Saturday, September 10, 2016
Are FTTH Take Rates Really 50%?
Friday, May 31, 2024
What is StreamSaver's Business Purpose?
StreamSaver is a new streaming bundle including Peacock, Netflix, and Apple TV that available exclusively to Xfinity customers, in the same way that Xfinity mobile services are only available to Xfinity customers.
But it might be reasonable to suggest the new bundle will boost Peacock and Apple TV market share by only single digits.
Netflix, Amazon Prime are the clear leaders leaders, with Disney (Disney, Hulu, coming ESPN service) poised to emerge at the top as well. All the others remain well into secondary or tertiary roles, and the new bundle likely cannot move the needle very much.
Of course, Comcast might see the value not so much in Peacock market share growth (Comcast owns Peacock) but in the value of customer acquisition and retention for its overall subscription businesses (mobile service, home broadband, linear TV).
As with Comcast's mobile phone service, the new bundle can be purchased only by existing Comcast customers (home broadband or linear video service). So the effort is primarily to increase the value of Comcast services.
As often is the case with bundles, the value is partly the price. The advantage of product bundles for the end user (aside from the bundles of features) is almost always the lower price. Streamsaver features the ad-supported versions of the services at $15 per month, where the a la carte prices of those services cost between $6 and $10 a month each.
A reasonable question is how many accounts, and how much revenue, that new service could attract.
Perhaps the easiest assumption is that Xfinity customers who already buy Peacock, Netflix and AppleTV+ will be most inclined to switch. Perhaps next most likely to adopt are Xfinity customers who already buy one or two of those services (Netflix as the presumed anchor and leader) and who can be convinced to the other services.
The other issue is that the new bundle can only be purchased by Xfinity customers buying either home broadband or Xfinity linear video services. And that means the bundle can likely only be considered by people living in roughly half of U.S. homes.
The potential market issues can be illustrated by Comcast’s similar approach to selling mobile phone service.
The context is that Comcast will only sell the bundle to its existing fixed network customers. Since the Comcast fixed network might only reach 45 percent of U.S. dwellings, that puts an upward limit on accounts.
Then the issue is how much market share Comcast can take from the mobile market leaders (Verizon, AT&T, T-Mobile) that collectively have about 97 percent of the installed base of customers.
In the third quarter of 2023, Comcast’s Xfinity mobile service had about six million accounts, with revenue growth near 25 percent per year.
According to the CTIA, there are 523 million mobile devices in the U.S. market with 97 percent of adults owning a mobile phone. Using a (definition of “adults” as those 18 or older, the U.S. Census Bureau estimates that in 2020, adults represented 78 percent of the total population, or 258.3 million people.
If 97 percent of those people have mobile phones and service, that implies something on the order of 250.55 million accounts. If correct, Comcast has an installed base of about two percent of the market.
The U.S. Census Bureau estimates there were around 140.7 million housing units in the United States in 2020, about 90 percent occupied. So assume dwellings with people living in them at about 126.6 million, with an average occupancy of 2.5 people, for a total of 316.58 million potential mobile accounts. Assume 97 percent have such accounts, for an implied subscriber base of around 307 million, excluding separate business accounts.
So the installed base of accounts might range from 250 million to 307 million. Assume Comcast’s network passed about 57 million homes (including small business accounts, that figure could reach 80 million locations, by some estimates. Assume it continues to sell exclusively to its own customers. Assume that its installed base of customers is about 55 percent of homes passed (customers buying internet access or video services).
That suggests terminal adoption ranging from 31.4 million to 44 million locations. If each location features 2.5 accounts, that implies a theoretical terminal customer base of perhaps 78.5 million to 110 million accounts.
Those figures are the theoretical maximum, keeping in mind that the leading mobile service providers today have installed bases in the 30 percent range each. According to Statista, in May 2023, mobile market shares were:
Verizon: 34.9%
AT&T: 32.2%
T-Mobile: 29.5%
Other Carriers: 3.4%.
Many observers believe Xfinity therefore will not reach terminal share as high as 55 percent, even within its own service territory, as its fixed network reaches perhaps 45 percent of occupied homes. So with the present policies, Comcast cannot sell to 55 percent of the market.
With those conditions, were Comcast to reach relative parity with any of the leading mobile service providers, it might hope to reach a ceiling of about 14 percent total market share (assuming 30 percent as a reasonable share within its sales territory, representing 45 percent of locations).
The new streaming bundle will face the same geographic limitations as does mobile service. On the other hand the streaming market still is growing, and is not mature, as is mobile service. And, obviously, the attraction of the bundle--for Peacock and AppleTV--is the potential to increase share in a market dominated by Netflix, Amazon Prime and Disney.
Streaming Provider | Estimated Market Share |
Netflix | 32% |
Amazon Prime Video | 22% |
Hulu | 14% |
Disney+ | 12% |
Other (HBO Max, Apple TV+, Peacock, etc.) | 20% |
But the bundle also increases the range of products and value for Xfinity customers. Right now, it is hard to say whether ultimate value comes from growing Peacock share or increasing the value of the Xfinity service overall (reduced churn, for example) or serving as a means of supporting higher revenue per account.
