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The Road Ahead for Autonomous Vehicles

Multiple Operators Suffer Damage to Fiber Networks from Hurricane Michael

Factbox Energy demand impacts to linger in wake of Hurricane Michael

Factbox: Hurricane Michael Impact Turns from Production Loss to Demand Destruction

Fast-moving Michael destroys gas demand across US Southeast

The Road Ahead for Autonomous Vehicles

The March 2018 pedestrian fatality by an Uber autonomous test vehicle highlights both the significant technical challenges and limitations associated with this transformative technology as well as the many practical, technical, legal and moral questions requiring resolution prior to the mass adoption of driverless, autonomous vehicles (AVs), still decades away. Full-scale testing of self-driving vehicles without human control—including tractor trailers--is underway in cities globally by a number of companies, and clearly, how people travel has been changing because of rideshare offerings from transport network companies (TNCs) like Uber, Lyft and soon perhaps Waymo. And with the commercial rollout of "hands-free" features on some premium autos this year, the early stages of a transition to autonomous vehicles is underway.

That said, we believe AV penetration will significantly lag that of electric vehicles (EVs) and the variance between our different AV disruption scenarios discussed in this report is very large: our low disruption scenario only foresees advanced AVs (level 4 and 5) with a 2% share of light vehicle sales by 2030 rising to 10% by 2040. However, should the revolution follow our high disruption scenario where AVs comprise a 30% share of light vehicle sales by 2030 and 50% by 2040, the effects on society will be profound and far-reaching. Semi-automated to fully autonomous all electric-vehicles sharing the road – augmented by ride-sharing technologies and TNCs – are likely to alter how cities are designed, grow, and function, affecting where we live and work. AVs will introduce life-saving and ultimately laborsaving technologies while fundamentally altering the movement of people and goods disrupting business models along the way.

In this report, we present our range of estimates of when AVs will arrive, highlight how mobility technology could develop, and how it will change the landscape of infrastructure needs and other sectors over the long term, principally from a U.S. perspective. We intend to use this background commentary as the basis for our next commentary, which will address the potential credit impact on transportation infrastructure assets of these technological advances.

Key Takeaways

  • Growth of fully autonomous vehicles will be influenced by and significantly lag the market growth of electric vehicles, which could approach a 10% share of U.S. light vehicle sales by 2025 (compared to 1.1% today), behind our forecast 25% share in Europe and 20% share in China.
  • Under our low disruption scenario advanced autonomous vehicles requiring minimal to no driver intervention could reach a 2% share of light vehicle sales by 2030 rising to 10% by 2040.
  • The trajectory of autonomous vehicle growth is complex and unpredictable as it faces hurdles beyond technology and cost.
  • If autonomous vehicles and related technology mobility advances develop incrementally and linearly with current industry participants leading the way, we anticipate fewer positive or negative credit implications. However, newer entrants into mobility technology could disrupt a gradual, evolutionary scenario and negatively affect credit quality across various sectors involving transportation infrastructure and supporting funding mechanisms.

Multiple Operators Suffer Damage to Fiber Networks from Hurricane Michael

Communications providers are working to restore services in areas impacted by Hurricane Michael, but storm debris, power outages and significant fiber damage are hindering progress in those counties most devastated by the storm.

As of Oct. 14, a number of counties along the Florida Panhandle had more than half of their cell sites down, including Bay County — home of Panama City and Mexico Beach, described as "ground zero" of the storm by U.S. Federal Emergency Management Agency administrator Brock Long — where 66.1% of cell sites were down. Similarly, neighboring Gulf County had 69.6% of cell sites down, according to data from the U.S. Federal Communications Commission.

Based on the amount of damage in the area and ongoing power outages, it could be weeks before services are restored. Long said Oct. 12 that after search and rescue, restoring communications in impacted counties is among FEMA's top priorities.

"You have to be able to communicate to appropriately respond and we are trying to do everything we can to get the private sector vendors, the Verizon [Communications Inc.]'s of the world, to get in to try to get their systems back up and running," he said.

