Cable providers are driving increased investment by traditional telecom operators and could lose their competitive edge over the next five years, according to new research from Goldman Sachs.
Tim Boddy and Hugh McCaffrey of Goldman Sachs’ European Telecoms/Cable research team suggest that cable competition is prompting incumbent operators to invest in fibre-based Next Generation Access (NGA) technologies. Over a five- to seven-year period, this shift may erode cable’s current advantage. However, the analysts also argue that as the market’s infrastructure consolidates, cable operators may gain pricing power, tightening conditions for local loop unbundlers.
In a Cable News briefing, the analysts note that faster internet speeds enabled by DOCSIS 3.0, combined with rising consumer demand for on-demand video, are encouraging operators to prioritize investment—especially in the cable sector. They estimate that deploying fibre-to-the-home (FTTH) will take most operators at least five years, and possibly longer, due to a constrained workforce of construction engineers and lengthy local planning approval processes. If consumer demand for bandwidth surges before operators can complete rollout plans, incumbents could experience substantial market share losses and significant value erosion, given their high fixed costs and leverage.
Goldman Sachs also estimates that rolling out FTTH across the European footprint currently served by cable could cost incumbents in excess of €41 billion.