With COVID-19 making it clear that broadband is an essential utility, users are flocking to cable connections if they want to remain secured to their jobs, education, and friends. The service providers in the industry are intensely focusing on improving the technology to meet the demands of the increasing bandwidth applications especially due to COVID pandemic causing work from home (WFH) and all other activities and high-speed internet requirements. As a result, broadband subscribers grew rapidly in Q2 2020.
Cable companies dominated the market in terms of new users added, leaving Telecommunication companies way behind.
Led by Comcast and Charter, the cable industry increased its dominance, with 67-percent market share at year end 2019, followed by an impressing number of new net broadband subscribers (323,000 and 850,000 respectively) in Q2 2020. Top eight cable companies combined to add 1,388,400 broadband subscribers in Q2 2020 alone, reaching a total of 70.6 million subscribers. Cox, the third biggest cable company, added 50,000 new broadband subscribers in Q2 2020 to hit total of 5.28 million.
The top eight traditional phone companies, which offer a mix of copper and fiber service, saw a decline in net new broadband subscribers; some even had negative number, indicating potential loss of customers in Q2 2020. The top four telcos – AT&T, Verizon, CenturyLink and Frontier – all lost broadband subscribers (114,000, 23000, 29000 and 41000 respectively) and are constantly losing net customers for recent quarters.
At the end of Q2 2020, cable had a 68 percent market share vs. 32 percent for telcos, and are on upgoing streak from past years. The cable/telco split was 63 percent/37 percent in 2017.
(Broadband Subscriber Adds in Q2 2020)
The Telco companies have the technology to overtake cable, by introducing fiber cables at large scale Even though cable companies have upper hand and more market share in broadband industry, Telcos can possess a threat to them by making fiber cable available for masses, at cheaper, faster and reliable speed than traditional companies. This can possibly help them to gain the lost territory and market share in industry. Fiber cables can deliver gigabit speeds both upstream and downstream, while not every traditional company offer that level of speed to residential area, creating new market opportunities for telcos. Customers in several areas have access to high-speed broadband provided by cable companies, but they often pay high prices and telcos, on the other hand, can provide same services for less cost and better speed.
5G has been hyped so much and now is being threat to broadband companies.
The global 5G technology market size is anticipated to be at USD 5.53 Billion in 2020 and is projected to reach USD 667.90 Billion by 2026, registering a CAGR of 122.3% from 2021 to 2026. As the speed and reliability of fixed wireless increase, more consumers may opt for it, increasing competition in the market. Increasingly, many of the enterprise such as manufacturing, health care applications, retail, transportation, and education (e.g., for distance learning) will rely on 5G’s ability to enable edge computing, creating threats to existing traditional cable companies. In the coming year, telecommunications companies should manage customers’ expectations about what 5G can really deliver.
With decreasing overall economic activity and decline in business investment due to COVID crisis resulted in reduced demand for service from business customers. We can conclude that negative trends and decline from business customers can be countered by the rapid increase in demand from individuals and residential customers and will help to sustain the growth of industry. It is worth pointing out that with a weak government support and less competition from telcos, cable company keeps getting away with charging higher rates than ever and providing poor service. Broadband industry has worst customer service rating than any industry in America, yet they are growing on an impressing rate. COVID has worked as double-edged sword for broadband industry; as it helped market players to acquire new customers, but also pushed expectations of customers for better service and fare prices.