At least 75% of U.S. Broadband Customers Get a Minimum of 100 Mbps Downstream

Looking only at the U.S. cable companies plus Verizon, and omitting AT&T and CenturyLink, fully 75 percent of U.S. fixed network subscribers receive an average speed of at least 100 Mbps. AT&T customers represent another 15 percent getting an average of 85 Mbps. 

That analysis combines Speedtest data on U.S. fixed network speeds in July 2020 with internet service provider account volume supplied by Leichtman Research Group.

The exercise is to overlay average speeds for the major internet service providers with the number of subscribers each ISP has, to get a sense of the typical experience. For the exercise, use Speedtest measurements of July 2020 speeds and Leichtman Research Group’s analysis of ISP account volume for the third quarter of 2020. 

Where Speedtest did not report average speeds, we use other available third party measurements. 

source: Speedtest 

We rounded up Charter's average speed of 95 Mbps and included it in the analysis of 100 Mbps (or faster) average downstream services. We did not do so for AT&T. 

Broadband Providers

Subscribers at end of 3Q 2020

Net Adds in 3Q 2020

Cable Companies
Comcast	30,062,000	633,000
Charter	28,633,000	537,000
Cox*	5,330,000	50,000
Altice**	4,363,500	26,000
Mediacom	1,425,000	29,000
Cable One**	865,000	27,000
WOW (WideOpenWest)	808,900	3,300
Atlantic Broadband	492,212	13,523

Total Top Cable

71,979,612

1,318,823

Wireline Phone Companies
AT&T	15,375,000	174,000
Verizon	7,069,000	110,000
CenturyLink/Lumen^	4,563,000	(75,000)
Frontier	3,119,000	(23,000)
Windstream	1,102,300	12,900
Consolidated	792,211	1,008
TDS	487,700	8,200
Cincinnati Bell	434,500	2,500

Total Top Telco

32,942,711

210,608

Total Top Broadband

104,922,323

1,529,431

source: Leichtman Research Group 

	Subs	% of total ISP	Average Speed	Accts = 100+	% 100 Mbps+
Comcast	30,062,000	28.65%	108	30,062,000
Charter	28,633,000	27.29%	95	28,633,000
Cox*	5,330,000	5.08%	102	5,330,000
Altice**	4,363,500	4.16%	100	3,927,150	https://stopthecap.com/2018/03/05/altice-usa-90-new-customers-want-broadband-speeds-100-mbps/
Mediacom	1,425,000	1.36%		1,425,000	https://broadbandnow.com/Mediacom-Cable-speed-test
Cable One**	865,000	0.82%		865,000	https://www.reviews.org/internet-service/sparklight-internet-review/
WOW	808,900	0.77%		808,900	https://broadbandnow.com/WOW!-speed-test#:~:text=As%20of%20December%202020%2C%20the,in%20the%205%E2%80%9370ms%20range.
Atlantic Broadband	492,212	0.47%		492,212	https://myspeedcheck.net/speedtest/atlantic-broadband
Total Top Cable	71,979,612
AT&T	15,375,000	14.65%	83
Verizon	7,069,000	6.74%	117	7,069,000
CenturyLink/Lumen^	4,563,000	4.35%	36
Frontier	3,119,000	2.97%
Windstream	1,102,300	1.05%
Consolidated	792,211	0.76%
TDS	487,700	0.46%
Cincinnati Bell	434,500	0.41%
Total Top Telco	32,942,711
Total Top Broadband	104,922,323			78,612,262	75%

Source: IP Carrier analysis

How Much Post-Covid Change for Telecom?

How much will present connectivity business trends enforced by efforts to defeat the Covid-19 pandemic continue post pandemic? The throwaway answer is “most of them.” 

There will be more cloud computing, remote work, virtual collaboration driven by lower density work environments, more dispersed network access volumes (and possibly lower traffic volumes), shifts in use of smartphones for content consumption, higher voice usage and possible shifts of peak hour traffic. Upstream capacity is likely to be more important for home broadband users. 

But one might argue that many of those trends shift traffic, revenue and geographic traffic patterns without necessarily causing significant permanent changes in industry dynamics. 

source: Deloitte 

A more-subtle and perhaps more satisfying answer might be that the pandemic and the business response accelerated many changes that would have taken longer. The typical phrase is that “changes that would have taken years happened in months,” referring to data consumption, for example, use of video conferencing or remote work apps. 

