2024 priorities and trends for fiber network operators and vendors.

Hello everyone and welcome to the Network IQ from IQGeo. My name is Steve Tongish and I'm the Chief Marketing Officer at IQGeo and I'm really pleased today to have two very well informed and influential individuals with us today. And that's Gary Bolton who is the president of the FBA in the US and North America and Rath Mearsman, who is the president of the board of the FTTH Council in the US. Europe. So welcome both of you to Network IQ. Steve, it's wonderful to be here. Raph, always great to see you. It's always good to have good friends here and hope you guys enjoying the European weather. Also my pleasure to be here and talk to you again, Gary. I think last time we met in Prague for the Global Alliance of the FTTH Councils a few months ago. So good to see you back. Yeah, I'll come to Prague anytime, Raph. So let me know when you want to be there. Yeah, yeah. Very good. Excellent. Thank you both. And we will avoid the topic of the European weather right now. But we do have a more interesting topic today. I just came to Palm Springs. We just had our premier member meeting in Palm Springs. So it doesn't get any better than that. Rub it in. All right. Good. Thank you, Gary. Great. So, but the topic we have for today is, you know, we have had an amazing year. 2023 for the fiber broadband industry has been incredible. I'm sure Gary can talk about the fact that there's been record deployments of fiber. And there have really been some seismic shifts in the structure of the industry as well. And so our challenge here today is for you guys to to gaze into your crystal balls and take a look at 2024. And let us know if you see any important priorities or emerging trends that are appearing in the industry for both the operators and for vendors like IQgeo over the next 12 months. What do you believe we're going to encounter? Gary, do you want to go first? Yeah. Well, I mean, it's 2023 was an amazing year, but also very confusing. You know, while on the deployment side, we'll be posting our latest numbers, but I can give you a preview that, you know, last year we had a record of 8.3 million incremental homes passed with fiber. This year we did 9 million. So another record year. Yet the supply side of the industry, you know, the factories were quiet. So we had a real issue on supply chain and inventory drawdowns. Also, one of the things that we're trying to get ahead of is workforce development. And then there's all kinds of things. You know, when you look at deployment of fiber to the home, you know, we're going to try to get our nation covered, every home covered by the end of the decade. But to do that, you know, we have to be efficient and, you know, about 75 percent of the cost is on the labor side. And so not only do we have to have the boots in the ground to get fiber deployed, but we have to worry about locates, make sure that we don't do damage as we're, you know, directionally boring and going up sidewalks and people's yards. And then also permitting is a big issue and right of ways and so forth. And then kind of the third key area is, you know, when we have people have fiber, it's got to be affordable. You know, we have to everybody participate because we're on the cusp of a major paradigm shift in innovation. When you start thinking about what's happening in quantum networking, quantum computing, generative AI, machine learning, the metaverse applications. And this isn't going to happen without fiber. So we have to do our job, get our whole nation's critical infrastructure deployed with fiber optics. We have a lot of CapEx behind us, but we have a lot of work ahead of us. Maybe I can, I can easily add from what I see in Europe is, is some very similar trends, especially this fiber to the everything and how to really reach not every household in itself, but also possibly in detail, all these data centers and 5G antennas. There's still so much more to do. And I think also stuff like the skilled labor and those and permitting are things that are still in Europe also coming back year after year as big challenges as the market keeps on growing. I think also in Europe, we've seen an amazing growth year after year on fiber rollouts. And maybe where there's a difference in the situation, potentially, what I see in Europe is that there's quite a variety within our market between some countries. In fact, if you look across the whole of Europe, we're approaching, I think, more than 60% of homes passed by fiber network. But if you would look at the individual countries, only UK, Germany and Italy in itself are still lagging behind and are responsible for the vast majority of what's still to be rolled out. So these regional differences obviously also mean that there's a lot of challenge to find the right skills and no doubt on the logistics as well. In those countries, there's a lot of these kind of challenges coming back. So there are clearly some sticky points in 2024. Supply chain, fiber availability, the thing we've been talking about for years, workforce skills and training and finding enough of the right people to do that. Those are all huge challenges. But the one that you kind of touched on that I'd be interested in exploring a little bit further is this idea that also, too, the financial landscape is shifting, that the cost of money is not what it used to be. And despite the investment and the CapEx investment that Gary said, are we seeing a slowdown in that in 2024? Or do you think that will continue to rage forward? Are organizations being a bit more cautious about investment? Oh, I'll jump on this one first. We have a very robust CapEx. We're basically the beginning of a huge CapEx investment cycle. So despite rising interest rates, you know, if you look at kind of the key indicators, it looks like that we're about peaked and the interest rates will start coming down. But it does affect costs. So we just are in the final stages of completing a fiber deployment cost benchmark survey study. And basically what's showing is that your costs have gone up. So this year was, you know, somewhere around 10 percent or more expensive than the previous year. But what's being projected is that 2024, those costs will not rise as high. And so that's great news. So we're going to see that environment improve. But, you know, as we go through these macroeconomic changes and we'll go through administration changes and other things, the one thing that's constant coming out of the pandemic is the desperate need for bandwidth and for connectivity. And so, you know, so I think that we are going to have a very robust are all our projections are showing is that through the end of the decade, that fiber deployment is going to be incredibly robust. And so really, it's going to be a work on efficiencies and accelerating deployment are going to be the keys to that. And, you know, we are I would say we're a little bit behind Europe. You know, some of the European countries Raf mentions are doing quite well, the