US broadband market normalises after Covid high

The number of new customers signing up for fixed broadband services in the US was back to what could be considered a normal level in the third quarter of the year, according to new research published this week.

The country’s biggest cable and telecoms providers, which together account for around 96% of the market, gained around 630,000 net additional broadband subscribers in the three months to the end of September, Leichtman Research Group data shows. That is markedly fewer than the net adds recorded in the year-ago quarter – less than half, in fact – but very much in line with Q3 figures from the two previous years.

Leichtman Research Group calculated net adds at a sizeable 1.53 million in Q3 last year, a significant uptick on the 615,000 and 600,000 recorded in 2019 and 2018 respectively, as consumers scrambled to hook up fixed broadband lines to support pandemic-related home working and home entertainment.

The quarter just ended marks the first real return to normal as far as market statistics go. The first and second quarters of 2021 also saw significantly fewer net adds than in the year-ago periods but were still some way up on pre-pandemic levels.

The figures show that the cable operators continue to dominate the US market, not only accounting for almost 70% of the total 107.9 million broadband subscriptions as of the end of September, but also taking 94% of the net adds in Q3. But those top level figures do not tell the whole story.

The telecoms operators may only have contributed 39,781 broadband net adds in Q3, but that can be taken as a good result, since it is 246 more than the figure they recorded for the whole of 2020. Q3 2020 saw them add 200,000 customers, but losses in other quarters offset that growth. And, incidentally, 2020 was the first year since 2014 that the big telcos reported positive annual broadband additions, so there is something of a recovery going on here.

Much of the growth came from Verizon and AT&T, which added 74,000 and 29,000 broadband customers respectively, while Windstream also did its bit with 15,200 net adds. There was a poor performance from CenturyLink/Lumen though, which shed 77,000 customers. The operator is in the process of being split, with Apollo Global Management working on closing the takeover of the legacy CenturyLink business. As an aside, Apollo this week revealed it will rename the CenturyLink assets as Brightspeed and will plough $2 billion into the rollout of fibre to up to 3 million homes and businesses over the next five years. Maybe that will help it to turn its customer loss figures around.

On a related note, Leichtman Research’s numbers show that the telcos’ overall net adds figure masks growth in the fibre broadband space. The operators added a net 475,000 fibre customers in Q3, but lost 435,00 non-fibre customers.

Despite those positive signs, the telcos are still dwarfed by their cable rivals.

The top two cable companies, Comcast and Charter, led in terms of cable broadband net additions, as you might expect, racking up 300,000 and 265,000 respectively. The biggest number of net losses on the cable side came from Altice, which operates the Optimum and Suddenlink brands, at a negative 13,200.

Overall the picture is fairly rosy, not just for the cablecos, but across the board in the fixed broadband market. Net adds returning to a normal level after their Covid high, rather than dipping, is quite a big deal, in the sense that it means last year’s figures represented an unusual peak, rather than the front-loading of growth for coming quarters.