Major Forces Set to Shape the Communications Industry for Years to Come
Unprecedented government funding, technology advances and investor interest expected to fuel rapid digitization of the economy
DENVER (November 10, 2021)—The telecommunications industry is expected to evolve significantly over the next several years, as a confluence of major forces is poised to drive rapid industry shifts. The amount of government funding expected to hit the market is unprecedented and will have a profound impact on bridging the digital divide. 5G and private wireless networks are enabling new business models and applications that will transform the way people work and live.
According to a new report from CoBank’s Knowledge Exchange, investor interest in the communications market is expected to remain very high, as infrastructure investment funds and private equity sponsors aim to gain exposure to the rapid digitization of the economy.
“Consolidation in the communications industry is expected to continue as investors hunt for new opportunities and strategic buyers look for scale and new markets,” said Jeff Johnston, lead communications economist with CoBank. “Significant investments in fiber will be made by investors and large telecommunications operators, which will increase the competition for cable companies running hybrid fiber-coaxial networks.”
After years of dabbling in the media business, major telecommunications companies are getting back to their roots. They have jettisoned non-core assets and are investing those proceeds back into their networks, with a major focus on fiber. These investments represent a headwind for incumbent cable operators, although it will take time before they materialize in a meaningful way.
Private wireless networks are emerging across a wide range of organizations and use case scenarios, following the Federal Communication Commission’s decision to make available a large swath of spectrum in the Citizens Broadband Radio Service (CBRS) band. Policy changes have enabled small rural cities, homeowners’ associations, manufacturers, universities and other entities to build their own carrier-grade wireless networks.
The proliferation of private wireless networks is expected to have a profound impact on the wireless market. The North American private wireless market is expected to grow at a 10.1% compound annual growth rate (CAGR) over the next seven years and will become a $2 billion market.
5G also introduces opportunities in fixed wireless as an alternative to fixed-line broadband, or a lower cost option to provide coverage in high-cost, low-population rural markets. National wireless operators Verizon and T-Mobile are big believers in fixed wireless, with T-Mobile putting a major emphasis on rural coverage. Looking ahead, Verizon plans to expand its fixed wireless coverage in rural America with the recently announced partnership with Amazon’s Kuiper LEO satellite business.
“The shift to digitize how we work and live is moving at a pace never seen before,” added Johnston. “Lawmakers in Washington and investors around the world are taking notice, which has driven an unprecedented amount of capital into the communications market, enabling new technologies and services that will have a profound impact across the board.”
Watch a video synopsis and read the report, Major Forces Will Shape the Communications Industry for Years to Come.
CoBank is a $155 billion cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 75,000 farmers, ranchers and other rural borrowers in 23 states around the country.
CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and maintains an international representative office in Singapore.