Have U.S. Telcos "Permanently Lost" the Internet Access Battle?

U.S. telcos now have permanently lost the battle for internet access market share to U.S. cable operators, analysts at Jefferies now say. “In our view, it is far too late for the ILECs to ramp spend to compete.”

The key exceptions, though, are AT&T and Verizon, which will be able to offer 5G access, both mobile and fixed, at speeds that will rival what cable operators can offer.

Still, unless something breaks the current trend, telcos collectively could become something of an afterthought in the access business, with market share as low as 28 percent by 2020, according to New Street Research.

That forecast, though, likely assumes 5G will not be an important factor for AT&T and Verizon, an assumption some of us do not share.

AT&T and Verizon represent 66 percent of all U.S. telco fixed network internet access accounts, while most of the fixed network telco accounts losses in the second quarter of 2017 came from the three former rural telcos CenturyLink, Windstream and Frontier Communications.

Depending on how the accounts are categorized (as accounts in the mobile business or the fixed networks business), AT&T and Verizon might be able to reverse the slow erosion they have been encountering in fixed network internet access connections.

It remains unclear whether other large incumbents will be able to use unlicensed spectrum and their own fixed networks to support backhaul to small cells, allowing them to provide fixed wireless.

Likewise, it also is unclear whether some firms might be able to lease assets from AT&T or Verizon to provide fixed wireless based on 5G platforms.

source: New Street Research

Telco	Internet Access Accounts, 2Q 2017	Net Change 2Q 2017
AT&T	15,686,000	(9,000)
Verizon	6,988,000	(23,000)
CenturyLink	5,868,000	(77,000)
Frontier	4,063,000	(101,000)
Windstream	1,025,800	(21,800)
Cincinnati Bell	307,100	(300)
FairPoint^	304,193	(1,160)
Total Top Telco	34,242,093	(233,260)

source: Leichtman Research

If at least 90 percent of U.S. mobile subscriptions include mobile broadband access, that implies 400 million U.S mobile internet access accounts could be in service by the early 2020s, dwarfing the 94 million fixed network accounts.

The point is that it might well prove nearly impossible to predict how internet access market share might change, by access platform or provider, over the next decade.

source: Ericsson