The Industry

My Predictions for 2024

BEAD Predictions. It’s clear that most state broadband offices are going to try to award all of the BEAD grants in 2024. There will be barely any BEAD construction completed in 2024, but there will be big hoopla over the handful of customers that get connected before the end of the year.

A lot of pundits have been predicting that a large majority of the funding will go to the largest ISPs to build fiber. But after reading the grant rules in numerous states, I’m not so sure. In some states, the big companies will win it all. States that emphasize the cost of the grant per passing might end up giving all of the money to WISPs. A few state rules are so obtuse that even the big ISPs might decide to take their money to a neighboring state.

RDOF Troubles. I’ve talked with a lot of local governments that haven’t heard a peep from RDOF winners. Most winners will be required to have completed 40% of the RDOF construction by the end of 2024, so this is the year that will flush out ISPs that are going to default. Defaults will probably be too late to attract any BEAD funding.

Wireless Technology Improvements Shake up the Market. 6 GHz radios will change the WISP landscape. New radios that include the giant 6 GHz channels will deliver much faster speeds. More WISPs will begin advertising gigabit speeds in 2024, but most will not deliver what they advertise – but speeds will still be fast.

Big cellular companies will use C-Band spectrum to boost speeds on FWA broadband. But a lot of rural counties that are hoping to get faster speeds will not see the new technology deployed in 2024.

The Beginning of Consolidation. We’re going to see some interesting acquisitions in 2024. I don’t know who, but some of them will be big names. There is a huge amount of venture capital suddenly interested in broadband, and as it becomes clear that these companies will not win as much BEAD grants as they hoped, they’ll turn their attention to acquisitions.

Cable Companies Will Lose Broadband Customers. The large cable companies collectively gained only 4,700 customers in the third quarter of this year, and the only one that grew was Charter. In 2024, customer losses will increase each quarter, and the cable industry is going to panic. Cable company board rooms are at a loss on how to stem the losses. They are now banking that the public will be happy with faster upload speeds with mid-split upgrades, but that isn’t going to impress customers who are offered a fiber alternative or a much cheaper FWA alternative.

Little Impact from FCC Broadband Regulation. If you listen to the rhetoric from the big ISPs, the double whammy of Title II regulation and the new digital discrimination rules will devastate ISPs and kill innovation and new investments. The reality is that there will barely be a peep from regulators concerning the new regulations in 2024. Some minor investigations will be undertaken, but the new regulation will have almost no impact on the market or investments.

Congress Will Let ACP Lapse. There seems to be a big consensus in Congress that the ACP program should continue., But I can’t picture the currently dysfunctional Congress approving new funding for the subsidy program before ACP runs dry. I think ACP will get renewed later in 2024, but only after first lapsing, which will create chaos for ISPs and customers. When ACP is renewed, the number of eligible households will be greatly pared down.

The FCC Will Launch the 5G Fund. This is intended to bring more rural cell towers. The industry says that $9 billion is not nearly enough to reach all of the places that need better cellular coverage, so counties and states will lobby fiercely to get included in the funding.

Big ISPs Will Continue to Buy Back Stocks Rather than Invest in Networks or Maintenance. This may be the least bold prediction I have ever made.

The Industry

Cable Customer Losses in 2Q 2023

Leichtman Research Group recently released the cable customer counts for the largest providers of traditional cable service in the second quarter of 2023. LRG compiles most of these numbers from the statistics provided to stockholders, except for Cox and Mediacom – they now combine an estimate for both companies. Leichtman says this group of companies represents 96% of all traditional U.S. cable customers.

The traditional cable providers continue to lose customers at a torrid pace, losing over 1.6 million customers in the second quarter, slightly fewer losses than the second quarter of 2022. Overall, the traditional cable providers lost over 17,700 customers every day during the quarter. The overall penetration of traditional cable TV is now around 46% of all households, down from 73% at the end of 2017.

