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.”

In-Flight Entertainment Company GoGo Looks to Sell Commercial Aviation Business; Lays Off 143 Staff

With the airline industry waylaid by the coronavirus pandemic, GoGo, a company offering high-speed Internet access and video entertainment to air travelers, is confronting the economic reality by letting go of 143 fulltime employees on Aug. 14, and implementing executive pay cuts. This followed a four-month furlough of more than 50% of the workforce, or more than 600 employees.

In pre-COVID-19 times, GoGo averaged 37 million airline passengers a month paying from $7/hour to $600 annually to use the company’s broadband service on flights. In April, that plummeted to 1.9 million passengers, down 95%.

“It has been an extraordinary quarter, but for all the wrong reasons,” CEO Oakleigh Thorne said on the fiscal call. “I think I can sum it up by saying that if you sell Internet on airplanes and no one’s on the plane, it’s tough.”

Quarterly revenue dropped 55% to $96.6 million from the second quarter of 2019 due to the impact of COVID-19 on demand for both domestic and international air travel. Service revenue of $74.3 million declined by 57% from Q2 2019, driven primarily by declines in commercial aviation. Equipment revenue 44% to $22.4 million from Q2 2019, driven by reduced shipment and installation activity across all three segments.

Net loss increased to $86 million, increased from $84 million in Q2 2019 — the latter loss including the extinguishment of debt of $58 million.

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.”

U.K. Daily Internet Usage Tops 4 Hours

Internet use in the United Kingdom is surging. Adults in the U.K. now spend more than a quarter of their waking day online with myriad services such as TikTok and Zoom, according to new data from Ofcom, the region’s regulator for the communications services.

In April, during the height of the coronavirus lockdown, U.K. adults spent a daily average of four hours and two minutes online. This was up from just under three and a half hours in September 2019. With people looking for new ways to keep connected, informed, entertained and fit during the pandemic, video-sharing and video-calling services surged in popularity.

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TikTok, which allows users to create and share short dance and lip-sync videos, reached 12.9 million U.K. adult visitors in April, up from just 5.4 million in January. Twitch, the live-streaming platform for video gamers, saw an increase from 2.3 million adults to 4.2 million.

The number of people making video calls doubled during lockdown, with more than 70% doing so at least weekly. Houseparty, the app which combines group video-calls with games and quizzes, grew from 175,000 adult visitors in January to 4 million in April. But the biggest growth was seen by Zoom, the virtual meeting platform, which grew from 659,000 users to reach 13 million users over the same period — a rise of almost 2,000%.

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Ofcom found that 90% of adults, and almost all older children aged 8-15, with access to the Internet used at least one of these platforms (YouTube, Snapchat, Instagram and TikTok) in the past year, with many doing so several times a day. About 32% of online adults now spend more time viewing video-sharing services than broadcast television.

“Lockdown may leave a lasting digital legacy,” Yih-Choung Teh, Ofcom’s director of strategy and research, said in a statement. “The coronavirus has radically changed the way we live, work and communicate online, with millions of people using online video services for the first time.”

The study shows that, before the pandemic, many people were moving away from more established forms of communication — particularly landline calls and SMS text messages — and adopting newer methods.

In the 12 months to February, more people were sending daily text messages using online messaging platforms (52%), such as WhatsApp and Facebook Messenger, than using SMS (41%) or email (26%). Daily use of online voice calls (31%) was only slightly lower than mobile calls (38%).

The pandemic appears to have sped up the adoption of online services to keep in touch. More than 70% people in the U.K. are now making video calls at least weekly, up from 35% pre-lockdown. This trend is particularly noticeable among older Web users; the proportion of online adults aged 65+ who make a least one video-call each week increased from 22% in February to 61% by May.

Report: 40% of Americans Want Faster Broadband Service

In an over-the-top video world, high-speed Internet connection is a must-have. New data from BroadbandNow contends that much of the country — rural America — does not have fast-enough Internet to handle streaming video.

The high-speed Internet aggregator believes 42 million Americans (16 million households) do not have access to a broadband-level connections — nearly double the FCC’s estimates.

Indeed, the survey-based report, from more than 700 households during May, contends 40% of Americans would sign up for a faster Internet option if the option became available. About 20% of respondents are somewhat dissatisfied with the speed of their existing service, including 25% in rural areas. The national average for broadband Internet is $79 per month.

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BroadbandNow suggests upstart ISP companies such as Elon Musk’s nascent SpaceX could help fill the void through its Starlink initiative, which aims to deliver high-speed broadband connections nationwide through a “mesh network” of satellites. Musk, creator of battery-powered Tesla cars, has said that the company needs 400 operational satellites to start service in the U.S.

