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.”