It might be reasonable to assume all three sources of value will be in play. There are lots of moving parts, though, as most of the other leading or contending streaming firms also are moving to create bundles.
The coming Disney and Warner Bros. Discovery bundle combines Disney+ with Hulu (including both ad-supported and ad-free options) and Warner Bros. Discovery Max content.
Also, a new sports streaming service featuring content from Disney (through ESPN), Fox, and Warner Bros. Discovery, Venu Sports, also is launching. Unknown at this point is whether the coming ESPN streaming service will be available as part of that bundle.
The differences are that StreamSaver can only be purchased by Xfinity customers. The other bundles can be bought by any U.S. consumer.
Still, the streaming bundles seem to suggest that Netflix and Disney could emerge as the tentpoles of the business.
Sunday, March 14, 2021
AT&T Somewhat Skeptical about Fixed Wireless, But it Might be a Choice for 70% of U.S. Buyers
AT&T does not believe that customers consuming between one and five terabytes of home broadband data will be best served by a mid-band fixed wireless home broadband product.
“Well, the large consumption that we are anticipating over the next five years will be hard to meet with a wireless-only solution,” said Scott McElfresh, AT&T Communications CEO. There will be places where fixed wireless does make sense, he added.
“There will be portions of the footprint that will not be economical to serve with fiber,” said McElfresh. “And we would intend to put at the edge of our fiber network this wireless C-band asset, along with our other mid-band spectrum to serve some of the limited use cases that we think are available for a fixed wireless solution.”
“But that's not our primary focus for that band, and that's not our primary focus to serve that heavy demand with broadband,” he noted.
At least in part, the issue is upstream bandwidth, where the difference between downstream data and upstream data has traditionally shown a 10:1 ratio. But AT&T CEO John Stankey argues that the ratio is heading to “something more like 5:1.”
As significant a change as that might be for a fixed network, the challenge is harder for a spectrum-constrained platform such as mobility, which never has the bandwidth provided by a cabled network.
As always, firm strategy hinges on supplier assessment of their own strengths and weaknesses. T-Mobile and Verizon have much more to gain from taking home broadband share than does AT&T, and fixed wireless is the fastest, most affordable way to do so.
T-Mobile has had zero market share in home broadband, as it has no retail fixed network business. Verizon has a retail fixed network business, but covers a small percentage of U.S. homes.
Both firms stand to gain millions of accounts--especially where they do not presently offer any service--using mobile or fixed wireless.
Comcast has (can actually sell service to) about 57 million homes passed.
The Charter Communications network passes about 50 million homes, the number of potential customer locations it can sell to.
Verizon homes passed might number 18.6 to 20 million. To be generous, use the 20 million figure.
AT&T’s fixed network represents perhaps 62 million U.S. homes passed. CenturyLink never reports its homes passed figures, but likely has 20-million or so consumer locations it can market services to.
T-Mobile and Verizon have the most market share to gain by deploying fixed wireless.
“We choose to serve our customers that demand high-speed bandwidth with fiber, and we will utilize our wireless networks to serve those other niche use cases in areas where fiber economics do not make sense,” said Jason Kilar, AT&T WarnerMedia CEO.
“We think that mid-band spectrum has its role,” said Stankey. “It has its role in being a premium mobility product.” But mid-band spectrum has issues supporting indoor coverage, he argued. “And we think there's better ways to kind of deal with what's going on inside most of the walls of society,” namely fiber to the premises.
All that can be reasonably argued. But McElfresh also said “our vision would be to have over half of our portfolio or 50 percent of our network covered by that fiber asset” by about 2025, building at about a three million to four million annual rate.
Proponents of fixed wireless might make exactly the same point: half of U.S. households buy broadband services running between 100 Mbps and 200 Mbps, with perhaps 20 percent of demand requiring lower speeds than that.
So even if fixed wireless offers lower speeds than cable hybrid fiber coax or telco FTTH, it might arguably still address 70 percent of the U.S. market.
Tuesday, September 13, 2022
Verizon Uses Owned Optical Fiber for 48% of its Mobile Site Backhaul
Verizon now says it connects 48 percent of its cell sites using owned optical fiber. That might not seem like such a big deal, but consider that Verizon’s fixed network only reaches about 20 percent of U.S. homes.
That matters because ownership of a fixed network reaching homes and businesses provides cost advantages for deploying optical fiber backhaul to cell towers and sites. AT&T, in contrast, has fixed network assets passing about 44 percent of U.S. homes. That also provides advantages for cell site backhaul.
Building fiber backhaul to towers outside the Verizon fixed network territory requires construction or long-term leases of capacity from other providers who can provide the access. It appears that a substantial percentage of Verizon backhaul uses built or owned facilities.
