Technology | Media | Telecommunications

Thursday, January 22, 2015

U.S. Must Compete in the Global Networked Economy

Leichtman Research Group (LRG) latest market study has found that 79 percent of U.S. households get a broadband Internet service at home -- that's an increase from just 20 percent in 2004.

Broadband adoption reached 95 percent of all households with Internet service at home -- that's an increase from 94 percent last year, 89 percent in 2009, and 33 percent in 2004.

The mean reported time spent online at home per day is 2.8 hours among all individuals online at home -- that's up from 2.2 hours per day in 2009. Given these findings, why is President Obama now seeking to increase internet service provider (ISP) competition in America?

It's about ensuring that the U.S. is prepared for the next wave of disruption in the Global Networked Economy. In order to compete globally, he believes that America requires infrastructure that's at parity (both capabilities and retail price) with the recognized broadband market leaders around the globe.

Challenging the Broadband Duopoly

LRG also found that the seventeen largest cable and telephone providers in the U.S. -- representing about 94 percent of the market -- acquired over 700,000 net additional high-speed Internet subscribers in the third quarter of 2014.

These top broadband providers now account for 86.6 million subscribers -- with top cable companies having over 51.2 million broadband subscribers, and top telephone companies having nearly 35.4 million subscribers.

Other findings from the market study include:

  • Overall, broadband additions in 3Q 2014 amounted to 135 percent of those in 3Q 2013.
  • The top cable companies accounted for 83 percent of the net broadband additions for the quarter versus the top telephone companies.
  • The top cable companies added about 580,000 subscribers, representing 133 percent of the net additions for the top cable companies in 3Q 2013.
  • The top telephone companies added about 120,000 broadband subscribers in 3Q 2014 – compared to a gain of about 80,000 in 3Q 2013.
  • Over the past year, there were about 2,930,000 net broadband adds – compared to about 2,540,000 over the prior year, and 2,925,000 two years ago.

Despite there being 86.6 million broadband subscribers in the U.S. via major cable and Telco providers, the industry has added subscribers at a faster pace over the past year than it did over the prior year. According to LRG, over the past year, cable companies accounted for 86 percent of the 2.9 million net broadband adds.

Apparently, the American ISP duopoly of cable and Telco providers is prospering, regardless of government attempts to generate more competition in the marketplace and thereby increase broadband service capabilities while lowering the retail cost of services.