Technology | Media | Telecommunications

Monday, August 17, 2015

Ongoing Status-Quo for U.S. Broadband Internet Market

If you look back over the past decade, while the Global Networked Economy has evolved as the leading nations in the Asia-Pacific region continue to expand their infrastructure capabilities, the market for broadband Internet access in America has been remarkably stable.

While the FCC has historically been tasked with administering the nation's communications laws and associated regulation, it has struggled to have an impact with the part of its charter that's focused on "supporting the nation's economy by ensuring an appropriate competitive framework for the unfolding of the communications revolution."

By and large, even in the major metropolitan areas of the country, a duopoly still exists -- where the majority of wireline broadband internet subscribers are being served by either a single local incumbent cable company and/or a single legacy telephone service provider.

Once again, Leichtman Research Group (LRG) has provided some illuminating market data that really demonstrates how the status-quo is being preserved, and how active competition in each area is essentially contained to small, relatively insignificant, changes.

LRG found that the thirteen largest pay-TV providers in the U.S. marketplace – representing about 94 percent of the total market – acquired nearly 1.2 million net additional broadband Internet subscribers in the first quarter of 2015. In summary, at the current average price for broadband service, the market is saturated.

Moreover, these top broadband providers now account for over 88.5 million subscribers -- with top cable companies estimated to have about 53 million broadband subscribers, and the top telephone companies (Telcos) estimated to have over 35.5 million subscribers.

Other key findings from the quarterly study include:
  • Overall within the U.S. market, broadband additions in the first quarter (1Q) 2015 were similar to those in 1Q 2014.
  • The leading cable companies accounted for 86 percent of the net broadband additions for the quarter, versus the leading Telcos.
  • The top cable companies added over 1,000,000 broadband subscribers in 1Q 2015, representing 104 percent of the net additions for the top cable companies in 1Q 2014.
  • The top Telcos added about 160,000 subscribers, estimated at 81 percent of the total net additions the top telephone companies achieved in 1Q 2014.
  • AT&T and Verizon added 573,000 subscribers via their U-verse and FiOS fiber-based services in 1Q 2015, while having a net loss of 463,000 legacy DSL subscribers.
  • It's estimated that U-verse (AT&T) and FiOS (Verizon) broadband subscribers now account for 54 percent of Telco broadband subscribers  -- that's compared to 40 percent two years ago.
  • The top cable broadband providers now have a 60 percent share of the total market versus Telcos for the first time since 2Q 2005.
  • Over the past year, there were about 3,000,000 net broadband subscriber adds – compared to about 2,700,000 over the prior year.

According to the LRG assessment, cable companies maintained their position for broadband service offerings in 1Q 2015, adding over 1,000,000 subscribers during that quarter. This was the first quarter with over a million net broadband adds for cable since 1Q 2008.

Cable also accounted for 90 percent of the 3,000,000 broadband additions over the past year, growing their market share versus Telcos back to 60 percent for the first time in nearly a decade.