2Q 2022 Change Change
Comcast 14,985,000 (543,000) -3.5%
Charter 14,706,000 (200,000) -1.3%
DirecTV 12,350,000 (400,000) -3.1%
Dish Network 6,901,000 (197,000) -2.8%
Cox & Mediacom 3,340,000 (100,000) -2.9%
Verizon 3,155,000 (70,000) -2.2%
Altice 2,405,900 (69,900) -2.8%
Breezeline 296,952 (3,732) -1.2%
Frontier 267,000 (21,000) -7.3%
Cable ONE 158,100 (8,900) -5.3%
   Total 58,564,952 (1,613,532) -2.7%
YouTube 5,900,000 200,000 3.5%
Hulu Live 4,300,000 (100,000) -2.3%
Sling TV 2,003,000 (97,000) -4.6%
FuboTV 1,167,000 (118,000) -9.2%
Total Cable Company 35,733,852 (916,632) -2.5%
Total Telco / Satellite 22,673,000 (688,000) -2.9%
Total vMvPD 13,370,000 (115,000) -0.9%

It doesn’t look like people are replacing traditional cable with an online alternative like YouTube and Hulu Live – which collectively lost 115,000 customers in the quarter.

Charter is still losing customers at a slower rate than other traditional cable companies. At current trends, Charter ought to have the most cable customers soon – something that could not have been imagined only three or four years ago.

The biggest news is that Comcast is one of the biggest percentage losers, and the biggest overall loser, down 543,000 cable customers in the quarter. The biggest percentage losers continue to be Frontier and Cable ONE.


A Tale of Two Markets

I wrote a blog the other day that got me thinking about the huge disparity in regulating two distinct but highly intertwined industries – broadband and voice. Before you stop reading because you might think voice is no longer relevant, voice regulation includes the cellular business, and in terms of revenue, the voice market is larger than broadband. JD Powers reported in April of this year that the average household is spending $144 for cellular per month.

I call these industries intertwined because the players at the top of both industries are the same. The big ISPs are Comcast, Charter, AT&T, and Verizon. The biggest voice players are AT&T, Verizon, and T-Mobile. Comcast and Charter are making aggressive moves to develop a wireless business, and T-Mobile is aggressively selling broadband.

The two markets are intertwined in a household. Most people connect their cell phones directly to landline broadband when they are home. The primary use for cell phones is to connect to the Internet. My twenty-something daughter is amazed that I predominantly use my cell phone to actually talk to people.

This handful of giant companies control the lion’s shares of both the voice and broadband industries. Yet we’ve decided to regulate the two business lines completely differently. You must admit that this it’s an odd national decision to regulate AT&T’s voice business but not its broadband business, particularly considering how intertwined the two businesses are. Comcast and Charter are proof of the link between the two industries since the companies will only sell cellular plans to customers who are buying broadband.

A regulatory expert from another country would look at the U.S. regulatory environment with incredulity. They would instantly wonder how we can treat the two industries so differently since they engage in such similar business lines, particularly since the same companies lead both markets.

The average American has no idea of how differently we treat the two industries and would be just as confused as a foreign regulator expert. It’s really hard to explain the difference in regulations since that quickly devolves into a discussion of things like Title II regulation, and the average person listening will quickly have no idea what you are talking about.

The easiest way to explain the difference in regulation is that we don’t regulate according to common sense but base regulation on the original legislation that established regulations for each industry. Voice is still regulated because, in the past, various pieces of federal legislation, like the Telecommunications Act of 1996, specifically mention voice. There were also laws that specifically defined how to regulate cable TV – but there has never been a definitive legislative declaration that broadband must be regulated.

This all started when interest in home broadband mushroomed. AOL, CompuServe, and others created a robust ISP industry that took off rapidly when DSL and cable modems increased speed to the point that people could do useful things with broadband. In those early days, there was a lot of discussion about regulating broadband, but the consensus among legislators was that regulators should leave the fledgling new broadband industry alone until it grew large enough. No doubt, this hands-off approach was whispered into the ears of legislators by lobbyists for the big ISPs.

With no direction from Congress, the FCC and various States tried to find ways to regulate broadband over the last few decades. But as hard as it is to believe, we weren’t even able to define what broadband is without legislative direction – is broadband a telecommunications service or an information service? All of the wrangling about regulating broadband ultimately comes down to this simple designation.

Regulation gets really bizarre the deeper you go into the details. Cell phones calls are regulated for voice, but the broadband on a cellphone is considered to be an information service. What is the regulatory regime of a cell phone call that is handed off to a broadband network through WiFi but then eventually reconnected with the cellular network? The average cell phone user regularly bounces between regulated and unregulated functions.

The title of the blog refers to A Tale of Two Cities, which opened with, “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness”. That’s as good of a description of our odd regulatory environment as anything else I can think of.

