Thursday, April 19, 2018

How Much Longer Can Fixed Internet Access Continue to Grow?

U.S. net new internet access accounts grew by about 2.1 million accounts in 2017, according to Leichtman Research Group.

A separate analysis by Convergence Research Group suggests U.S. internet access accounts grew by about 2.33 million accounts in 2017, reaching 96.95 million total accounts. At the same time, subscription revenue grew seven percent in 2017 to $56.8 million.

Convergence Research Group expects 2.57 million internet access additions and six percent revenue growth to $60.5 billion in 2018.

The issue is how close we now are to peak internet access. By at least one estimate, there are 95 million U.S. buyers of fixed network internet access.

In the fourth quarter of 2017 there were an estimated 136.9 million U.S. housing units. Vacancy rates are an issue, though. Some 16.7 million of those units were vacant.

In the fourth quarter of 2017, some seven percent of rental units were unoccupied, as were some 1.6 percent of owned residences. So assume the number of residences where fixed network consumer telecom services could be sold is about 120.2 million.

So that implies 79 percent of all U.S. households buy a fixed network internet access subscription. Assume another 1.6 million buy a satellite internet access service (about one percent of occupied U.S. residences. That implies 80 percent of occupied homes buy internet access.

But we also must add another six million subscribers served by all the smaller telcos, cable TV companies and independent internet service providers (assuming those smaller fixed network suppliers supply five percent of homes). That adds another five percent, bringing consumer household buying of internet access up to about 85 percent.

Also, some 10 percent of homes use mobile internet access exclusively, according to the Pew Research Center. So add another 12 million occupied U.S. homes to the total of buyers of internet access.

That brings buyers of internet access up to about 95 percent of U.S. occupied homes. The point is that we fast are approaching the point where at-home internet access is saturated. There simply are not that many more U.S. homes to convert, possibly six million or so (unless the percentage of occupied homes grows and millions of new households are formed, driving demand for new housing stock).

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