Does WISP Market Share Explain Satellite Broadband Share?

Market share held by wireless internet service providers might explain why the number of satellite broadband accounts is not higher than its supporters believe can be the case. 

Satellite broadband and fixed wireless operators traditionally have targeted rural homes and small businesses as their primary market, in the past said to include as many as 35 million locations. But estimates vary widely. Some say 80 million people live in rural areas, others say 46 million do, using the U.S. Census Bureau methodology. 

 Satellite broadband providers seem to have three million subscriptions, though some estimates (wrong, in my opinion) suggest that  6.76 percent of U.S. internet subscriptions are provided by satellite. 

Assume there are 139 million U.S. housing units. That implies nine million U.S. satellite broadband subscribers. No estimate I have seen--ever--suggests there really are nine million U.S. satellite broadband accounts. 

HughesNet believes 18 million homes are its market opportunity. Rental units alone might represent 6.6 million units, although not locations, as some of those units are in multi-family complexes. 

According to Urban.org, 13 million homes are owned by rural residents. So one might conclude there are about 19.6 million rural dwelling units (not necessarily locations, which would be smaller by some measure). 

Those figures roughly accord with HughesNet estimates of market opportunity. 

A more conservative estimate is that perhaps two percent to three percent of U.S. homes are the primary target for satellite broadband. That would include the most-isolated areas, where there are no terrestrial fixed networks using cabling. In many rural areas that are slightly more dense, wireless ISPs already operate. And, of course, there are many parts of rural areas served by cable operators or telcos. 

A big issue is the presence of fixed wireless ISPs. According to Broadband Now, some 148.4 million U.S. residents are covered by fixed wireless ISPs. Assume an average household size of 2.5. That implies some 59 million rural locations already are reached by fixed wireless ISPs. 

Alabama	834,331	17.0%	44 Fixed Wireless Providers
Alaska	366,426	48.9%	21 Fixed Wireless Providers
American Samoa	40,764	74.8%	2 Fixed Wireless Providers
Arizona	6,263,384	91.2%	69 Fixed Wireless Providers
Arkansas	1,608,108	53.3%	42 Fixed Wireless Providers
California	16,268,529	42.1%	136 Fixed Wireless Providers
Colorado	4,759,559	89.3%	98 Fixed Wireless Providers
Delaware	174,393	18.5%	4 Fixed Wireless Providers
District of Columbia	43,004	6.9%	9 Fixed Wireless Providers
Florida	3,224,633	16.2%	46 Fixed Wireless Providers
Georgia	1,177,132	11.5%	33 Fixed Wireless Providers
Hawaii	187,234	13.2%	9 Fixed Wireless Providers
Idaho	1,567,481	93.8%	55 Fixed Wireless Providers
Illinois	11,378,292	87.6%	159 Fixed Wireless Providers
Indiana	5,825,665	87.7%	96 Fixed Wireless Providers
Iowa	2,272,673	73.3%	115 Fixed Wireless Providers
Kansas	2,709,060	92.7%	77 Fixed Wireless Providers
Kentucky	1,642,070	36.8%	57 Fixed Wireless Providers
Louisiana	1,264,577	27.5%	24 Fixed Wireless Providers
Maine	347,651	25.9%	16 Fixed Wireless Providers
Maryland	1,489,981	25.0%	32 Fixed Wireless Providers
Massachusetts	1,123,939	16.9%	30 Fixed Wireless Providers
Michigan	4,355,976	44.3%	97 Fixed Wireless Providers
Minnesota	4,487,969	82.2%	83 Fixed Wireless Providers
Mississippi	1,029,983	34.2%	25 Fixed Wireless Providers
Missouri	5,156,799	84.0%	102 Fixed Wireless Providers
Montana	770,579	75.2%	43 Fixed Wireless Providers
Nebraska	1,755,440	93.5%	60 Fixed Wireless Providers
Nevada	2,878,685	97.9%	47 Fixed Wireless Providers
New Hampshire	95,994	7.2%	15 Fixed Wireless Providers
New Jersey	32,158	0.4%	13 Fixed Wireless Providers
New Mexico	1,797,525	83.2%	50 Fixed Wireless Providers
New York	5,645,759	28.9%	43 Fixed Wireless Providers
North Carolina	1,210,033	12.0%	36 Fixed Wireless Providers
North Dakota	330,862	47.7%	23 Fixed Wireless Providers
Ohio	5,205,438	44.9%	99 Fixed Wireless Providers
Oklahoma	2,624,729	67.6%	72 Fixed Wireless Providers
Oregon	3,475,190	87.0%	84 Fixed Wireless Providers
Pennsylvania	1,652,257	12.8%	61 Fixed Wireless Providers
Puerto Rico	1,254,222	34.7%	13 Fixed Wireless Providers
South Carolina	484,007	9.9%	19 Fixed Wireless Providers
South Dakota	591,266	70.2%	27 Fixed Wireless Providers
Tennessee	1,411,141	21.4%	50 Fixed Wireless Providers
Texas	23,591,297	87.5%	239 Fixed Wireless Providers
Utah	2,924,461	98.0%	49 Fixed Wireless Providers
Vermont	477,239	75.6%	15 Fixed Wireless Providers
Virgin Islands	59,868	57.6%	5 Fixed Wireless Providers
Virginia	2,191,700	26.2%	49 Fixed Wireless Providers
Washington	3,200,222	45.2%	81 Fixed Wireless Providers
West Virginia	1,224,923	65.4%	18 Fixed Wireless Providers
Wisconsin	3,405,642	58.6%	72 Fixed Wireless Providers
Wyoming	513,567	86.8%	36 Fixed Wireless Providers

source: Broadband Now

It the WISP figures are close to correct, much of the rural internet access opportunity for satellite operators already is satisfied, as WISPs have taken most of the available market. 

The point is that the potential satellite market is sharply reduced by market share taken by competing WISPs. So there might be only two percent to three percent of rural locations that WISPs cannot reach. 

That would imply a potential satellite broadband market of 2.8 million to four million homes. If U.S. satellite internet providers already serve perhaps two million locations, the bad news for satellite broadband providers is that the market is approaching saturation, where every potential customer already buys. 

U.S. FTTH Coverage Exceeds EU

If there are 60 million U.S. homes able to buy fiber-to-home services, and a total of 139 million U.S. housing units, then FTTH availability stands at 43 percent. The average of European Union homes able to buy FTTH services is 30 percent. 

source: Frontier Economics

What Matters More, Inputs or Outputs?

Productivity is one thing, internet access speed another. Knowledge creation is one thing, average speeds another. Though a few small countries rank higher, the most productive larger country is the United States. 

That rarely is discussed when observers complain about the speed, price or availability of internet access in the United States. The point is that what matters is the ability to wring economic and social value out of communications. Without context, it is difficult to evaluate the value of speeds, coverage or other measures of quality. 

Nor, it should be noted, are various speed estimates in agreement. Looking only at mobile network speeds, some point out that U.S. mobile speeds are well down the rankings. Other estimates suggest North American speeds (a proxy for U.S. speeds) are among the highest in the world. 

source: Cisco

Put simply, all measures of internet speed are input measures. What matters are output measures. The value any nation can wring from internet access is what matters.