The Industry

Broadband Customers 2Q 2023

Leichtman Research Group recently released broadband customer statistics for the end of the second quarter of 2023 for the largest cable and telephone companies. Leichtman compiles most of these numbers from the statistics provided to stockholders other than for Cox and Mediacom, which are estimated, and now reported together. Leichtman says this group of companies represents 96% of all US landline broadband customers.

The first quarter of the year shows a continuation of the trend where all of the growth in broadband is coming from T-Mobile and Verizon FWA fixed cellular wireless. Those two companies added 903,000 customers, while the rest of the ISPs collectively lost over 52,000 customers.

2Q 2023 1Q 2023 1Q Change % Change
Comcast 32,305,000 32,324,000 (19,000) -0.1%
Charter 30,586,000 30,509,000 77,000 0.3%
AT&T 15,304,000 15,345,000 (41,000) -0.3%
Verizon 7,562,000 7,528,000 34,000 0.5%
Cox & Mediacom 7,035,000 7,035,000 0 0.0%
Altice 4,576,100 4,612,700 (36,600) -0.8%
T-Mobile FWA 3,678,000 3,169,000 509,000 16.1%
Lumen 2,909,000 2,981,000 (72,000) -2.4%
Frontier 2,865,000 2,863,000 2,000 0.1%
Verizon FWA 2,260,000 1,866,000 394,000 21.1%
Windstream 1,175,000 1,175,000 0 0.0%
Cable ONE 1,057,900 1,063,000 (5,100) -0.5%
Breezeline 680,785 687,519 (6,734) -1.0%
TDS 523,600 515,400 8,200 1.6%
Consolidated 376,829 369,862 6,967 1.9%
Total 112,894,214 112,043,481 850,733 0.8%
Cable 76,240,785 76,231,219 9,566 0.0%
Telco 30,715,429 30,777,262 (61,833) -0.2%
FWA 5,938,000 5,035,000 903,000 17.9%

The telcos collectively lost almost 62,000 customers in the quarter despite gains from Verizon FiOS, TDS, and Consolidated of 49,000 customers for the quarter. The biggest loser was Lumen, losing 72,000 broadband customers.

The only cable company with positive growth was Charter – its strategy of expanding its footprint into rural areas is clearly paying off.

It’s hard to see from these numbers where the huge growth of FWA wireless broadband is coming from. Much of the FWA growth is coming in rural markets where the competition is fixed wireless and satellite service. But FWA pricing seems to be aimed squarely at competing with DSL and probably counts for the overall losses for AT&T and Lumen. Both companies are adding fiber customers and are losing DSL customers more quickly than indicated by the overall numbers. I’m sure AT&T hates the loss of DSL revenue, but competition from FWA makes it that much easier for the company to eventually walk away from rural copper.


Technology The Industry

DOCSIS 4.0 vs. Fiber

Comcast and Charter previously announced that they intend to upgrade cable networks to DOCSIS 4.0 to be able to better compete against fiber networks. The goal is to be able to offer faster download speeds and drastically improve upload speeds to level the playing field with fiber in terms of advertised speeds. It’s anybody’s guess if these upgrades will make cable broadband equivalent to fiber in consumers’ eyes.

From a marketing perspective, there are plenty of people who see no difference between symmetrical gigabit broadband offered by a cable company or a fiber overbuilder. However, a lot of the public has already become convinced that fiber is superior. AT&T and a few other big telcos say they quickly get a 30% market share when they bring fiber to a neighborhood, and telcos claim aspirations of reaching a 50% market share within 3-4 years.

At least a few big cable companies believe fiber is better. Cox is in the process of overbuilding fiber in some of its largest markets. Altice has built fiber in about a third of its markets. What’s not talked about much is that cable companies have the same ability to overlash fiber on existing coaxial cables in the same way that telcos can overlash onto copper cables. It costs Cox a lot less to bring fiber to a neighborhood than a fiber overbuilder that can’t overlash onto existing wires.

From a technical perspective, engineers and broadband purists will tell you that fiber delivers a better broadband signal. A few years back, I witnessed a side-by-side comparison of fiber and coaxial broadband delivered by ISPs. Although the subscribed download speeds being delivered were the same, the fiber connection felt cleaner and faster to the eye. There are several technical reasons for the difference.

