Parks Associates recently announced the release of its Home Services Dashboard, a for-pay service that tracks consumer adoption of telecom services like Internet, pay-TV, and cellphones. As part of the announcement, the company released a blog that shows that at the end of the first quarter of 2021 that 41% of US homes are buying standalone broadband – meaning broadband that’s not bundled with cable TV or a home telephone.
This is further evidence of cord-cutting since in 2018 only 33% of homes had standalone broadband. This shows that in eight years that 8% of all US homes have ditched all services from their ISP other than broadband. One doesn’t have to trend this too many years into the future until over half of all homes will be buying only broadband.
ISPs are working hard to keep some kind of bundle because they understand the power of the bundle to control churn. It’s much easier for a customer who is only buying broadband to switch to another ISP. As the bundle with cable TV is losing appeal, the biggest cable companies, Comcast and Charter, have been busy bundling customers with cellular service. Comcast has also been successful in bundling millions of homes with smart home packages. For a short time, Comcast even tested the idea of bundling with solar power.
My consulting firm does broadband surveys and we’ve seen a wide range of success of bundling in different markets across the country. Just in the last two years, we’ve seen communities where the level of bundling is as low as 45% or as high as 80%. We’ve noticed that cities with older populations seem to have the highest percentage of homes still buying a bundle. Bundling is also still fairly common in rural America, although the rural bundle is most typically a DSL connection and a telephone landline. A few telcos like CenturyLink still bundle with satellite TV.
The one statistic from Park Associates that I have to challenge is the average price for unbundled broadband at $64. I have to wonder what is included in that figure. Consider Comcast as an example. The Comcast price for its most popular broadband product, Performance, is $76. There is currently a web special where a new customer can buy the product for as little as $34.99. But that price is only good for 12-months and reverts to the higher price. But more importantly, Comcast charges $14 for the modem. That means the price of standalone broadband without a promotional price is $90. Even the introductory product is at $49 when including the modem. The same is true for Charter and other major cable companies – the standalone price without special discount with every big cable company is more than $64 – sometimes a lot more.
Over the last year, I’ve done rate studies in over a dozen communities, and I’ve never seen the average price for standalone broadband below the $75 range. I can accept the Park Associates price if it doesn’t include the extra modem fee. Park Associates are obviously looking at a larger database of numbers than I am, but I’ve seen the $70+ average price in urban, suburban, and rural markets.
I agree with Parks Associates that broadband prices have steadily been climbing, and they observed that standalone broadband prices have increased in price by 64% since 2011. I have no way to judge the percentage increase, but I agree there has been substantial rate increases.
What might surprise a lot of people is how many households still cling to their bundles. After accounting for homes that don’t buy broadband, there are still slightly more homes that buy broadband through a bundle than households that buy standalone broadband. However, at the rate that homes are cutting the cord, it seems likely that within a year or so that there will be more homes without a bundle. In 2020, the traditional cable industry lost almost 6 million customers or almost 7.4% of the base of cable customers – and most of those customers broke a bundle when they ditched cable.