Verizon Fios TV Subs Down Nearly 30% Through Nine Months

The pay-TV subscriber hits keep coming.

Verizon Oct. 21 reported that its Fios TV pay-TV service ended the third quarter (Sept. 30) with 3.92 million subscribers — down 6.6% from 4.2 million subs in the previous-year period. Through nine months of the fiscal year, Fios TV has jettisoned 277,000 subscribers, or 29.9% from the previous-year period.

Like most pay-TV operators, Verizon has seen an uptick in high-speed Internet subscribers requiring broadband to access over-the-top video services such as Netflix, Disney+, Hulu and Amazon Prime Video.

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139,000 Fios Internet net additions, an increase from 30,000 Fios Internet net additions in third-quarter 2019, and 144,000 Fios Internet net additions across consumer and business, the most since fourth-quarter 2014.

Broadband subscriptions increased 4.1% to 6.1 million from 5.9 million during the previous-year period. Through nine months, broadband subs have risen 96.2%, or 208,000 subs, since last year.

Kagan: 37% of Broadband Homes Have Dropped Pay-TV

Pay-TV continues to lose appeal among Internet-connected (broadband) homes in the U.S. New data from Kagan, a unit of S&P Global Market Intelligence, found that 37% of broadband homes have cut the cord with traditional cable, telco or satellite TV distribution. That’s up from 12.5% of broadband homes six years ago.

The percentage of U.S. households without pay-TV service now hovers around 30%. In 2015, there were almost 100 million pay-TV households, a number that dropped to 86 million in 2019.

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Notably, the number of broadband-enabled homes has increased 80% from 2019 to 2020 due in large part to house-bound consumers cutting costs during the coronavirus pandemic.

“Given the economic headwinds of the first half, U.S. households likely were looking to cut back on discretionary spending, including entertainment,” analyst Tony Lenoir wrote in a note.

Broadband Added 1.25 Million U.S. Households in Q2; Largest Gain in Eight Years

If there’s a silver lining for pay-TV distributors hemorrhaging video subscribers, it’s high-speed Internet. Linear TV subs dropping service are doing so for alternative home entertainment channels delivered over the Web. To get that distribution requires broadband, which most pay-TV operators deliver.

New data from Leichtman Research Group found that the largest cable and telephone providers in the U.S. — representing about 96% of the market — acquired about 1.24 million net additional broadband Internet subscribers in the second quarter, ended June 30, which was up 233% from a gain of about 375,000 subs in the previous-year period.

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These top broadband providers now account for about 103.3 million subs, with top cable companies having 70.6 million broadband subs, and top wireline phone companies having 32.7 million subs.

Findings for the quarter include:

  • Overall, broadband additions in 2Q 2020 were about 870,000 more than in 2Q 2019;
  •  Broadband additions overall were the most in any quarter since 1Q 2012;
  • The top cable companies added about 1,400,000 subscribers in 2Q 2020 — compared to a net gain of about 530,000 subscribers in 2Q 2019;
  • Cable broadband net additions were the most in any quarter since 1Q 2007;
  • Charter’s 850,000 net adds in 2Q 2020 were more than for any provider in any previous quarter;
  • The top wireline phone companies had a net loss of about 155,000 subscribers in 2Q 2020 — compared to a net loss of about 160,000 subscribers in 2Q 2019.

 

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“With the continued impact of the coronavirus pandemic, there were more quarterly net broadband additions in 2Q, than in any quarter in eight years,” analyst Bruce Leichtman said in a statement. “In the first half of 2020, there were over 2.4 million net broadband additions. This is the most net adds in the first half of any year since 2008.”

Comcast Loses Record 477,000 Pay-TV Subs in Q2, Adds Most Broadband Subs in 13 Years

As expected, Comcast legacy cable pay-TV business represents a widening economic fissure, losing 477,000 pay-TV subscribers in the second quarter, ended June 30. That was more than double the 224,000 video subs lost in the previous-year period. The cable giant has lost more than 1.2 million video subs in the past 12 months as consumers increasingly turn away from linear TV to over-the-top video distribution, including SVOD and AVOD.

Offsetting the video losses is high-speed Internet, which counts Comcast as the largest ISP in the country. With high-speed Internet a prerequisite for OTT video, Comcast had the best second quarter high-speed Internet net adds in 13 years, adding more than 340,000 broadband subscribers compared with 182,000 in the previous-year period. That does not include more than 600,000 free “Internet Essentials” customers that are receive service during the coronavirus pandemic, but were not included in reported results because they do not pay for the access.

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Comcast has added more than 1.6 million broadband subscribers in the past 12 months, to end Q2 with 29.4 million subscribers.

“We are optimistic about the runway ahead,” Comcast CEO Brian Roberts said on the fiscal call.

Parks: Adoption of Standalone Broadband Service Increases 42% — Driven by Streaming Video

In an over-the-top video ecosystem, demand for high-speed Internet service, or broadband, continues to remain strong. New consumer research from Parks Associates finds the market for standalone Internet service (excluding pay-TV, telephone) rising from 34% in 2017 to 42% in 1Q 2020.

