In the third episode of North American Fiber Trends for Dummies, by Dummies, our CEO Mikael and CRO Isak explore another trend shaping the broadband industry: ISP consolidation.

The U.S. broadband landscape is unique, driven by local ISPs, which contrasts sharply with markets like Europe, where such players are almost nonexistent. These local ISPs often have a strong local brand. They boast strong community ties and loyal customer bases that set them apart from larger corporate providers.

The Challenges of Larger Scale Fiber Build-Outs

Isak and Mikael address the potential challenges posed by the ongoing fiber expansion. The rapid pace of infrastructure development is shrinking opportunities for new greenfield projects. This has led to a growing trend of consolidation, where larger ISPs or infrastructure owners acquire smaller, local ISPs. While consolidation might bring operational efficiencies, there’s concern that it could erode the unique identity and trust that local brands have cultivated over time.

The Value of Preserving Local Brands

Mikel and Isak underscore the importance of retaining the identity of local ISPs even as consolidation occurs. They argue that local brands hold a significant competitive advantage in their markets, with customers willing to pay up to 50% more than the cheapest competitors. This premium is driven by trust and the personal connections these brands establish with their communities.

It’s not always about being the biggest player; local brands thrive because customers often know the owners, the staff, and the faces behind the business. This trust is further enhanced by tangible interactions, such as having a local shop where customers can seek assistance.

It’s similar to buying a jar of honey at a local market for $50, even though the same product might be available for much less at a large grocery store. People value knowing and supporting the person who actually produced the honey, reinforcing the power of local, trusted brands.

By maintaining these brands, ISPs can compete effectively against larger national providers while offering the same high-quality network performance.

Open Access as a Solution

The discussion shifts to the potential of Open Access models to address these challenges. Open Access networks separate infrastructure operations from service provision, enabling local ISPs to operate within a shared network framework. The model allows operators to centralize operations for cost efficiency while preserving the distinct local branding of individual ISPs. Such an approach sustains competition and makes room for additional service providers, enhancing customer choice and increasing network take rates.

Strengthening the Future of Local ISPs

Mikael and Isak conclude by expressing optimism about the future. They stress their commitment to supporting small ISPs during this transition, helping them navigate consolidation while monetizing operational synergies. They envision a future where local ISPs retain their community-driven identities, leveraging Open Access and other innovative models to thrive in an evolving broadband ecosystem.

The conversation ends with a hopeful note: These strategies will maintain the diversity and strength of the U.S. broadband market while ensuring sustainable growth for all stakeholders.

The Business Case for Open Access

Private owners of Open Access networks benefit directly from the success of multiple providers. More ISPs mean higher wholesale revenue, maximizing the network’s value. The model also appeals to ISPs pursuing government grants, as Open Access can score higher in grant applications. This creates a pathway for private ISPs to adopt Open Access practices, blending traditional and modern approaches.

An Outlook

The trend of private investment in Open Access networks is likely to grow. Some experts even predict that incumbent ISPs might open their legacy networks to other providers, recognizing the untapped potential of higher take rates.

As this model matures, trust and collaboration will be critical. A clear separation between operations companies and ISPs will help build confidence among stakeholders and ensure the growth and success of Open Access networks.

Open Access networks represent a powerful business opportunity, driving innovation, choice, and efficiency in the fiber market. As more private players embrace this model, the future of broadband will become more inclusive, competitive, and robust.