Younger Home Broadband Buyers are Less Loyal, Generate Lower ARPU

Sometimes researchers have to do studies that have an expected outcome, even if what the new research does is simply confirm an expected pattern. So it is with consumer home broadband loyalty and average revenue per account.

I don’t think anyone should be at all surprised by the recent findings of a study suggesting younger home broadband buyers spend less and churn more than older customers. In fact, that is the expected pattern for most subscription or repeat-purchase products. 

Age Group	Loyalty (Likelihood to Stay with One Brand/Service)	Average Spend
Gen Z (under ~25)	Low loyalty – experimenters, switch easily for price or novelty	Low spend – budget constraints, high trial behavior
Young Millennials (25–34)	Moderate loyalty – will stay if product aligns with values (sustainability, brand ethos)	Medium spend – starting careers, increasing discretionary income
Older Millennials / Early Gen X (35–49)	Higher loyalty – convenience and habit take hold	Higher spend – peak earning years, subscriptions accumulate
Older Gen X / Boomers (50–64)	High loyalty – less brand switching, seek reliability	High spend – stable income, value convenience and trust
Seniors (65+)	Very high loyalty – tend to stick with familiar brands	Variable spend – can be high (healthcare, legacy services) or constrained (fixed income)

Many studies of consumer home broadband churn behavior show the pattern. 

Study / Source (year)	Geography & sample	Findings – Churn / Switching by Age	Findings – Spend / Price by Age	Notes
Ofcom & Choose.co.uk (2019)	UK, broadband customers	Only 9% switched in last 12 months overall; >50% of customers aged 65+ have never switched (Choose)	Older customers less empowered to negotiate—62% confident to talk to provider, vs 87% under-65s; older more likely to be out of contract and overpay (Choose)	Clear age gap in switching behavior: older customers stick around and pay more.
Broadband.co.uk Switching Study (2025)	UK broadband users 18–24 vs older	Only 29% of 18–24 “like my provider” vs 45% of 65+; 37% of 18–24 had “no particular reason” to not switch vs much lower for older groups (Broadband Genie)	Indicates younger consumers are less satisfied, more inclined to question loyalty. Older show higher contentment.	Suggests younger users are less loyal, older are more settled.
Pew Research (US, 2017)	US adults by age group	Millennials (18–24) more likely to use mobile-only internet; 55% of 18–24 use smartphones only vs 69% of 55–64 prefer broadband (THE Journal)	Younger more mobile-dependent; older more likely to maintain home broadband subscriptions → spends more.	Non-UK data reinforcing that older rely more on broadband.
Reddit – subscription churn analysis	General subscription users (not broadband-specific)	“Customers between **18–24 y/o have the highest churn. Older age correlates to higher tenure.” (Reddit)	Implies older users tend to spend longer (hence likely higher cumulative spend).	While not broadband-specific, supports the general age-churn correlation.

Why Product Bundling is Key to Payoff from AT&T Purchase of Lumen Consumer Fiber Assets

Lots of observers argue that the Verizon purchase of Frontier Communications assets (buying back an asset it had previously sold off) is not a wise use of capital, with the arguments often suggesting Verizon should be investing more in artificial intelligence in some way.

Of course, there is an argument to be made that such forays into applications, content or additional roles in the value chain have not worked out very well.

And some of the same questions are raised about AT&T's purchase of Lumen Technologies mass market fiber-to-home assets. The concern is that the purchase will not have a near-term impact on profits and could be a case where the opportunity cost is too high.

AT&T believes it can justify the purchase of Lumen Technologies consumer fiber business based in part on the ability to drive higher revenues by bundling mobile services, and also boosting take rates from the current 25 percent level to perhaps 40 percent. 

But other buyers without the ability to bundle with owned mobile services also could have interest in acquiring significant copper access assets and then upgrading for fiber access. In many cases the upside comes more from asset value increases than actual operating cash flow or profits, though. 

