Parks PointsOver 85% of U.S. homes have broadband service
by
Brett Sappington |
In-home broadband has become "the fourth utility" in United States households, many of which have multiple connected devices and viewing screens. More than 85 percent of U.S. homes have broadband service, according to Parks Associates, 93 percent of those have DSL, fiber or cable high-speed, fixed-line Internet services. The demand for high-speed fixed broadband is a key contributor to ongoing revenue and profitability for operators, particularly due to declines in pay-TV and landline voice subscribers. The competitive market has changed vastly over the past two years, as have the services available. AT&T acquired DirecTV and launched an online pay-TV service (DirecTV Now) that it bundles with broadband, satellite TV and mobile. Charter acquired TWC and Bright House to become Spectrum, which serves roughly 30 percent of the U.S. residential fixed broadband market -- about 23 million consumers, similar to the size of Comcast's customer base. Google halted expansion of its fiber service late last year after disrupting and accelerating broadband competition across the U.S. landscape. Streaming Services The way people use broadband also has changed. Over-the-top streaming services are a key part of home entertainment. Music streaming is seen as a source of new hope for the struggling music industry, and subscriptions to OTT video services have become the norm. Netflix, Amazon, Hulu and CBS All Access offer high-quality original content exclusively for distribution online through their services. Operators and device makers have partnered with OTT video services, seeking to leverage their brands and popularity to drive uptake of higher broadband speeds and connected consumer electronics. For example, Consolidated Communications recently announced a partnership to offer HBO Now along with its broadband services, providing an alternative to the traditional double-play bundle. These types of partnerships will become increasingly common as operators and OTT services both adapt to the new consumer entertainment marketplace. Despite the demand for data, some fixed-line operators fear the possibility of consumers turning to their smartphones and cellular plans for home Internet connectivity. One-half of U.S. consumers with fixed home broadband also use their smartphones or tablets to connect to 3G or 4G at home, according to Parks Associates. Fixed Advantages However, fixed broadband has several key advantages over wireless data services that keep consumers from completely cutting the broadband cord:
Working in Tandem Mobile service providers will push their advantages, which includes a direct connection to consumers through their smartphones. Mobile services have begun positioning fifth-generation ("5G") wireless technologies to compete against wireline technologies, which will give more options to consumers and put more pressure on fixed-broadband operators to innovate in order to retain their customers. Fixed-line operators will protect their fixed-line revenues by increasing throughput, innovating in their CPE, reducing costs, and expanding coverage of their fiber deployments. There already is some evidence of this, with both fixed broadband providers and mobile data providers seeking new ways to add value to their services, such as free WiFi hotspots and zero-rating for online video streaming from associated OTT services. They also will explore new areas, notably rural and underserved areas in the U.S. where fixed wireless technologies could be the best solutions for last-mile connectivity. Though some substitution may occur, fixed-line and mobile data will continue to work in tandem to address consumers' insatiable data needs. Fixed-line operators will benefit from wireless technologies in several ways over the next few years to drive improved satisfaction and greater revenues, further solidifying their position as valued providers of reliable data connections. This story orginally appeared in the E-Commerce Times.
Brett SappingtonSenior Research Director and Principal Analyst INDUSTRY EXPERTISE: Pay TV and OTT video services, entertainment content distribution, video and cloud technologies, broadband services As Senior Research Director and Principal Analyst, Brett Sappington leads Parks Associates research practice for entertainment, broadband access, and consumer electronics markets. His personal and custom research focuses on trends and technology innovations among major service providers, content producers, networks, and technology vendors and the market forces affecting their businesses. Brett is an internationally recognized thought leader in the television, broadband, and online video service industries. Brett has spent over twenty years in the industry as an analyst, executive manager, and entrepreneur for companies specializing in cloud, communication, and IP-related technologies. He founded a successful networking technology startup, built new divisions of wireless networking and audio software products, and was involved in the development and marketing of early-market products for Wi-Fi, VoIP, video-over-IP and other technologies. Brett holds an MBA from the University of Texas at Austin with a concentration in high-tech marketing and a BA in physics from Baylor University. |