Leichtman Research Group recently released the broadband customer statistics for the end of the second quarter of 2020 for the largest cable and telephone companies. Leichtman compiles most of these numbers from the statistics provided to stockholders other than for Cox, which is estimated. Leichtman says this group of companies represents 96% of all US landline broadband customers.
The second quarter shows big growth in broadband customers with almost one and a quarter million customers added to the big ISPs in the second quarter. However, due to the pandemic, those numbers need to be accompanied by an asterisk based upon several factors that are inflating broadband subscribers. Before discussing those issues, the following are the statistics for the first and second quarters of 2020.
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Going purely by the numbers, the cable companies collectively added 1.4 million customers in the second quarter compared to the first quarter. However, there are some issues related to the pandemic that are inflating the second-quarter numbers. First, Charter alone added 160,000 free households during the quarter as the company kindly provided free broadband to homes with students with no broadband. But is a home that is not paying a broadband bill really a customer?
All of the ISPs on this list were not disconnecting customers for non-payment in the second quarter due to the pandemic. With tens of millions of people newly unemployed, it seems likely that the ISPs are going to be disconnecting a lot of customers when that policy finally ends. The ISPs all have to be discussing how long to extend that policy. It seems unrealistic that they will continue to provide free broadband to millions too far into the future.
I don’t think anybody, including the ISPs know how many customers they will lose as a result of the pandemic. We got something of a clue during the second quarter when almost 1.6 million households disconnected cable TV. A lot of that cord-cutting has to be coming from homes that could no longer afford to pay their cable bill. At some point there is going to be a reckoning and many of the gains shown in the first and second quarters of 2020 will be wiped out by homes that can no longer afford broadband.
But there is another industry story that is not reflected in these numbers. It seems that a huge number of homes have been upgrading to faster broadband speeds. OpenVault reported recently that at the end of the second quarter 4.9% of homes were subscribed to gigabit broadband products, more than double the 2.1% of gigabit subscribed at the end of the second quarter of 2019. Students and adults working at home have been finding that their existing broadband plans are inadequate for multiple people to connect to remote servers simultaneously.
The quarterly numbers continue to reflect the migration away from DSL. Many of the telcos showing customer losses have been actively adding customers on fiber, so DSL losses are a lot larger than are indicated by the net numbers above.