Permanent changes--qualitative and quantitative--are more likely if Covid-19 becomes a permanent affliction, ever-present as are colds and flus. 

But other industries likely will be much more affected than the telecom industry. Retail, travel and lodging, real estate, supply chains and hospitality (restaurants, for example) are likely to see bigger shifts of customer demand than are connectivity service providers. 

Instead, the core business problems for connectivity service providers are likely to remain the same ones that were bedeviling before the pandemic: saturated demand, lower average revenue per user or service or account, more stranded assets, margin pressure and a change in the value of connectivity, compared to apps, devices or business platforms.

U.S. 5G Mid-Band Spectrum Might be an Existential Move

Are mid-band spectrum assets an existential matter for the likes of AT&T and Verizon? In other words, even if acquiring huge amounts of mid-band spectrum ultimately fails to produce significant new top-line revenue, must the investments still be made?

That would not be an unprecedented situation in the telecom business over the past nearly 30 years. Back in the mid-1990s, as one telco was pondering an investment in fiber to the home, the value of the investment was almost-entirely strategic, and not directly related to the more-mundane ability to boost top-line revenue.

One CEO, asked in private and off the record about the magnitude of FTTH investments, said the upside was “we get to keep our business.” Note: the argument was not “we will make more top-line revenue.” The justification was existential: “we get to stay in business.”

Specifically, FTTH would enable 10 Mbps data access--literally 10 Mbps--allowing the telco to hold its own versus cable TV operators in the internet access space and take some share in video entertainment, as it simultaneously lost share in voice.

Is that the same existential bet top U.S. mobile operators are making in investing heavily in mid-band spectrum?

And, if so, what are the implications for business models and firm fortunes at the top ranks of the U.S. telecom business? 

What are we getting wrong about 5G? Are we unclear about the value of other advanced technologies in the connectivity business and internet ecosystem? An experienced panel of industry analysts will tackle those subjects head on at the PTC'21 conference closing session . 

on Jan. 20, 2021. You can register here. 

Among the big topics certain to be discussed: is the global industry investing too much on 5G, without hope of return? How much capital can service providers really afford to invest in a mature business?

How big is the threat of service provider displacement from private 4G or 5G networks? What is the value proposition that might drive substantial numbers of enterprises to do so? 

Is there really serious hope of 5G revenue growth, or must we look at 5G capital investment as maintenance spending? 

As Matt Bramson, Cloud Strategy Solutions founder puts it: “what are the implications of these new technologies? What do you need to know when a board member asks you about them?”

When do you need to move; start investing; and why? What chasm has to be crossed?

Matt Bramson

Panelist Benoit Felten, Diffraction Analysis founder asks: “What 5G dangers lie ahead for regulators? What are they not seeing?” What are the possible impacts on market structures, need for consolidation or even ownership? And is there really significant revenue upside from new services?

Benoît Felten

In a mature business, how much capital can service providers actually afford to invest, asks Dan Hays, Strategy& principal. “What are the business and financial implications of huge amounts of capital invested in some 5G auctions?” 

“Can you afford to invest so much if there is no top-line growth?” Hays will discuss. 

Daniel Hays

Do big mobile service providers such as Verizon actually have a choice to invest heavily in mid-band mobile spectrum? Mark Lutkowitz, FibeReality principal, is not so sure. It fundamentally is an existential question. “Do you want to stay in business or not?”

What are the longer term implications of an inability to wring more revenue from such capital investments? Can the industry actually support multiple facilities-based competitors? 

Some of us remember roughly similar questions and answers asked about fiber to the home investments as well, back before the turn of the 21st century. 

Mark Lutkowitz

The large U.S. telcos invest about $10 billion in capex every year, Hays notes. The U.S. C-band auctions already exceed $80 billion in commitments. How big a burden might that be, even if the spectrum is essentially existential? After 82 rounds, about $81 billion has been committed by bidders in the C-band auction. 

In addition to those sums, roughly 16 percent to 22 percent more has to be added as the cost of clearing existing licensed users from the bands. In other words, existing bidders already are pledging between $94 billion and $99 billion for C-band spectrum, and the auction is not yet over. 