Nordics, UK, you know, Spain. There's places that are doing very, very well. The other area that UK and Europe in general is doing is way ahead of the U.S. is on sustainability. And so we are just kind of in the early kind of investigations on our zero carbon footprint metrics. And and that's an area where fiber really, really shines. And we can talk a little bit more about that in a few minutes. But I mean, it's a real exciting time. Yeah, I know the FBA has launched your own sustainability initiatives and working groups, too. And you're a big contributor on that. So thank you very much, Steve. I appreciate all your muscle in that. We hope to try and get that started. But it's it's a that's a huge team effort. Raf, are you seeing, you know, similar sort of profile in Europe as well? Or are there some differences there? Yeah. Again, it's hard to speak about like a global European trend. But still, I think what we what we did see is the past the past years, especially in 22, there was a record amount of really private money going into the industry in even so much that you really saw areas which initially look to be more difficult to get economically served, actually being served with private money based on the fact that the money was was indeed with low interest rates. That is something you do see a little bit of a change, not necessarily that those projects will stop. But there is a bit of a shift in in focus of getting just homes passed and making sure that that you deploy the network as fast as possible towards more focus also on as early as possible, getting the connections and getting actual paying customers so that that business case and that return on investment is accelerated. And so that is definitely also something we see a lot of operators and parties looking to stimulate. And what I think there is going to be very interesting and a topic that I would really like to see some progress on is on copper switch off. Because where we really have a good fiber network, if we can get that copper switched off, it will help us to boost the adoption of the fiber connection. Yes, to follow on that graph, that brings up an excellent point. You know, in our our studies, Fiber Broadband Association studies were showing that when we get every American connected with fiber, that'll be equivalent to taking 11 million cars off the road every year from a zero carbon or reduction in carbon emissions. And I had Hawaiian telephone on my five for breakfast program, you know, a few months ago, and they were showing me that by migrating their copper network to fiber, that the actual just that one part of moving it to fiber is going to get them 50, 50 percent towards their zero carbon footprint. So one change, going to fiber. And what they were citing is that a fiber network reduces power consumption between 32 to 54 percent. So you have a significantly reduction in, you know, power consumption, which in Europe power is, you know, paramount. Also, the fiber, you know, the glass product is one sixth the embodied carbon of copper wires. And copper wiring also has a carbon footprint that's eighty five thousand times higher than fiber. So and then, you know, you start also thinking about secondary effects of less truck rolls and and things like that, people being on the work at home. So it's the key to sustainability. Yeah. Across all those metrics, it's just way more efficient and something we need to do. So it's right. Right. Yeah. Switching off copper and cable. Yeah. What I find so motivating being in this industry is really like what we're doing is leaving a legacy for future generations, bringing this better infrastructure to a whole community. And actually, with everything we're doing, we're both helping the digital, digital society, digital improvements from from the broadband usage. But at the same time, in line with those sustainability and challenges from a climate perspective. So I think it's really great to see what what we're doing is really contributing to the major challenges of society. And that's so nice to be involved and see. Also, when you look, one thing that that I would like to mention briefly is that this year we'll have our five to the home conference in March in Berlin. And we're celebrating our 20th anniversary. And that's that's that's a great time to actually look back. And when you compare from where we're coming, it's it's amazing how how how we were able in the course of these two decades to really change the landscape of infrastructure in the broadband community. That that's such a change. It's definitely going to be there. Berlin. Yeah. Second greatest city on the planet. Prague being number one. But that's why we're pretty close to each other. Yeah. Well, it's it's fantastic to to be able to get a little bit of your time. Such inspiring organizations that are, as Raf said, and as Gary said, you know, really changing, changing our society for the better and and hopefully changing our environment for the better. So I thank you so much. Before we close out, I just wanted to mention something. That's OK. You know, so Raf leads, you know, the board at Fiber Home Europe. And he mentioned Prague in our global summit. So we've been working. You know, there's six regions in the world for Fiber, Fiber the Home. And we do a global summit each year. And we, you know, we had members from Raf Sports and from boards across all six regions. And so, you know, it's while kind of North America and Europe are kind of leading, we're bringing everybody, making sure everybody's rolling in the same direction. So I think this is really on a great trajectory to get the whole world connected with Fiber. And it's really exciting. Yeah, it certainly is. So we started out asking you for predictions for 2024. And the two of you have gone way beyond 2024 and looking into the future. So I thank you for that. But again, it's really inspiring. Thank you so much. This is what we've been working our entire careers for. So we're at this, you know, historic moment that we are going to elevate the quality of life for generations to come. So it's super exciting to be in this industry. And it's happening. And it's happening. Fantastic. So thank you all for your hard work. And thank you for your time. And this, again, an inspiring conversation about what Fiber is doing for society and for our planet. So I appreciate it very much. And thank you very much. I want to just thank IQgeo for all your contributions to, you know, the Fiber Broadband Association. You know, as I mentioned, you know, you put a lot of contributions and sustainability in other areas. So I really appreciate, you know, IQgeo support. Thank you. Well, thank you. It's nice for you to say that. We love the team at the FBA and look forward to working with you in 2024, getting back to the topic and beyond. So thank you both. Yeah. And same from my side for Europe, but I may be a little bit biased to say that. Raph has two hats. So thank you both very much. And we will see you soon. Yes. Bye-bye. Thank you. Bye-bye.