  • The fiber signal has far less latency. Latency is a delay in getting bits delivered on a broadband signal. Higher latency means that a smaller percentage of bits get delivered on the first attempt. The impact of latency is most noticeable when viewing live sporting events where the signal is sent to be viewed without having received all of the transmitted bits – and this is seen to the eye as pixelation or less clarity of picture.
  • Fiber also has much less jitter. This is the variability of the signal from second to second. A fiber system generally delivers broadband signals on time, while the nuances of a copper network cause minor delay and glitches. As one example, a coaxial copper network acts like a giant radio antenna and as such, picks up stray signals that enter the network and can disrupt the broadband signal. Disruptions inside a fiber network are comparatively minor and usually come from small flaws in the fiber caused during installation or later damage.

The real question that will have to be answered in the marketplace is if cable companies can reverse years of public perception that fiber is better. They have their work cut out for them. Fiber overbuilders today tell me that they rarely lose a customer who returns to the cable company competitor. Even if the cable networks get much better, people are going to remember when they used to struggle on cable holding a zoom call.

Before the cable companies can make the upgrade to DOCSIS 4.0, which is still a few years away, the big cable companies are planning to upgrade upload speeds in some markets using a technology referred to as a mid-split. This will allocate more broadband to the upload path. It will be interesting to see if that is enough of an upgrade to stop people from leaving for fiber. I think cable companies are scared of seeing a mass migration to fiber in some neighborhoods because they understand how hard it will be to win people back. Faster upload speeds may fix the primary issue that people don’t like about cable broadband, but will it be enough to compete with fiber? It’s going to be an interesting marketing battle.

Regulation - What is it Good For?

Disclosing Hidden Fees

The FCC recently proposed a requirement that companies that sell traditional cable TV must disclose the full cost of video to customers. I’ve written about hidden fees many times over the years, and the fees have grown to become a big issue for customers.

Hidden fees are those that a cable provider doesn’t disclose when they advertise to attract new customers. At best, these fees are mentioned vaguely in the small print but are often difficult or impossible to find.

Consider the hidden fees that Comcast charges (I can make a similar list for any of the big cable companies). Comcast’s hidden fees differ by market, and the following is from a market we recently studied.

  • The broadcast fee is $28.70 per month. This is a fee where Comcast accumulates increases in programming costs each year instead of billing the cost increases into the price of cable.
  • The regional sports fee in the market we looked at is $6.10 per month – the fee varies depending upon the local sports networks carried. This fee accumulates increases in sports programming fees that Comcast has chosen not to include in the advertised price of cable TV.
  • Comcast charges $9.00 extra for each settop box – a fee that is not mentioned in advertised prices.

For Comcast, these fees are almost $43 per month in this market for a customer with one settop box. A customer that signs up for a $40 special promotion for video on the web will be shocked when the first bill shows up at $83.

The FCC is the federal regulator for cable TV, and it has always had the full authority to require cable companies to do disclose honest rates. What I find disappointing is that they’ve done nothing until now. This announcement is clearly in response to President Biden criticism of hidden fees in many industries, including airline and online ticket prices. Why hasn’t the FCC tackled hidden fees for cable TV until now? In this example, the hidden fees are greater than the advertised special price for the cable service. I think the average person would think that hidden fees probably mean paying a few extra bucks – not a fee that is more than the advertised price of the purchased service.

This topic has been taken on a few times at the state level. In 2018, Lori Swanson, the Attorney General of Minnesota, sued Comcast and asked for refunds for all cable customers who were billed hidden fees, retroactive to 2014, in violation of the states Prevention of Consumer Fraud Act and Uniform Deceptive Trade Practices Act. The suit concentrated on the Broadcast TV fee and the regional sports fee. In January 2020, Comcast settled with the Minnesota Attorney General’s Office and agreed to pay $1.4 million in refunds to 15,600 Minnesota customers. That’s a pretty small penalty for a practice that must net the company a huge cash flow nationwide.

To be fair to Comcast and the other cable providers, there are underlying costs that are covered by these fees, so the fees are not extra profit. Local television stations, nationwide TV networks, and sports programming have continued to increase the cost of programming at a much faster pace than inflation. Comcast has no choice but to pass on these costs to subscribers. What the FCC is finally criticizing is that cable companies sign new customers to a year-long contract based on advertised low rates and then surprise them with these giant hidden fees.