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“If SpaceX’s Starlink service managed to enter the market in the $60 monthly range, it could pose a substantial threat to a status quo that has existed for decades in some areas,” Tyler Cooper, editor at BroadbandNow, wrote in the report. “Offering the service for $80 to $90 would likely still be attractive for many, but if it was significantly more expensive than current options, the company (and others working on new types of connectivity) may face an uphill battle with adoption, regardless of how robust the service is.”

 

 

 

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.

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.

DirecTV Now Raising Prices, Changing Service Plans

Despite losing nearly 270,000 DirecTV Now subscribers in the fourth quarter (ended Dec. 31, 2018), AT&T is initiating a $10 monthly price hike for its standalone online TV service that takes effect in early April.

DirecTV Now is also changing service plan options for new subscribers to include Plus ($50 for 40 channels, including CNN, ESPN and HBO) and Max ($70 for 50 channels, including HBO/Cinemax, ESPN and regional sports networks).

The plans replace existing (wordy) options such as “Live a Little Plan” ($40) with 65 channels; “Just Right” ($55) with 85 channels; “Go Big” ($65) 105 channels; and “Gotta Have It” ($75) for 125 channels.

Existing subscribers will have their plans grandfathered in.

AT&T is also offering OTT streaming versions of its linear pay-TV packages, including “Entertainment” (65 channels for $93 per month); “Choice” ($110 and 85 channels); “Xtra” ($124 for 105 channels); “Ultimate” ($135 for 125 channels); and “Optimo Mas” ($86 for 90 channels).

As cord-cutting increases among consumers, AT&T hopes migrating linear TV subscribers to OTT distribution translates into more broadband subs. The company ended 2018 with 15.7 million high-speed Internet subs.

 

 

 

 

AT&T CEO Calls on Congress to Restore Net Neutrality

AT&T chairman/CEO Randall Stephenson apparently believes in miracles.

Speaking Nov. 12 at the Wall Street Journal’s WSJ Tech D. Live confab in Laguna Beach, Calif., Stephenson called on politically-divided Congress to enact net neutrality guidelines for the nation’s Internet service providers.

It was wishful thinking, Stephenson agreed, joking the lawmakers can’t agree on the freezing temperature of water.

“I get fatigued every time the President changes, the head of the FCC changes, and regulations swing from left to right,” he said.

Indeed, with politics driving the Obama-era net neutrality guidelines enacted in 2015 by the Federal Communications Commission, a slightly revamped FCC three years later under President Trump rescinded the provisions that sought to treat the Internet as a utility, intending to safeguard content distribution against ISPs throttling, denying access, and charging higher prices for faster streaming speeds, among other issues.

To Stephenson, whose telecom is both an ISP and streaming content distributor and creator through subsidiary WarnerMedia, the lack of clear regulation will only encourage individual states to employ their own versions of net neutrality – as California lawmakers voted to do this year.

“What would be at total disaster for the innovation we see in Silicon Valley is to pick our head up and have 50 different sets of rules across the U.S.,” Stephenson said.

Current FCC chairman Ajit Pai – an Obama nominee upped to head the agency by Trump – has argued that net neutrality is regulation in search of an industry.

“It is not the job of the government to pick the winners and losers of the internet … We should have a level playing field [via market forces],” Pai said earlier this year.

Critics contend the lack of regulation hurts consumers. FCC Commissioner Jessica Rosenworcel – a Democrat – said reversing net neutrality put the FCC “on the wrong side of the American public.”

The U.S. Supreme Court earlier this month declined to hear a case brought by the telecommunications industry and the Department of Justice seeking to reverse a lower appeals court ruling upholding the subsequently rescinded Obama-era guidelines.

The Supreme Court’s lack of action does not reverse the repeal of the net neutrality guidelines, and leaves the door open to future litigation should a future FCC restore the guidelines.

The latest round of net neutrality lawsuits involves the Trump Administration, arguing the supremacy clause gives the Federal government the sole authority to regulate the Internet in the United States, suing states attempting to enact their own stricter guidelines.

 

 

Comcast Loses 96,000 Cable Subs in Q1

Comcast Cable April 25 said it lost 96,000 video subscribers in the fiscal first quarter (ended March 31), compared to adding 42,000 subs in the previous-year period. The cabler ended the period with 22.2 million video subs – down 288,000 subs from 22.5 million last year.

The decline underscores ongoing secular declines in pay-TV to alternative distribution channels as witnessed by Comcast shedding 151,000 video subs in 2017. The cabler gained 161,000 subs in 2016.

Meanwhile, Comcast added 379,000 high-speed Internet subscribers, which was down from 429,000 additions last year. The cabler ended the period with 26.2 million broadband subs compared to 25.1 million subs during the previous-year period.

Indeed, Comcast added more than 1.1 million high-speed Internet subscribers over the past year.

“Our steady increase in customer relationships continued, balanced with solid growth in [pre-tax earnings], reflecting momentum in our high-speed Internet and business services segments,” CEO Brian Roberts said in a statement.