How Much Further Can Fixed Network Broadband Grow?

It almost seems impossible that fixed network broadband Internet access could have become a “legacy product” so soon, at least in the U.S. and other developed markets, but that is what has happened.

In the U.S. market, most potential consumers already buy broadband. Leichtman Research Group points out that  the 17 largest cable and telephone providers, representing about 93 percent of the total market, acquired about 580,000 net additional high-speed Internet subscribers in the third quarter of 2012.

Collectively, these service providers now account for over 80.7 million subscribers. Cable companies have 46.2 million broadband subscribers, and telephone companies have 34.5 million subscribers.

The issue is how close the U.S. market is to full saturation. By some estimates, U.S. fixed network broadband penetration is near 80 percent of homes. You might argue that leaves room to grow, and there is, but not much.

The reason is that not every home requires broadband. Not every home owns computers. Not every home has users that want to use at-home Wi-Fi to support tablet and smart phone access, or game consoles or Internet-connected TVs.

Also, some households substitute mobile access for fixed connections. Perhaps six percent of U.S. homes using broadband already seem to rely exclusively on mobile connections.

When asked what device they normally use to access the internet, 25 percent of smart phone owners say that they mostly go online using their phone, rather than with a computer. 




While many of these individuals have other sources of online access at home, roughly one third of these “cell mostly” internet users lack a high-speed home broadband connection, according to Pew Internet & American Life Project. That implies about an eight percent of households that only use mobile broadband. 

Many studies show that income is directly correlated to PC ownership and broadband usage. Households with annual incomes of at least $75,000 buy broadband at at least an 87 percent rate. Homes with annual incomes of $30,000 to $49,999 buy broadband at a rate of about 64 percent.




The top cable companies added about 575,000 subscribers, while the top three telephone companies added about 5,000 subscribers, in large part because AT&T and Verizon actually lost customers.

AT&T and Verizon added 749,000 fiber subscribers (U-verse and FiOS) in the quarter, while having a net loss of 799,000 DSL subscribers.

The slow pace of net additions simply reflects a market that is nearly saturated. We will know when the market is completely saturated when net additions hit zero, or very close to it. .