It’s troubling that the FCC could have done something about this at any time and never acted until now. But even more annoying, at least to me, is that FCC has this authority for cable TV but can’t ask similar questions about broadband rates. The price for broadband from the big ISPs has been rising at a rapid pace. As an example, I looked recently at some rate research I did in 2016, and the broadband prices for Charter have more than doubled since then. Unlike cable TV programming, there are no big underlying costs that have driven the big cable companies to increase broadband rates, and those increases were far in excess of inflation.

The FCC under Chairman Ajit Pai killed the agency’s ability to do anything about broadband prices when it killed Title II regulation. The FCC recently opened an inquiry into data caps, which might be a hopeful sign that the FCC is thinking about getting back into broadband regulation. The history of the FCC tells me to be cautious with any optimism when it comes to regulating the biggest companies in the industry. We’ve watched the FCC do nothing for years about hidden cable fees while it also killed its own ability to regulate broadband – two moves that clearly favor the big monopoly providers over the public.

Regulation - What is it Good For?

The FCC to Look at Data Caps

FCC Chairwoman Jessica Rosenworcel asked the other Commissioners to join her in opening an investigation into broadband data caps. According to FCC rules, a majority of Commissioners must agree to open any official proceeding. For those not familiar with the data cap concept, it’s where an ISP bills extra for using more than a defined amount of broadband in a month.

Not all ISPs use data caps. The ISP that gets the worst press about data caps is Comcast, but it doesn’t bill data caps in all markets – seemingly only where it doesn’t have a lot of competition. Charter would love to bill data caps, but it has been prohibited from doing so because of an arrangement reached with the FCC when it got approval to buy Time Warner. That agreement just lapsed on May 18 of this year. We’ll have to wait to see if Charter will impose data caps – but it seems likely it will do so since the company asked permission from the FCC to impose data caps in 2021.

AT&T imposes Data caps on DSL and on some fiber connections. Astound broadband charges data caps in Washington, Oregon, and California. Cox has data caps that kick in after a user exceeds 1.25 terabytes per month. Mediacom imposes data caps on many of its plans. All of the products of the high-orbit satellite companies, HughesNet and Viasat, have severe data caps. So do cellular hot spot data plans.

It’s an interesting request by the Chairwoman. Under current FCC rules, the FCC has no authority to do anything about data caps. This authority went away when the previous FCC under Chairman Ajit Pai eliminated the regulation of broadband by killing Title II authority. Chairman Pai went even further and pushed remaining vestiges of any broadband regulation to the Federal Trade Commission.

This makes me wonder why Chairwoman Rosenworcel would try to open this docket. I can see several possibilities. First, this could just be done to show that the FCC cares about an unpopular ISP practice. It’s clear that the public hates data caps. I saw that the press that covers the FCC immediately flooded the news after this was announced. I would hope the Chairwoman would not be so callous as to investigate something for which the FCC is powerless to make any changes.

That leads to the second possibility that Chairwoman Rosenworcel believes that adding a fifth Commissioner will provide the votes needed to reinstate Title II authority or some updated version of it. Starting the investigation into data caps now might sync up well with renewed FCC regulatory authority and let the FCC make a popular change in the future to ban or modify data caps.

I’ve written several blogs over the years that make the argument that data caps are nothing more than a way for ISPs to extract extra payments from customers. There is zero justification from a cost perspective that residential customers that use more data than average cause any significant incremental cost for an ISP. ISPs buy wholesale broadband based on the busiest times of the usage in a month. Within the pile of broadband purchased to meet that peak need, it doesn’t matter how much broadband customers use as long as it doesn’t push up the busy hour for the month.

Additionally, the big ISPs that use data caps also engage in peering arrangements where they directly hand off broadband traffic to the largest web services like Google, Netflix, Facebook, and Microsoft. While there is a cost to create the peering points, once established, the amount of data sent through peering arrangements saves a huge amount of money compared to shipping this same traffic through the Internet.

It’s harder each year for affected homes to avoid data caps. Data caps accumulate both download and upload usage, and homes are increasingly using upload bandwidth that most folks don’t even realize. According to OpenVault, the average home in the U.S. now uses over 560 megabytes of data per month, an amount that keeps climbing. The household average as recently as 2017 was only 273 megabytes per month.

