No Covid hangover in US broadband market...yet

The US is still experiencing robust growth in fixed broadband connections, driven predominately by the cable market, according to new industry figures published this week.

The country recorded 945,000 wired broadband net additions in the second quarter of this year, data from S&P Global Market Intelligence’s Kagan media research group shows. That’s slower growth than in the same quarter last year, but a good result for the industry, given the broader context.

The market rocketed in the first half of 2020 as Covid-19 drove working from home to new levels and customers felt the need for more reliable – and faster – Internet connections. Kagan last year noted that the number of residential wireline subscribers taking a broadband service of 100 Mbps or more increased by 5.5% in the first six months of 2020, compared with end-2019, for example.

The research firm declined to share figures for growth in net broadband additions for Q2 last year, simply stating that the 2021 numbers “fall short of the year-ago boom.” However, Q2 this year was far ahead of the same period in 2019, which it – and the industry itself – would serve as a more accurate benchmark for future growth. In the second quarter of 2019, wireline broadband net adds came in at 339,000.

Furthermore, the new figures mean that fears over a 2021 hangover, as Kagan puts it, have not become reality.

Towards the back end of last year Kagan quoted a number of industry analysts as warning that robust growth in fixed broadband connections stemming from the pandemic would not be sustainable, and in fact represented a pull-forward from future quarters. While that could still be the case, it clearly isn’t happening yet.

The overall residential broadband market in the US reached 109.2 million subscribers at the end of June, an increase of 4.3% year-on-year; net adds over the 12 months hit nearly 4.5 million. Again, Kagan did not provide comparative figures. However, earlier this year it noted that net additions for full-year 2020 came in at 5.5 million, which gives us some idea of how the market is panning out. Those figures mean that residential broadband penetration is now above the 83% mark, rising to 84.5% if satellite broadband is factored in.

The cable companies are still having the best of the market. 1.9 million net additions in the first half of the year across the residential and commercial sectors give the cable operators a 96% share, leaving the telco and satellite providers sharing the remaining 4%, or just under 80,000 customers.

With the satellite broadband companies together losing 24,000 customers over that period, that means the telcos probably signed up north of 100,000 (Kagan really likes making us do these back-of-the-envelope calculations, huh?) customers in the first half. It’s not a huge number, given the scale of the market, but not to be sneezed at either.

Indeed, Kagan notes that “the surging enthusiasm for FTTH upgrades is boosting telco wireline broadband net adds, albeit at relative magnitudes. While the segment’s residential net adds in the second quarter pale in comparison to cable’s growth, it represents a dramatic improvement over the second quarter track record since 2016.”

To put it another way, the telco fibre builders are performing better than they have for a while.