Last week I looked at the performance of the cable TV industry and today I’m taking a comparative look at broadband customers for all of the large ISPs in the country. Following are the comparative results comparing the end of 2Q 2017 to 2Q 2016.
All of these figures come from reports published each quarter by Leichtman Research Group. Just like with cable subscribers, these large companies control over 95% of the broadband market in the country – so looking at them provides a good picture of all broadband. Not included in these numbers are the broadband customers of the smaller ISPs, the subscribers of WISPs (wireless ISPs) and customers of the various satellite services. It’s always been fuzzy about how MDUs are included in these numbers. The MDUs served by the major ISPs above are probably counted fairly well. But today there are numerous MDU owners who are buying a large broadband pipe from a fiber provider and then giving broadband to tenants. These customers are a growing demographic and are likely not included accurately in these numbers.
One of the biggest stories here is that the overall market is still growing at a significant rate of almost 2.5% per year. A little over half of the growth is coming from sales of broadband to new housing units. In the last year, with a good economy the country added almost 1.5 million new living units. But there are obviously still other homes buying broadband for the first time.
There has been a debate for years in the country about where the broadband market will top out. Those that don’t have broadband today can be put into four basic categories: 1) those that can’t afford broadband, 2) those that don’t want it 3) those that are happy with a substitute like cellular broadband, and 4) those who have zero broadband available, such as much of rural America.
It’s obvious that cable companies are outperforming telcos and Comcast, Charter and Mediacom gained more than 5% new broadband customers over the last year. But compared to more recent years the telcos have largely held their own, except for Frontier – which had numerous problems during the year including a botched transition for customers purchased from Verizon.
There are a number of industry trends that will be affecting broadband customers over the next few years:
- We should start seeing rural customers getting broadband for the first time due to the FCC’s CAF II program. We are now in the third year of that program. The number of customers could be significant and CenturyLink estimates it will get at least a 60% penetration where it is expanding its DSL. I have seen reports from all over the country of fixed cellular wireless customers being connected by AT&T and Verizon.
- The introduction of ‘unlimited’ cellular plans ought to make cellular broadband more attractive, at least to some demographics. While not really unlimited, the data caps of 20 GB or more per month are a huge increase over data caps from prior years.
- There are almost a dozen companies that have filed requests with the FCC to launch new broadband satellites. The first major such launch was done recently by ViaSat which will use the new satellite to beef up its Excede product. There’s no telling how many of the other FCC filings represent real satellites or just vaporware, but there should be more competition from satellites, particular those that launch in low orbits to reduce the latency issue. The really big unknown is if Elon Musk will be able to launch the massive satellite network he has promised.
- Lifeline programs. Companies like Comcast and AT&T have quietly launched low-price broadband options for low-income homes. The companies don’t advertise the plans broadly, but there are communities where significant numbers of customers have been added to these programs.