S&P Global — 27 August 2024
Daily Update: August 27, 2024
Fiber Continues its Search for a Market
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
The story of fiber optic cable networks has featured moments of enthusiasm and investment, followed by disillusionment and occasional bankruptcy. The turn of the millennium coincided with a period of investor enthusiasm. Fiber optic cable was laid substantially in excess of the requirements of the networks of the time. Unsurprisingly, many of the fiber companies of that time no longer exist today. The phrase “dark fiber” refers to unused fiber optic cable installed underground. Much of the fiber of the late 1990s stayed dark for decades.
Broadband requirements have increased in the intervening years. Today, with many people working remotely, the ability to stream video calls has become more desirable. Many households also enjoy broadband streaming entertainment, often on multiple platforms and devices. We live in a low-latency economy. But the requirements of broadband are struggling to meet the capacity of fiber, according to the latest “Next in Tech” podcast from S&P Global Market Intelligence. Though hard to believe, fiber optic cable can carry a higher data load than we require. Fiber is still a technology with excess capacity beyond our present needs.
While fiber connectivity has become more common in commercial locations, there is a significant delay in connecting fiber to the home. The first obstacle is that “last-mile” connectivity is always the hardest. Each branch of a network adds cost and complexity. The branches that lead to individual homes are much more numerous than the branches that lead to neighborhoods. Infrastructure regulation also creates complications.
Finally, DSL copper cables are more than sufficient for most residential usage. To the end consumer, the benefits of fiber are not always clear because their data needs aren’t large enough to tap fiber’s additional capacity. However, this doesn’t mean that the demand for bandwidth won’t grow in the future.
“I think the demand will create itself,” said S&P Global Market Intelligence Kagan analyst Natalie Colakides. “You’re kind of future-proofing at the same time as each home has more and more devices connected to the home, which means you’re going to need more bandwidth eventually. It’s just that consumers don’t realize that today.”
Not all countries have the same installed fiber base at this point. According to S&P Global Market Intelligence Kagan estimates, the telco industry had 22.1 million residential and commercial fiber broadband customers as of Dec. 31, 2023. In terms of residences, 20.9 million of the 119.7 million broadband homes use telco fiber. In Latin America, fiber-to-the-home connections rose 21.2% year over year in 2023 to reach 62.9 million households, reflecting a market share of 56.3%. In Europe, there is variability in terms of fiber adoption. Fiber is relatively common in some markets such as Spain, but across Europe, only 35% of occupied households have adopted fiber.
Today is Tuesday, August 27, 2024, and here is today’s essential intelligence.
Brazil Soybean Meal Export Market Higher Ahead Of EU Sustainability Rule
Destination demand for Brazilian soybean meal has showed some improvement over the past few days after spot prices dropped to near 4-year lows while traders eye new sustainable regulations to be implemented by the European Union in December. When the regulation is implemented, EU-based importers would be required to produce verifiable information, such as geolocation data, to show that commodities such as cocoa, coffee, palm oil, soybean and rubber were not grown on land deforested after 2020 and were grown in accordance with local laws.
—Read the article from S&P Global Commodity Insights
Flash PMI Points To Sustained, But Unbalanced, Third Quarter US Economic Growth As Price Pressures Moderate Further
Solid growth signaled by the S&P Global flash PMI in August points to robust GDP growth in excess of 2% annualized in the third quarter, which should help allay near-term recession fears. Similarly, a fall in selling price inflation to a level close to the pre-pandemic average signals a “normalization” of inflation and adds to the case for lower interest rates.
—Read the article from S&P Global Market Intelligence
Your Three Minutes In Chinese LRGs: Offshore Issuances Could Spark Credit Divergence
Risk differentiation could deepen as China's local and regional governments (LRGs) more regularly explore international bond markets. The market may start to better differentiate credit quality among Chinese tier-one LRGs (such as provincial-level, municipalities and special planning cities). These tier-one Chinese governments are the only ones allowed to borrow directly.
—Read the article from S&P Global Ratings
Supply Shocks In Europe Push Hungarian Gas Market Into Limelight
The Hungarian natural gas market is gaining more prominence in Europe, with its stable supply of Russian gas via the TurkStream pipeline enabling the country to play a more active role in the Central and Eastern European gas balance. Hungary's strategic position in the gas market is further underscored by the uncertainty around Russian gas flows via Ukraine into the region, albeit constrained by capacity limitations.
—Read the article from S&P Global Commodity Insights
Quest For Critical Materials Fuels Growth Of North American Battery Hub
North America is on the brink of becoming a battery production hub that will help power the global energy transition, while expanding the region's fleet of electric vehicles. Automakers, spurred by US government support for the sector and their own goals to expand EV model offerings, have announced more than $100 billion in new investments for the development and production of EVs in the nation over the coming years.
—Read the article from S&P Global Commodity Insights
Listen: MediaTalk | Season 2 | Ep. 27 — College Football Preview & Venu Injunction
With August winding down, it is time for college football. MediaTalk host Mike Reynolds joins three S&P Global Market Intelligence Kagan analysts to talk about the 2024/25 college football season, which has a number of major changes, including conference realignments and a 12-team College Football Playoff. Together, they talk about the demise of the Pac-12, the expansion of the Big 10, the dominance of the SEC and the chances for the ACC. It promises to be a wild year with big rights fees, big ratings and big stories.
—Listen and subscribe to the podcast from S&P Global Market Intelligence
India Forward: Emerging Perspectives (Sept. 19, 2024)
Join us for the inaugural launch of India Forward: Emerging Perspectives, a collaborative insight and India-focused thought leadership initiative by S&P Global and CRISIL (An S&P Global company). S&P Global and CRISIL have assembled their world-class analysts, data experts, economists and researchers to offer essential perspectives on local and global factors across sectors that will shape the India journey in these crucial years ahead and would like to invite you to an exclusive event to launch the report.
—Register for the in-person event from S&P Global