How Big is Market for Untethered Internet Access?

You might think it is easy to quantify the size of the consumer internet access market in rural areas of the United States or elsewhere. It is harder still to estimate the size of that market that potentially could be supplied by untethered access platforms of all types.

For starters, the actual size of the rural untethered access opportunity can vary wildly based on one’s assumptions. Is the market “all homes in rural areas” plus “some homes in suburban and urban areas that have slow speeds” or both?

Is the potential for untethered access the same once 5G launches, making mobile platforms reasonable product substitutes for fixed access in many cases? If so, what percentage of cases are we talking about?

How much market share might untethered platforms take away from fixed network providers?

Even estimates of rural need vary. Some 23 million people in rural areas of the United States are said to have no access to a fixed network, though nearly all have satellite access from at least two providers.

From a service perspective, “locations” matter more than “people at those locations,” since facilities have to be build to reach fixed locations such as houses. And that number is itself dependent on assumptions about housing stock, end user demand, pricing and speed offers.

By some estimates, 14 million U.S. locations have slow service from cable or telcos or are not served at all. That includes urban and rural locations.

Few of those locations actually have no fixed network service. On surveys of availability, about one percent of respondents say they do not have the ability to buy internet access services from any fixed services provider.

That implies, on a household base of 126 million, that about 1.3 million locations actually have zero fixed network access. The point is that market sizing estimates that postulate 23 million or more “unserved” people actually represent a rather small percentage of locations, and it is locations that must be served (mobile actually serves “people”).

Also, one problem is definitional. Some studies people who choose not to buy or people who do not wish to use the internet as “not able to buy internet access.” There is a difference between people who choose not to buy a product that is available and people who want to buy, but cannot.

U.S. internet access adoption is about 82 percent. If there are 126 million U.S. households, perhaps 95 percent of which are occupied, then 100-percent adoption would imply about 120 million locations buying internet access. That might imply a reasonable saturation level of demand at about 107 million households, or nearly the level that might be reached in 2021.

In other words, 107 million households might be the saturation level for fixed network platforms (untethered options include mobile, fixed wireless, satellite, balloons, unmanned aerial vehicles, blimps).

Of course, demand does not exist at that level. Some households (perhaps five to 10 percent simply do not wish to buy). And some percentage of households (growing in number) buy alternatives such as mobile internet access.

source: SNL Kagan

The point is that we are entering a period when older assumptions about market segments will have to be revised. Mobility-based platforms are going to take more share. Fixed wireless is going to take more share. A range of new platforms likely will emerge, also taking some share from existing providers.

Under such conditions, it is not unreasonable to expect a general shift of market share from fixed networks to untethered platforms of several types.