Parks found the average standalone broadband subscriber now pays $60 per month for service, which increased by 36% from 1Q 2012 to 3Q 2019, while payment for TV plus Internet services increased from $107 to only $127 over the same time period.

“Data speed is the primary driver of [average revenue per broadband user],” David Drury, research director, Parks Associates, said in a statement. “In other words, speed rather than the number of [value-added services] broadly determines ARPU levels, even though those with higher speeds also have a higher number of VAS.”


Coronavirus-related changes in the needs of broadband households indicated that many consumers are likely trying many VAS for the first time, particularly telehealth, video conference, and remote learning tools. The increase in consumer need for these services represents an enormous opportunity to grow these markets even after the crisis passes, according to Parks.

The research finds nearly one-half of U.S. broadband households receive at least one value-added service from their service provider, but these services are generally included at no additional cost. The most commonly adopted VAS are support, antivirus, streaming video, and Wi-Fi services. AT&T and Suddenlink by Altice subscribers have the highest number of VAS adopted overall, combining both free and paid services.

“Broadband growth has plateaued, so the next opportunity is in VAS,” Drury said. “Providers have generally used VAS as a marketing tool to attract and retain subscribers, so for them to make the transition to a revenue source, companies need a clear understanding of the gaps in consumer satisfaction and demand for strategic and successful VAS deployments.”

Pay-TV’s Silver Linings Playbook: Broadband

With pay-TV distributors continuing to hemorrhage subscribers by the boatload, the growing void is being supplanted by a burgeoning new market: high-speed Internet — a prerequisite to over-the-top video consumption.

The largest cable and telephone providers in the U.S. — representing about 96% of the market — added more than 1.16 million broadband Internet subscribers in the first quarter, ended March 31. That’s up from a gain of about 955,000 subs in previous-year period, according to new data from Leichtman Research Group.

Broadband additions in the quarter were 122% of those in Q1 2019 — the most in any quarter since Q1 2015. Broadband providers now account for about 102.4 million subscribers, with cable distributors accounting for 69.2 million broadband subs, followed by telecoms with 33.2 million subs.

Over the past year, there were about 2.75 million broadband additions — compared with about 2.63 million net broadband adds over the prior year

The top cable companies added about 1.23 million broadband subs in the quarter — 132% of the net adds for the top cable companies in Q1 2019. Cable broadband net additions were the most in any quarter since Q1 2007.

Telecom companies had a net loss of about 65,000 broadband subs in the quarter, compared with a net gain of about 20,000 subs in Q1 2019.

“With the onset of the coronavirus pandemic, there were more quarterly net broadband additions in Q1 than in any quarter in five years,” Bruce Leichtman, principal analyst for Leichtman Research Group, said in a statement. “Top cable companies performed particularly well, having the most net additions for cable broadband services in any quarter in 13 years.”

FCC: Americans Lacking Broadband Access Declines

The number of people lacking access to fixed high-speed Internet access has declined more than 30%, according to new data from the Federal Communications Commission.

This comes as welcome news to Americans living in rural parts of the country looking to stream Netflix, Amazon Prime Video, Disney+ and Redbox TV, among other over-the-top video services.

Section 706 of the Telecommunications Act of 1996 requires that the FCC determine annually whether advanced telecommunications capability, i.e. broadband access for streaming video, music, data, is being deployed to all Americans “in a reasonable and timely fashion.”

The FCC’s “Broadband Deployment Report” found that for the third consecutive year advanced telecommunications capability is being deployed on a reasonable and timely basis.

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The report found the number of Americans lacking access to fixed terrestrial broadband service at 25/3 Mbps continues to decline, going down by more than 14% in 2018 and more than 30% over the course of 2017 and 2018. The number of Americans without access to 4G Long Term Evolution (LTE) mobile broadband with a median speed of 10/3 Mbps based on Ookla data declined approximately 54% between 2017 and 2018.

The vast majority of Americans — more than 85% — now have access to fixed terrestrial broadband service at 250/25 Mbps, a 47% increase since 2017, with the number of rural Americans having access to 250/25 Mbps fixed terrestrial broadband service more than tripling between 2016 and 2018.

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“Under my leadership, the FCC’s top priority is to close the digital divide, and I’m proud of the progress that we have made,” chairman Ajit Pai said in a statement. “In 2018 and 2019, the United States set consecutive records for new fiber deployment, with the number of homes passed by fiber increasing by 5.9 million and 6.5 million, respectively.”

Pai said growing up in rural Kansas drove home the need for access to new technology in communications and technology. Since being appointed by President Trump to chair the FCC, Pai has made deregulation a cornerstone of his tenure — including spearheading the overturn of Obama-era “net neutrality” guidelines mandating equal access to broadband networks for video services.

“I have a deep commitment to expanding broadband to all corners of the country,” he said. “That’s why we’ve taken aggressive steps to remove regulatory barriers to broadband deployment and reform our ‘Universal Service Fund’ programs.”

