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Broadband adoption slows in Q3

Tue, 11/19/2013 - 1:18pm
Brian Santo

The growth rate in broadband subscribership is slowing, and while phone companies increased their share of new broadband customers in the third quarter, cable is still dominating the growth numbers.

“With top providers now having over 83.6 million subscribers, the broadband industry continues to grow, but at a slightly slower pace than a year ago,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group (LRG). “In the first three quarters of 2013, the top providers added about 1,930,000 subscribers, compared to about 2,150,000 in the first three quarters of 2012.”

Broadband has been the industry’s main growth product since the video market approached near-saturation a few years ago.

The deceleration in growth rates inspired analyst Greg Moffett of MoffettNathanson Research to muse about the likelihood of broadband subscribership approaching its saturation point. Penetration is at currently at 73 percent and Moffett thinks it is likely to top out at about 80 percent, a point the industry is likely to hit in about three years at current growth rates, by his estimates.

The seventeen largest cable and telephone providers in the U.S. (representing about 93 percent of the market) added about 520,000 Internet subscribers in the third quarter of 2013. That brought their aggregate total to about 83.6 million subscribers, by LRG’s calculations.

The top MSOs attracted about 440,000 of the 520,000 new subscribers. Together those MSOs have about 48.7 million broadband subscribers. Top telephone companies signed up the balance of 80,000 new adds, and now account for a total of approximately 34.9 million subscribers.

The telco share in the most recently completed Q3 was 16 percent, up from less than a percentage point in the similar quarter a year ago. The number of total telco broadband adds obscures the success that AT&T and Verizon appear to be having migrating their DSL subscribers to their fiber-based services.   

Total video subscribership has been falling in recent quarters (by 113,000 in Q3) while broadband subscribership has increased. MSOs are losing video subs, while the telcos and satellite companies are gaining video subscribers.

MoffettNathanson believes the overall loss in video subscribership while broadband subscribership continues to grow reveals cord-cutting, but the most recent numbers suggest the cord-cutting trend isn’t growing much. MoffettNathanson also cites U.S. Census data showing household formation declining, which naturally serves to suppress the adoption of communications services.

 

 

 

Broadband Internet

Subscribers at end of 3Q 2013

Net Adds in 3Q 2013

Cable Companies

 

 

Comcast

20,283,000

297,000

Time Warner

11,550,000

(9,000)

Charter

4,535,000

98,000

Cablevision

2,774,000

(13,000)

Suddenlink

1,039,100

21,900

Mediacom

956,000

7,000

WOW (WideOpenWest)*

725,000

16,000

Cable ONE          

469,296

5,004

Other major private cable companies**

6,350,000

15,000

Total Top Cable

48,681,396

437,904

Telephone Companies

 

 

AT&T

16,427,000

(26,000)

Verizon

8,995,000

56,000

CenturyLink

5,942,000

33,000

Frontier^

1,808,000

26,500

Windstream

1,183,400

(11,100)

FairPoint

330,698

(1,922)

Cincinnati Bell

265,600

3,900

Total Top Telephone Companies

34,951,698

80,378

Total Broadband

83,633,094

518,282

 

Sources:  The Companies and Leichtman Research Group, Inc.

*   WOW was added as one of the top cable broadband providers this quarter, replacing RCN

** Includes LRG estimates for Cox, and Bright House Networks

^  LRG estimate, does not include wireless subscribers

Company subscriber counts may not represent solely residential households

Totals reflect pro forma results from system sales and acquisitions

Top cable and telephone companies represent approximately 93% of all subscribers

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