The pace of cable broadband subscriber growth has slowed to a crawl amid surging growth from fixed wireless access (FWA) providers and continued pressure from fiber-to-the-premises (FTTP) competition. Though cable's broadband road has been a slog of late, smoother tracks are ahead as FWA growth starts to decline.

At least that's the high level view of New Street Research's latest "Autumn for Broadband" report. In Q1 2023, the nine companies tracked in the report (comprising about 85% of the market) added about 700,000 broadband subs, down from +828,000 gained in the pre-pandemic first quarter of 2019.

Drilled down further, the top US cable operators tracked in the report added just 54,000 broadband subs in Q1 2023. That compares to a pre-pandemic increase of +789,000 in Q1 2019 – a drop of about 745,000.

Figure 1: (Source: Piotr Malczyk/Alamy Stock Photo)

By comparison T-Mobile and Verizon added a combined 665,000 residential FWA subs in Q1, a level that was at zero in Q1 2019. New Street Research estimates that FWA's share of gross adds in the US has climbed to about 18%, up from a range of 3%-5% in the second half of 2021.

Sticking with the telcos, fiber net adds improved by 60,000 to +442,000 in the period, alongside copper losses that worsened by -115,000.

Share gains tilt toward FWA and fiber

New Street Research reckons that this indicates a big shift in decisions that are driving market share trends. Instead of consumer decision-making focused on cable and DSL, they've shifted to fiber and FWA.

But, "[i]t looks like FWB [fixed wireless broadband] is driving all the pressure on Cable," New Street Research analyst Jonathan Chaplin surmised in the report.

Figure 2: Change in market share - Cable vs. ILECs (including FWB) Click here for a larger version of this image. Cable's share is the darker line that saw share drop by 45 basis points in Q1 2023.
(Source: New Street Research)

"Cable lost share in the overall residential market over the trailing twelve months," Chaplin noted. "This is the fifth quarter in a row where Cable has convincingly lost share on a TTM [trailing twelve month] basis. It seems the pace of share loss has at least stabilized."

Better days ahead for cable broadband?

But cable's broadband picture could brighten in future quarters. New Street Research holds that FWA adds may have peaked in the third quarter of 2022. But they'll also keep an eye out on how FWA gross adds step up in the fourth quarter of 2023 as Verizon opens new markets for sale and gains access to fresh C-band spectrum licenses.

Alongside a slower pace in overall subscriber growth, FWA is also seeing a higher rate of churn/disconnects. New Street Research estimates that the US FWA market was hit with 274,000 disconnects in Q1 2023, up from 68,000 in the year-ago period.

"As FWB adds plateau and then decline, Cable adds should stabilize and then recover. As cable adds recover, there should be a revaluation of the sector," Chaplin wrote.

That thinking matches up a bit with the narrative being pushed by some of the nation's publicly-traded cable operators. Both Charter Communications and Cable One view FWA as an inferior product to cable broadband, believing that many FWA customers will eventually shift back to cable as data usage climbs and the spectrum used by fixed wireless services starts to buckle under the stress.

But arguments have also been made that FWA has been successful – and will remain so – as it continues to pair attractive pricing with enough speed and capacity to support the needs of most customers. It's clear that this combo of price and performance has caught cable's attention. Comcast, for example, recently introduced a promotional package that targets FWA from a pricing and speed perspective.

Boiled down, the nadir for cable broadband should be this year, putting cable "back to consistent and sustainable customer growth," Chaplin wrote.

However, there's still no telling how big of a rebound cable might see as FWA subscriber growth tapers off. Chaplin believes cable may never get back to the 2.5 million to 3 million adds per year as DSL subs become a shrinking target and FTTP customer growth remains solid.

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— Jeff Baumgartner, Senior Editor, Light Reading