Connect with us

Trends

Cable broadband growth is sputtering, and no one’s sure why

Something is slowing internet subscriber growth at Comcast Corp. and Charter Communications Inc., raising concerns about an end to what has been a huge growth business, with explanations ranging from a slowdown in consumer spending to competition from phone giants. Charter on Friday reported 25% fewer new broadband subscribers than analysts estimated and said the overall number of new customers would fall back to 2018 levels. Comcast, which had earlier cut its subscriber forecast, reported 300,000 new internet customers Thursday, less than half the number added a year ago.

Analysts were expecting some slowdown in demand coming off 2020, a year when broadband sign-ups spiked as the pandemic shifted people to working and schooling from home. Still, with Charter echoing Comcast’s gloomy picture from Thursday, suddenly there’s a chill on the cable broadband front, which became the most prized segment of the business as consumers cut traditional TV service. Charter’s shortfall raises “questions about whether this is the beginning of the end of the cable broadband story,” said Geetha Ranganathan, an industry analyst at Bloomberg Intelligence.

Charter shares fell as much as 6.6% to $660 Friday, the biggest drop in nine months. Comcast shares were down 1% Thursday and almost that much on Friday. Chris Winfrey, Charter’s chief operating officer, said on an earnings call that “residential customer activity” was “taking longer than we expected to return to normal levels.” Charter had 1.27 million new broadband customers in 2018 compared with 2.2 million last year.

Analysts predict it will add 1.4 million subscribers this year, according to estimates compiled by Bloomberg. No one has been able to identify the exact reason why the wind has gone out of the sails for big cable. Both Charter and Comcast blamed a slower new home market for some of the slack in demand, leaving the companies to try and squeeze more business out of their saturated markets. Other factors could include a dropoff in lower-paying customers as government assisted broadband funds dry up. “There’s clearly softness in consumer spending,” said Maribel Lopez with Lopez Research.

“They are making choices on tiers and downgrading services.” New competition from phone companies certainly doesn’t help. AT&T Inc. is expanding its network and added 289,000 new fiber internet customers last quarter. Meanwhile, T-Mobile US Inc. and Verizon Communications Inc. are very excited about new wireless home broadband offers that aim directly at cable and outlying areas where cable could potentially expand. Changes in TV viewing may also be a factor. For decades, cable companies sold TV and internet in discounted bundles. With rise of streaming video “the cable promos aren’t as appealing for broadband only,”

Lopez said. Even as Comcast and Charter deploy new faster network technology to attract more lucrative customers, cable’s share of the market is starting to shrink, according to Tammy Parker, a senior analyst with GlobalData. Total U.S. broadband lines will increase to 112.3 million by the end of 2026 from 103.1 million in 2021, including new wireless internet customers, the research firm predicts. Cable’s market share may slide to 67.1% from 68%. Bloomberg Quint

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

 

Copyright © 2021.Broadcast and Cablesat

error: Content is protected !!