As always, much hinges on the assumptions. Assume a copper access asset with:

• 500,000 copper broadband and voice customers, with 80 percent convertible to fiber over 10 years (much higher than AT&T expects with its bundled services approach)

• Copper assets are valued at 4–8x EBITDA. Assuming annual EBITDA of $100 million for the copper business, acquisition cost is estimated at $600 million (6x EBITDA).

• Fiber Upgrade Costs: 800–$1,200 per home passed, plus $300–$500 per connected subscriber. Assume $1,000 per home passed and $400 per connected subscriber.

• Revenue: Copper ARPU (Average Revenue Per User) at $40/month, fiber ARPU at $60/month. Fiber adoption grows linearly to 80 percent (400,000 customers) by year 10.

• Copper maintenance costs are high ($300/customer/year), while fiber reduces this to $100/customer/year.

• CapEx: Fiber deployment spread over 5 years, with 20 percent of customers upgraded annually.

• Financing: 50% equity, 50% debt at 5% interest rate.

• Depreciation: Fiber assets depreciated over 20 years (straight-line).

• Market Dynamics: Copper demand declines 5% annually; fiber demand grows with 10% annual subscriber growth post-upgrade.

• Copper Recycling: Recycled copper yields $7,000/ton, with 5,000 tons recoverable (based on scaled-down estimates from TXO’s $7 billion market potential for 963,000 tons).

Perhaps the key sensitivity here are take rates. The business model here assumes take rates at 80 percent in a decade. That is more likely for rural and other lower-density markets, where competitors are deterred from investing. It is hard to imagine such take rates in competitive urban markets. 

Component	Details	Year 1	Year 5	Year 10
Acquisition Costs
Purchase Price	6x EBITDA ($100M) for 500,000 customers	$600M	$0	$0
Transaction Costs	Legal, advisory fees (2% of purchase price)	$12M	$0	$0
Total Acquisition Cost		$612M	$0	$0
Fiber Upgrade Costs
Homes Passed	$1,000/home × 500,000 homes (spread over 5 years, 100,000/year)	$100M	$100M	$0
Subscriber Connections	$400/subscriber × 100,000/year (20% of customers annually)	$40M	$40M	$0
Equipment & Installation	Network upgrades, ONTs, etc. ($200/home × 100,000/year)	$20M	$20M	$0
Total Upgrade CapEx		$160M	$160M	$0
Revenue
Copper Revenue	$40/month × 500,000 (Year 1), declining 5%/year	$240M	$193M	$144M
Fiber Revenue	$60/month × 100,000 (Year 1), growing to 400,000 by Year 10	$72M	$288M	$288M
Copper Recycling Revenue	5,000 tons × $7,000/ton (one-time, Year 1–2)	$35M	$0	$0
Total Revenue		$347M	$481M	$432M
Operating Expenses (OpEx)
Copper Maintenance	$300/customer × remaining copper customers	$150M	$90M	$30M
Fiber Maintenance	$100/customer × fiber customers	$10M	$40M	$40M
General OpEx	Marketing, admin (10% of revenue)	$34.7M	$48.1M	$43.2M
Total OpEx		$194.7M	$178.1M	$113.2M
EBITDA	Revenue – OpEx	$152.3M	$302.9M	$318.8M
Cash Flow Implications
Operating Cash Flow	EBITDA – Taxes (25%)	$114.2M	$227.2M	$239.1M
Free Cash Flow (FCF)	Operating Cash Flow – CapEx – Interest ($30M/year, 5% on $600M debt)	-$75.8M	$37.2M	$239.1M
Profit Implications
Depreciation	$612M acquisition (20 years) + $800M fiber CapEx (20 years)	$70.6M	$70.6M	$70.6M
Net Income	EBITDA – Depreciation – Interest – Taxes	$51.7M	$166.6M	$182.5M
Equity Increase Implications
Enterprise Value (EV)	10x EBITDA (fiber) + 6x EBITDA (copper)	$1.05B	$2.45B	$2.94B
Equity Value	EV – Debt ($600M)	$450M	$1.85B	$2.34B
Equity Increase (from Year 0)	Initial equity investment: $306M (50% of acquisition)	$144M	$1.54B	$2.03B