This will be an interesting process to watch. Chairwoman Rosenworcel has created a form for folks to describe their data caps stories. I’m sure that everybody who does so will be hoping that the FCC can help them – but that remains to be seen. It means getting a fifth Commissioner who is willing to reintroduce broadband regulation – something that is going to have a lot of opposition.

The Industry

Subsidizing Lost Cable TV Revenue

I’ve been tracking the number of claimed broadband customers at the largest telcos and cable companies for years. When I was looking at the statistics for the first quarter of 2023, it struck me that the biggest cable companies are now making up for the loss of cable TV customers by increasing broadband rates.

For the last decade, the big cable companies have been thriving financially through big annual increases in broadband customers. This came year after year as large numbers of customers bailed on DSL, along with organic population growth – the cable companies won most new broadband households.

Every traditional cable TV provider started to lose traditional cable TV customers starting around the end of 2018. Since that time, the loss of cable TV customers has accelerated. Small ISPs will tell you that they don’t make much money from cable TV, and many of them have abandoned the business line. But this is not the case for the biggest cable companies, which still have a decent monthly margin from cable TV.

But the margins on broadband are far higher than on cable TV, and as cable TV customers dropped, cable companies continued to add broadband customers, and profits continued to increase.

Profits were further bolstered by broadband rate increases. Comcast has been increasing broadband rates by about $3 per year, while Charter’s rate increases have been closer to $5. Charter broadband rates were significantly lower than Comcast, and they seem to be in the process of closing the gap.

Over the last year, the traditional formula of covering the losses of cable TV customers with the growth of broadband customers came to a screeching halt. Consider the following table that shows the annual change in broadband and cable TV customers for Comcast and Charter since the end of the first quarter of 2019. These numbers come from the Leichtman Research Group, which publishes customers every quarter for the biggest ISPs and cable providers.

Comcast Broadband Cable TV
YE 1Q 2020 1,509,000 (1,021,000)
YE 1Q 2021 1,928,000 (1,490,000)
YE 1Q 2022 1,129,000 (1,691,000)
YE 1Q 2023 161,000 (2,136,000)
Charter Broadband Cable TV
YE 1Q 2020 1,559,000 (357,000)
YE 1Q 2021 1,988,000 (12,000)
YE 1Q 2022 1,040,000 (341,000)
YE 1Q 2023 235,000 (815,000)

In the years ended in the first quarter of 2020 and 2021, Comcast added more broadband customers than the losses of cable TV customers. That flipped in the year ended 1Q 2022 as Comcast lost 562,000 more cable TV customers than it gained broadband customers. In the year just ended 1Q 2023, the wheels have totally come off for Comcast. The company lost over 2.1 million cable TV customers while gaining only 161,000 broadband customers.

Charter’s numbers are not quite as dramatic since the company has been able to hang onto traditional cable TV customers better than the rest of the industry. But Charter’s net customer gains for broadband have slowed to only 235,000 for the year ended 1Q 2023 while traditional cable TV losses are accelerating.

It now seems like both big cable companies must make up for losses of cable TV customers through broadband rate increases. The day of broadband growth subsidizing cable TV losses is over. I wonder how folks who cut the cord from these two companies feel about having the companies make up for losing them as cable TV customers by raising broadband rates?

The Industry

Broadband Customers 1Q 2023

Leichtman Research Group recently released broadband customer statistics for the end of the first quarter of 2023 for the largest cable and telephone companies. Leichtman compiles most of these numbers from the statistics provided to stockholders other than for Cox and Mediacom, which are estimated. Leichtman says this group of companies represents 96% of all US landline broadband customers.

The first quarter of the year shows a continuation of the trend where all of the growth in broadband is coming from T-Mobile and Verizon FWA fixed cellular wireless. Those two companies added 916,000 out of 962,000 total customer growth for the quarter. T-Mobile passed Lumen and Frontier in the quarter in terms of the total number of broadband customers.