The gains have been fueled in part by the broadband industry’s $80 billion investment in network infrastructure in 2018, the highest annual amount in at least the last decade. In 2019 alone, fiber broadband networks became available to roughly 6.5 million additional homes, the largest one-year increase ever, with smaller providers accounting for 25% of these new fiber connections.

But despite these gains, Pai said the job isn’t done affording all Americans have access to digital “opportunity.”

“I look forward to commencing Phase I of our ‘Rural Digital Opportunity Fund’ auction in October, which will bring high-speed broadband to millions of currently unserved Americans,” he said.

Survey: 60% of Households Would Cancel Pay-TV Before Broadband

More than three-fourths of U.S. broadband households reported a Parks Associates survey in the third quarter of 2019 that it would be difficult for them to go without broadband service, a finding likely to increase following the widespread COVID-19 outbreak.

The report, 360 View: Broadband Services in the US, also found that 60% of households would cancel their pay-TV subscription before canceling their broadband service.

“Consumers with OTT subscriptions are shifting away from Internet bundles, with this group much more likely to have standalone internet service than non-subscribers,” Steve Nason, director of research, Parks Associates, said in a statement. “This finding indicates providers need to adjust their bundling strategies, to include more OTT video services as options. Currently less than one-fifth of subscribers receive an OTT service bundled with their broadband package.”

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The research also showed that consumers have little understanding of how much broadband speed their home needs and uses. Demographic factors, such as age, rather than the number of connected platforms in the home, largely determine the choice of broadband speed. Demand for 1+ Gbps services is highest among younger consumers who use connected platforms and services heavily. As social distancing and self-isolating habits increase across the country, the demand for these higher-speed services could spike across all demographics and households, according to Parks.

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“Current conditions, with many people working at home and entertaining-in-place, put more stress on the home’s broadband capacity, so service providers need to step up their efforts to help customers better understand their throughput needs,” Nason said in a statement. “Customers will be more willing to upgrade their speed to match their increased consumption habits, provided they get the right information and assurances it will meet their needs, which will ultimately lead to higher satisfaction levels.”

Analyst: Pay-TV to Lose $50 Billion in Revenue by 2025 — Despite Accelerated Broadband Growth

With the pay-TV industry seeing greater numbers of subscribers exiting toward alternatives such as over-the-top video, new data from Digital TV Research suggests domestic operators will see revenue fall by $50 billion to $62 billion in 2025.

The report says pay-TV revenue in North America, which peaked in 2015 at $112 billion, will see declines across all distribution channels, including cable (down $22 billion, including $3 billion from analog and $19 billion from digital). Satellite distribution will fall by $21 billion and online TV (Sling TV, AT&T TV Now, Hulu with Live TV, etc.) will drop by $7 billion.

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“The loss of 42 million pay-TV subscribers between 2010 and 2025 is mostly responsible for this decline,” Simon Murray, principal analyst at Digital TV Research, said in a statement. “Operators now put more emphasis on broadband connections than on traditional pay TV channels.”

Indeed, Comcast added 442,000 broadband subscribers in the most-recent quarter, AT&T added 191,000 subs, Charter Communications (Spectrum) added 339,000 subs, and Verizon added 35,000 Fios Internet customers.

“Subscribers are turning against high traditional pay-TV fees by seeking cheaper alternatives,” Murray said. “OTT allows viewers to see what they want when they want — they are not tied to the channels’ schedules. The value of the linear schedule for recorded programming is rapidly diminishing.”

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Comcast Loses 149,000 Q4 Cable Subs; Record 733,000 Subs in 2019

In another reminder the traditional pay-TV business model’s leak is widening, Comcast Cable Jan. 23 reported a drop of 149,000 video subscribers in the fourth quarter, ended Dec. 31, 2019. The nation’s largest cable operator lost a record 733,000 video subs in 2019 — underscoring consumers’ growing disinterest in the cable bundle and migration toward less-expensive over-the-top video distribution.

Comcast, which ended the year with 20.2 million video subscribers, is offsetting video sub losses with broadband — the lifeblood of video streaming. The company is one of the largest ISP operators, adding 424,000 high-speed Internet subs in the quarter; and 1.4 million for the fiscal year, including business customers.

Comcast ended 2019 with 28.6 million broadband subs, up 5% from 27.2 million subs at the end of 2018.

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In a statement, CEO Brian Roberts lauded the company’s broadband subscriber growth, adding the Comcast in 2020 would differentiate its broadband product in the U.S. through innovations like Flex and xFi Advanced Security; accelerating the deployment of Sky Q and launching a new broadband service in Italy.

The executive said Comcast has high hopes for the April debut of Peacock, the company’s first branded over-the-top video platform featuring both subscription and ad-supported services.

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“Underscoring our confidence in the continued success of our company, we are pleased to announce a 10% increase in our dividend, our 12th consecutive annual increase,” Roberts said.