• Another Strong Year for Cable Broadband Growth Fuels TV’s Disruption

    The biggest U.S. cable companies added nearly 2.9 million broadband subscribers in 2018 according to a new report from Leichtman Research Group. That was up from 2.7 million subscribers added in 2017.

    Cable-delivered broadband continues to dominate, with 65% share, compared to telcos’ 35%, the biggest gap since Q3 ’03. The biggest telcos collectively lost over 470K broadband subscribers in 2018, slightly better than the 620K they lost in 2017. The top providers combined now have 98.2 million broadband subscribers.

    For those who have followed the evolution of the U.S. broadband market, the 2018 results bring little surprise; cable companies’ hybrid fiber coax networks have provided superior technical flexibility and capex efficiency. The result is relentless network upgrades reflected in continually improving quality and speed for users.

    More interesting to me is how high-quality broadband, especially coupled with robust WiFi, is completely remaking the TV industry, including viewers’ behaviors, service creation/monetization, production/talent decisions, industry structure/corporate strategy, devices and more. There is no corner of the TV industry that is untouched these days. When you trace the pattern of the falling dominoes, proliferation of high-quality wired (and more recently wireless) broadband is revealed as the original trigger.

    Broadband’s popularity has driven up the number of cord-cutters and cord-nevers, who of course access TV over-the-top. There were over 23 million broadband-only homes in the U.S. at the end of 2018 according to Kagan/S&P Global Market Intelligence, which projects nearly 41 million broadband-only homes by 2023.

    With tens of millions of U.S. homes effectively falling out of the traditional TV ecosystem (and into the welcoming arms of OTT providers like Netflix, Amazon and others), the industry is working furiously on new services to win them back, hence the launch of numerous direct-to-consumer options (CBS All Access, HBO Now, Disney+, WarnerMedia, etc) as well as virtual pay-TV (Hulu Live TV, DirecTV Now, YouTube TV, etc.). 

    Broadband has become an essential utility in most U.S. homes. As it has taken on this role, broadband has disrupted TV which as recently as 10 years ago had 90%+ of U.S. homes paying for some type of multichannel service. The new dynamic means TV providers are scrambling as never before to find their profitable corner of the ecosystem. With broadband-only homes set to grow even further, the pressure on TV providers will only heighten as well.

     
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