For Cable, Broadband Is the New Video
Alan Breznick, Cable/Video Practice Leader, Light Reading
The US cable industry has quietly achieved a major milestone, with the number of broadband subscribers for the top nine MSOs topping their number of video subscribers for the first time in the industry's 65-year history.
In its latest report on the US broadband market by Leichtman Research Group Inc. (LRG) , the nine biggest cable operators plus cable overbuilder WideOpenWest Holdings LLC (WOW) added about 382,000 high-speed data subscribers in the second quarter, easily exceeding the 296,000 they added in the same period a year earlier. Thanks to these strong gains, they ended June 30 with nearly 50.7 million data subs.
Even without the addition of WOW's 769,000 data subs, the nine top MSOs still closed out the spring quarter with 49.915 million broadband customers. That's slightly more than the 49.910 million TV customers those nine providers now have, after sustaining another round of heavy video sub losses in the spring. (See US Pay-TV Subs Renew Plunge.)
Reaching this milestone was not exactly a surprise. The cable industry has been trending towards broadband for years and, in a recent report, Moody's Investors Service predicted that the crossover point was coming momentarily. (See Cable Broadband Surpassing Video: Moody's.)
But that doesn't make the milestone any less significant. An industry founded on the premise of bringing TV signals and video programming to those who couldn't get them over-the-air is now more reliant on a non-video service for its future prospects.
Fortunately for cable operators, their hold on the US broadband market continues to tighten, even as their hold on the pay-TV market continues to slip. LRG reported that cable operators accounted for virtually all the growth, or 99%, in the high-speed data market again.
In stark contrast, the top seven phone companies collectively netted a mere 2,000 broadband subs, the same amount as a year ago, essentially keeping their total flat at 35.2 million. Notably, AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), despite gaining a combined 627,000 broadband subs via their respective U-verse and fiOS platforms, actually shed a total of 9,000 data customers in the spring quarter because of their even heavier DSL losses.
As a result, the cable industry now commands 59% of the total US broadband market, which is 85.9 million homes strong and still growing at a healthy pace. That's cable's highest market share since the early days of broadband technology a decade or so ago.
With such major MSOs as Time Warner Cable Inc. (NYSE: TWC), Cablevision Systems Corp. (NYSE: CVC) and Suddenlink Communications clearly placing more emphasis on broadband growth in the future, these trends will likely continue. So look for the broadband market to continue to grow as the video market flattens out. And don't be surprised if cable's broadband market share continues to climb, despite all the headline-grabbing moves by Google Fiber, AT&T, CenturyLink and other rivals to deploy 1-Gig speeds.
— Alan Breznick, Cable/Video Practice Leader, Light Reading