For U.S. cable operators, who prefer to sell mobile service only to their own existing customer base, the same logic applies. Owning their own landline facilities reduces the cost of creating a cell network.
Of a total of 140 million homes, AT&T’s landline network passes 62 million. Comcast has (can actually sell service to) about 57 million homes passed.
The Charter Communications network passes about 50 million homes, the number of potential customer locations it can sell to.
Verizon homes passed might number 27 million. Lumen Technologies never reports its homes passed figures, but likely has 20-million or so consumer locations.
Friday, June 24, 2022
Home Broadband Strategy is Heavily Dictated by the Business Model
AT&T is targeting about 30 million homes for new fiber-to-premises availability. Verizon is emphasizing fixed wireless. As always, strategy is based on firm strengths and weaknesses. AT&T has the largest footprint of homes; Verizon’s fixed network possibly reaches 20 percent of U.S. homes.
Of a total of 140 million homes, AT&T’s landline network passes 62 million. Comcast has (can actually sell service to) about 57 million homes passed.
The Charter Communications network passes about 50 million homes, the number of potential customer locations it can sell to.
Verizon homes passed might number 27 million. Lumen Technologies never reports its homes passed figures, but likely has 20-million or so consumer locations.
AT&T has more fixed network share to protect, compared to Verizon, while Verizon has bigger upside in taking home broadband share outside its footprint.
The same holds for T-Mobile, which historically had zero percent share of home broadband.
“If all I had was a wireless network, if I did not have a scaled physical infrastructure fiber thriving and growing network, I might have no other choice than to leverage my wireless spectrum portfolio to go grow my business,” said Jeff McElfresh, AT&T COO.
Wednesday, October 25, 2023
C-Band is a Huge Deal for Verizon: Extends Home Broadband Addressable Market from 25% to Virtually 100%
One iron rule for internet access services is that if one has enough bandwidth, access speeds can be very high. For mobile operators, bandwidth expansion can come in a few ways: adding more spectrum, building smaller cells or deploying better modulation techniques or radios.
In that regard, for 5G, mid-band spectrum has been key for firms such as Verizon, which have had less mid-band spectrum than others. The difference is striking.
After deploying C-band spectrum, Verizon mobile peak speeds “go from 9 Mbps to an amazing 2.4 gigabits per second,” said Hans Vestberg, Verizon CEO.
That has implications for home broadband as well, as, in principle, peak speeds might reach gigabit per second levels. And that, in turn, is important because it dramatically extends the addressable market for fixed wireless from perhaps 25 percent of buyers to perhaps 99 percent of buyers (those who buy home broadband at speeds up to about 2 Gbps, and do not require symmetrical access)
True, Verizon has millimeter wave assets to deploy in urban areas, but C-band means fixed wireless has higher bandwidth in suburban and rural areas as well.
For Verizon, which has a smaller fixed network footprint than many of its leading competitors, that really does matter, as it means Verizon can compete for home broadband customers who want higher speeds in most U.S. geographic areas.
Of a total of 140 million U.S. homes, AT&T’s landline network passes 62 million. Comcast has (can actually sell service to) about 57 million homes passed.
The Charter Communications network passes about 50 million homes, the number of potential customer locations it can sell to.
The number of Verizon homes passed might be 27 million. Lumen Technologies never reports its homes-passed figures, but likely has 20-million or so consumer locations.
The point is that Verizon cannot easily expand its fiber to home footprint outside its historic service areas, for reasons of investment magnitude. So fixed wireless makes eminent sense for a firm that can presently reach only about 19 percent of U.S. homes using its fixed network.
The same sort of logic holds for T-Mobile, which historically has had zero access network fixed network footprint. There is neither time nor money for T-Mobile to wire the entire country, or even a substantial part of it, using FTTH.
So C-band is a really big deal. It extends Verizon’s home broadband addressable market from about 25 percent of homes to up to 100-percent of homes.
Wednesday, January 18, 2017
Verizon Buying Comcast or Charter--Absent Huge Divestitures--Would Not Pass Horizontal Antitrust Review
It all seems too complex, too likely to draw antitrust rejection, to be a likely outcome.
Tuesday, April 3, 2018
Can Independent ISPs Get 50% Market Share?
Penetration: Units Sold or Homes Buying Service?
| |||||
Morristown
|
Chattanooga
|
Bristol
|
Cedar Falls
|
Longmont
| |
homes passed
|
14500
|
140000
|
16800
|
15000
|
4000
|
subscribers
|
5600
|
70000
|
12700
|
13000
|
500
|
units sold
|
39%
|
50%
|
76%
|
87%
|
13%
|
services sold
|
3
|
3
|
5
|
3
|
2
|
HH buys .66 =
|
2
|
2
|
3
|
2
|
1
|
Homes served
|
2828
|
35354
|
3848
|
6566
|
379
|
penetration
|
20%
|
25%
|
23%
|
44%
|
9%
|
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