Long added, however, that the process is not easy. "There was a tremendous amount of debris. When you look at the damage in Mexico Beach, that is where the ocean rose potentially 14 feet … and shoved buildings out of the way. When you have that type of damage, it takes time to get in and go through," he said.

Hurricane Michael made landfall Oct. 10 near Mexico Beach as a Category 4 hurricane with 155-mile-per-hour winds.

For its part, Verizon said the "vast majority" of Florida and Georgia service has been restored, with 99% of the company's network in Georgia in service and 97% of its network in Florida. But the company noted there are pockets, particularly near Panama City, where the damage is severe.

"The storm caused unprecedented damage to our fiber, which is essential for our network — including many of our temporary portable assets — to work. Our fiber crews are working around the clock to make repairs, and while they are making good progress, we still have work to do to get the fiber completely repaired," the company said Oct. 14.

Fiber is the connecting component of a network that carries data from point to point. It is necessary for Verizon's permanent and temporary cell sites to be operational. The company noted that while it has multiple fiber paths to carry data, "The severity and intensity of the storm caused damage to all duplicate routes in the Panama City and Panama City Beach area."

In terms of wireline services, the FCC said 291,300 subscribers remain out of service as of Oct. 14, including 205,643 subscribers in Florida. The figures were down from a day earlier, when a total of 337,223 subscribers were without service, including 233,843 in Florida.

The top residential video and broadband provider in Bay County is Comcast Corp., according to MediaCensus data from Kagan, a research group within S&P Global Market Intelligence. Comcast, the largest cable operator in the U.S., said in an Oct. 12 statement that it is working to get Xfinity services back online.

"As power returns … and it becomes safe for our technicians and restoration crews, we will work to repair any damages affecting our network," the company said.

As of Oct. 15, more than 162,000 customers in Florida remained without power, including all 27,275 customers served by Gulf Coast Electric Cooperative. The cooperative said in an Oct. 12 Facebook Inc. post that its distribution system "suffered catastrophic damage"

In Gulf County, the top residential video provider is AT&T Inc.'s satellite video service DIRECTV, according to MediaCensus data, while the top residential broadband provider is Mediacom Communications Corp., the fifth-largest cable operator in the U.S.

Mediacom said Oct. 14 that its recovery efforts are underway but its network in Florida has 14 miles of severely damaged fiber near Walton County, as well as 25 miles of damaged fiber east of Panama City that is obstructing video transmission from Gulf County to Walton County.

"Our current priority remains focusing on repairing damage to our high-speed data transport network and main transmission facilities and repairing downed lines where we have access to the area. We have outages from widespread loss of commercial power along with downed lines, and structural damage throughout our systems," the cable operator said.

Factbox: Hurricane Michael Impact Turns from Production Loss to Demand Destruction

Houston, Oct. 11 2018 — Hurricane Michael made landfall at the Florida panhandle as a Category 4 hurricane Wednesday with 155 mph winds, quickly destroying demand for power, natural gas and refined oil products. Shut-in oil production rose modestly from Tuesday to over 700,000 b/d, but the storm has stayed east of much of the region's production, which means supply should be back online quickly.

Meanwhile, the severity of the storm has surprised to the upside, which could a mean longer lasting and more severe impact on demand for power, natural gas, refined products and ultimately crude oil.

"We expect the impact on refined products demand to be below that of previous hurricanes in the Gulf Coast such as Harvey in 2017, as the region impacted by Michael has lower population density than Houston ... Nevertheless, the impacts are favoring the high side of our estimates given the sheer severity of the storm," said Claudio Giamberti, Head of Demand and Refining at S&P Global Platts Analytics.

As of 7 pm EDT, the eye of Michael was moving over southwestern Georgia with maximum sustained winds still at 100 mph, according to the National Hurricane Center. The storm is expected to move northeast across the Carolinas before heading back out to sea Friday morning.