Cable and telcos will battle for broadband market share as growth opportunities dwindle, says Kagan
Growth in residential broadband subscriptions will primarily be a game of market share between cable, telecom, and satellite providers for the foreseeable future, as total broadband Internet penetration exceeds 90% in the United States, according to Kagan, the media research unit of S&P Global Market. Intelligence.
Kagan estimates that the total number of broadband subscriptions in the United States will reach 122 million by the end of 2022, as cable operators continue to expand their existing footprints through edge programs, which telcos are upgrading their factory with fiber builds, that wireless carriers are rolling out 5G service, and that the federal government is providing incentives to bring broadband to rural markets through programs like the Access and Deployment Project (BEAD) of $42.5 billion.
Cable broadband growth has been slower than record growth during the pandemic, a combination of high penetration rates, stiffer competition and slowing new housing starts.
Both Comcast and Charter saw first-quarter broadband subscriber growth halving from a year earlier, and while most analysts expect carriers and telcos are growing their high-speed data customer bases, no one expects the pace to pick up anytime soon.
Kagan warns that growth will come at the expense of other players. In the research report, Kagan analysts Ian Olgeirson and John Fletcher write that “there simply aren’t enough subscribers to meet each segment’s growth ambitions.”
As a result, Kagan expects cable, the by far dominant player in the broadband segment over the past decade, to start showing signs of slipping, with market share declining slightly to 61 .9% through 2026. Telecom operators will see the biggest jump in market share. – from 8% to 12.6% by 2026 – mainly due to their aggressive fiber development, although this is somewhat mitigated by their legacy copper DSL offerings.
Although the next generation of satellite broadband offers some hope, unfavorable cost and speed comparisons should limit growth expectations, according to Kagan, who estimates that their market share will remain stable at 1% until 2026. ■