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American broadband market normalizes following COVID high

The sheer number of fresh clients signing up for fixed broadband services in America returned to what could be perceived as a typical level in the third quarter of the year, going by new research that was put out this week. 

The nation’s largest cable and telecoms providers, which cumulatively account for approximately 96% of the market, gained approximately 630,000 net extra broadband subscribers within the three months to the conclusion of September, Leichtman Research Group data demonstrates. This is considerably lesser that the net adds documented in the year-ago quarter – lesser than 50%, as a matter of fact, but very much in accordance with Q3 figures from the two prior years. 

Leichtman Research Group calculated net adds at a considerable 1.53 million in Q3 previous year, a considerable uptick on the 615,000 and 600,000 documented in 2019 and 2018 respectively, as customers scrambled to connect fixed broadband lines to assist pandemic-related home working and home entertainment.  

The quarter just concluded signifies the first actual return to normal with regards to the market statistics. The Q1 and Q2 of 2021 also witnessed considerably lesser net adds in the year-ago periods but were still some way up on the pre-pandemic scenario. 

The figures demonstrate that the cable operators are dominating the American market on an ongoing basis, not just taking into account for approximately 70% of the cumulative 107.9 million broadband subscriptions as of the conclusion of September, but also taking into account 94% of the net adds in Q3. However, these top level figures do not portray the entire tale.  

The telecom operators might just have contributed 39,781 broadband net adds in Q3, however that can be considered as a good outcome, as it is 246 more than the figure they documented for the entirety of 2020. Q3 2020 observed them rope-in 200,000 clients, but losses from other quarters offset that growth. Also, incidentally, 2020 was the first year every since 2014 where the major telecoms reported positive yearly broadband additions, so there is somewhat of a recovery taking place here. 

A lot of the growth came from major telecom operators AT&T and Verizon, which raked in 29,000 and 74,000 broadband clients respectively, while Windstream also did its part with 15,200 net inclusions. There was weak performance observed from CenturyLink/Lumen though, which shed 77,000 clients. The operator is in the procedure of being split, with Apollo Global Management working on shutting down the takeover of the legacy CenturyLink Business. As a side note, Apollo this week unveiled that it expects to rename the CenturyLink assets as Brightspeed and will plough $2 billion into the putting out of fibre to more than 3 million houses and enterprises over the course of the next half-a-decade. Perhaps that will assist to turn its client loss figures around. 

On a connected note, Leichtman Research’s numbers demonstrated that the telecom’s cumulative net includes figure masks growth in the fibre broadband space. The operators included a net 475,000 fibre customers in Q3, but lost 435,000 non-fibre clients. 

Regardless of these positive indicators, the telecoms are currently dwarfed by their cable rivals.  

The leading cable entities, Charter and Comcast, took the lead with regards to cable broadband net additions, as you might predict, racking up 300,000 and 265,000 respectively. The largest number of net losses on the cable side was from Altice, which undertakes operation of the Optimum and Suddenlink brands, at a negative 13,200. 

Cumulatively, the picture is fairly positive, not only for the cablecos, but across the board in the fixed broadband space. Net adds returning to a typical level following their COVID high, instead of dipping, is a very big deal, in the sense that it implies that previous year’s figures represented an atypical peak, instead of the front-loading of growth for the upcoming quarters. 

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