Many would argue that acquiring a trove of mid-band spectrum is existential for Verizon and AT&T, in the same way that fiber to the home was existential for some telcos. But that is quite a different rationale from arguing that the investments will drive top-line revenue, substantially reduce operating costs, significantly reduce churn or elevate marketing effectiveness. 

Those are among the weighty issues the panel will discuss.

Covid-19 Shifts Enterprise IT Spending

The Covid-19 pandemic apparently has hit enterprise spending on data centers the most, but also boosted spending on software as a service the most, the Flexera 2021 State of Tech Spend Report says. 

source: Flexera, ZDnet 

The Flexera 2021 State of Tech Spend Report is based on 474 responses from respondents who work in large organizations, with 52 percent employed at organizations with 10,000 or more employees, 68 percent from the Americas and the rest from Europe. 

As you might guess, there were big boosts in spending to support remote workers. 

source: Flexera, ZDnet

“Digital transformation” was the top priority for technology initiatives, along with cybersecurity and cloud computing. 

source: Flexera

U.S. Fixed Network Speeds were Highest in G-20 All of 2020

Some critics routinely criticize “slow” U.S. fixed network broadband speeds. According to Speedtest data, U.S. fixed network speeds were the highest of any G-20 country during 2020, and were already the highest in the G-20 countries at the beginning of 2020 as well. 

As the year progressed, the U.S. speed lead actually grew substantially. 

source: Speedtest

Consumer Mobility Will Not be Tomorrow's Revenue Driver

As hard as it might be to envision, mobile services that now drive revenue growth in the global telecom business will not always do so. Something--and we cannot say for certain what it is--will emerge as the revenue leader within a decade. For the past 30 years, that replacement process has happened with regularity.

Voice services once represented as much as 82 percent of total communications service provider revenues, as recently as 2004, according to International Telecommunications Union data. 

Mobile represented about half of voice revenues by that point. In 1990, mobile voice was in single digits as a percentage of total service provider revenue. 

By 2021, fixed network voice will represent only about 7.7 percent of total global telecom revenues, compared to mobile subscriptions at 59 percent of total, according to researchers at Ovum. 

The point is that connectivity provider service revenue sources have changed fairly fast since 2000, illustrating the strategic importance of developing new revenue sources in the connectivity business. 

Some 30 years ago, about 1990, mobile service accounts were in single digits, globally, as a percentage of total revenue. About 20 years ago--around 2000--mobile service revenues had leaped to more than 21 percent of total. 

By 2010, mobile service revenue had grown to a majority of total revenue, and also was providing as much as 80 percent of the revenue growth. 

About 2000, voice services represented as much as 89 percent of total global service provider revenues. By 2010, the revenue driver had changed to mobility services, with growing contributions from internet access. 

source: ITU 

According to researchers at IDATE, mobility represented about 80 percent of revenue growth, with 64 billion Euros generated by mobile services; 15.6 billion by all fixed network services. 

source: Idate 

Before 2020, mobile services revenue had become the revenue driver in every market regionally. 

source: Idate 

But mobility itself will be challenged as subscriptions and use of mobile internet access reach saturation. 

Those patterns illustrate a principle: telecom service providers have had to replace about half of total existing revenue every decade, since about 1990 at the very least. 

As a rule, I expect that any given communications service provider will have to replace half of current revenue about every decade. Among the best examples (because we have the data) is the change in composition of U.S. telecom revenues between 1997 and 2007.

Back in 1997, nearly half of total revenue was earned from “toll” services (long distance, including international and domestic long distance voice. Profits also were disproportionately driven by long distance services.

A decade later, toll service had dropped to 18 percent of total revenue, while mobile services had risen to about half of total revenues, up from about 16 percent of total.

In addition to mobility revenues displacing long distance, internet access began to build around 2000. Between 2000 and 2010, internet access had grown to represent 24 percent of total revenues.  

Voice is an essential feature of a mobile account, of course. But voice usage--as such--does not drive revenue. The reason is the low--and declining--prices of carrier voice services and substitution by over-the-top messaging. 

By 2021, fixed network voice will represent only about 7.7 percent of total global telecom revenues, according to researchers at Ovum. 

Fixed network broadband will represent 18 percent of total revenues, while subscription TV represents about 15 percent of total revenues.