provider broadband access capex will take a rare dip this year, according to researchers at the Telecommunications Industry Association (News - Alert). Broadband access investment has risen for seven straight years, from $2.2 billion in 2002 to $8.9 billion in 2008.

 

There are some noteworthy differences, principally a dip in every form of wired network access in 2009 and 2010 while fixed wireless grows steadly through 2012.

 

Overall broadband access investments might not start growing again, overall, until 2012. Overall access investments will reach $5.7 billion in 2011, on the strength of upturns in DSL, cable modem and fixed wireless spending, balanced by a continued decline in FTTP spending, TIA (News - Alert) forecasts.

 

One might be tempted to blame the economic recession for the unusual caution, but other factors are at work, even though the recession encourages caution.

 

Verizon's spending on FiOS (News - Alert) has propped up fiber-to-home spending since 2004, when the upgrade began. But such upgrades are cyclical. Verizon will finish the upgrade, and now is nearing that point. So it is not unexpected that national FTTH spending would dip at some point.

 

On the other hand, digital subscriber line and cable modem investments are declining temporarily in 2009 and 2010, TIA predicts. One reason for that is the recession, but operators also are at a threshold.

 

Demand for existing products based on current technology is saturating. Cable operators are readying upgrades to DOCSIS 3.0 technology that will boost potential speeds dramatically, but consumer demand for 50 Mbps and higher speeds is limited at the moment.

As a practical matter, though it makes sense to grab marketing headlines, it does not make as much sense to widely deploy a solution that will have relatively few buyers in the near term.

 

Telcos other than Verizon are pushing ahead with their own FTTP upgrades, but it takes a dominant player such as Verizon or AT&T (News - Alert) to really push the volumes that "move the needle." AT&T continues to extend its FTTP deployments, but in a rather controlled way.

 

Given the current economic environment, it just makes sense not to "over-invest" in higher-speed DSL at a time when demand is rather weak.