% 1Q
1Q 2023 4Q 2022 1Q Change Change
Comcast 32,324,000 32,319,000 5,000 0.0%
Charter 30,509,000 30,433,000 76,000 0.2%
AT&T 15,345,000 15,386,000 (41,000) -0.3%
Verizon 7,528,000 7,484,000 44,000 0.6%
Cox 5,565,000 5,560,000 5,000 0.1%
Altice 4,612,700 4,632,000 (19,300) -0.4%
T-Mobile FWA 3,169,000 2,646,000 523,000 19.8%
Lumen 2,981,000 3,037,000 (56,000) -1.8%
Frontier 2,863,000 2,839,000 24,000 0.8%
Verizon FWA 1,866,000 1,473,000 393,000 26.7%
Mediacom 1,470,000 1,468,000 2,000 0.1%
Windstream 1,175,000 1,175,000 0 0.0%
Cable ONE 1,063,000 1,060,400 2,600 0.2%
Breezeline 689,903 693,731 (3,828) -0.6%
TDS 515,400 510,000 5,400 1.1%
Consolidated 369,862 367,458 2,404 0.7%
Total 112,045,865 111,083,589 962,276 0.9%
Cable 76,233,603 76,166,131 67,472 0.1%
Telco 30,777,262 30,798,458 (21,196) -0.1%
FWA 5,035,000 4,119,000 916,000 22.2%

The telcos collectively lost 21,000 customers for the quarter, but unlaying that number is the success story where telcos are collectively now adding as many customers on fiber as are being lost on DSL. After so many years of seeing Frontier bleeding broadband customers, it’s interesting to see the company now growing faster than the big cable companies. It’s hard to think that the telcos overall won be in a positive growth mode soon.

The only cable company with any significant growth is Charter – and that growth likely comes from the company now constructing fiber in some of the markets where it won the RDOF subsidies.

The only company on the list with a significant loss is Lumen, which lost 1.8% of its customers in the quarter. Lumen is also the telco with the least aggressive fiber growth plans.

There are several companies conspicuously missing from the list. It’s hard to think that Brightspeed and Google Fiber are not larger than the companies at the bottom of the list.

The Industry

Is Charter the Largest Rural ISP?

Once in a while, I see something in the industry press that gives me a pause. Telecompetitor reported that Charter CEO Chris Winfrey said on the company’s first quarter earning call that Charter is the “largest rural provider today.” As much as I work in and track the industry, I would never have connected the dots enough to think that.

I can see how Charter is on the way to being a big rural player. The company was the largest winner of the RDOF reverse auction in terms of passings and is slated to bring broadband to pass over 1 million rural homes and businesses. The company says it is ahead of schedule and has already built 40% of those passings. But does passing 400,000 homes make Charter the biggest rural provider in the country?

In the last few years, there has been an explosion of FWA fixed cellular wireless from T-Mobile and Verizon. At the end of 2022, T-Mobile had over 2.6 million FWA customers and added 524,000 in just the fourth quarter of 2022. Verizon had almost 1.5 million customers and added 389,000 in the fourth quarter. While not all of those customers are rural, it seems likely that both companies have a lot more rural customers than Charter.

It’s hard to get specific statistics from the big telcos, but it’s hard to imagine that CenturyLink and Frontier don’t still have more rural customers than Charter. In all fairness, the rural telco DSL customers are the prime target for Charter and everybody else who is building rural networks – but it’s unlikely that Charter has yet eclipsed them in customer counts.

Jonathan Chambers of Conexon wrote a recent blog that notes that electric cooperatives collectively have more rural customers than Charter.

Nobody knows who the eventual biggest rural winner will be. There are somewhere north of 10 million rural passings that will be tackled by the upcoming BEAD grants. Meanwhile, huge amounts of funding have been provided in rural America through CARES and ARPA funding administered through states or awarded by local governments. I think we’re going to have to wait for the BEAD grants to play out to see who will ultimately be the largest rural ISP.

And even at the end of those grants we might not know. I’ve been predicting that there will be a major roll-up of last-mile fiber networks, and there is no reason that won’t include rural properties. We might have to wait a decade to see who the biggest rural players will be.

I have to think that Winfrey knew his statement wasn’t factual, and I think that he was making the point that Charter is now a major player in rural America. He caught the industry’s attention through the statement which was aimed at Charter’s stockholders. We’re seeing big cable company customer counts level off after a decade of spectacular growth, and I think his message was that Charter is still a growing company.

One thing that Charter didn’t say is that whoever builds fiber in rural areas today is creating monopoly markets. It’s going to be hard for anybody to compete against rural fiber over the long run, and Charter and other companies pursuing grants are counting on being the monopoly provider across large swaths of rural areas. I see a lot of speculation asking why companies are pursuing rural broadband – and I think the appeal of having markets where a company will eventually have an 80%+ market penetration is something that pencils out well.

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