Broadband sector continues growth as cable operators gain more customers

During the second quarter of 2018, broadband providers gained 455,000 customers. Comcast is the company that grew its customer base the most. Compared to last year’s second quarter, twice as many subscribers were added to broadband providers’ customer base.

The ISP market is growing and cable operators are the ones benefiting from this trend. There are 14 different ISP companies that control 95 percent of the market, while seven cable operators control 65 percent of the market.

The new subscribers Comcast and other cable operators are gaining are partially coming from ISP-only companies. Companies that only offer ISP services have been losing customers over the past few years. Frontier Communications lost 101,000 subscribers during Q2 2017 and this number has been reduced to 32,000 in Q2 2018, but there are signs of this trend reversing.

ISP-only companies are facing a challenge

Internet Service Provides played a crucial role in making broadband internet accessible to residential customers. Broadband providers have invested a total of $1.6 trillion since 1996 to develop the current telecommunication infrastructure.

During the early stages of the internet, ISPs based their business model on existing telecommunication companies. Bundling a landline with a broadband connection was a common model.

These companies can compete on the quality and speed of the service they offer, but consumers typically don’t see much of a difference when they switch from one ISP to another. This is a market where standing out from competitors isn’t easy, and this is also a market that is finite.

As of 2018, four of five U.S. households have a fixed broadband connection. This leaves very little room for growth for ISP companies.

Cable operators are taking over the market

Diversification is the key to remaining competitive on this finite market. ISP-only companies are still relying on offering a landline with a broadband connection.

This model is no longer adapted to the telecommunication needs of most households now that 60 percent of homes make wireless calls. VoIP technology is still primarily used by businesses, but it is finding its way into the residential market.

The demand for mobile and Wi-Fi connections is growing. They haven’t replaced fixed networks yet, but wireless networks will continue to grow and to become more performing as consumers expect better speed and reliable connections for their mobile device while they are on the go. Wireless networks could also be the key to improving speed and coverage in rural areas.

The vertical diversification of services that cable operators are exploring by bundling cable and internet services is making them more competitive. Watching video content represents a significant portion of what internet users do on a daily basis. Did you know that the average internet user watches 30 minutes of video content each day on their phone alone?

Cable operators changed traditional TV in the 1960s by offering more choices. They are now changing the ISP market by offering internet service along with the content that people want to consume.

They are also re-imagining the way this content is delivered, thanks to on-demand programming and streaming apps that make video content accessible on mobile.

Cable operators have an advantage over ISP-only companies as long as they keep offering speed and the media content consumers want. The current growth of cable operators’ customer base will provide these companies with the revenues needed to invest in new infrastructure and deploy tomorrow’s network.