Tuesday, August 13, 2019

Cable Gets 100% of Net Internet Accountr Additions in 2Q 2019

As has been the case for some years, virtually all the net internet subscriber gains in the U.S. market in the second quarter of 2019 were gotten by cable operators. 

The largest cable and telephone providers in the United States, representing about 96 percent of the market--gained a net 370,000 internet subscribers in the second quarter of 2019, compared to 480,000 subscribers in the second quarter of  2018, according to Leichtman Research Group.

These top broadband providers now account for 99.9 million subscribers, with the largest cable companies having 66.2 million broadband subscribers, and largest telephone companies having 33.7 million subscribers.

About six percent of those subscribers are business accounts, LRG says. 

Broadband Providers Subscribers at end of 2Q 2019 Net Adds in 2Q 2019
Cable Companies
Comcast 27,807,000 209,000
Charter 25,945,000 258,000
Cox* 5,120,000 20,000
Altice 4,168,100 13,100
Mediacom 1,303,000 15,000
WOW (WideOpenWest) 765,500 (400)
Cable ONE 681,762 3,377
Atlantic Broadband** 443,696 14,134
Total Top Cable 66,234,058 532,211

Phone Companies
AT&T 15,698,000 (39,000)
Verizon 6,968,000 (5,000)
CenturyLink 4,750,000 (56,000)
Frontier 3,626,000 (71,000)
Windstream 1,034,300 1,900
Consolidated 783,008 2,288
TDS^ 433,400 5,800
Cincinnati Bell^^ 425,500 (1,200)
Total Top Telco 33,718,208 (162,212)
Total Top Broadband 99,952,266 369,999

Monday, August 12, 2019

U.S. Linear Video Losses Steepen

Though there are changes of market share for every product category, the losses of legacy product accounts and revenues continues unabated in most markets. Consider video services, one of the newer telco products.

U.S. linear subscription TV providers lost at least 1,530,000 net video subscribers in the second quarter of  2019, compared to a net loss of about 420,000 subscribers in the second quarter of 2018, according to Leichtman Research Group. 

Satellite suppliers took a bigger hit than fixed network providers, and DirecTV took the lion’s share of losses.  Satellite TV services lost about 855,000 subscribers in the second quarter of 2019, compared to a net loss of about 480,000 subscribers in the same quarter of  2018. 

Video Providers
Subscribers 2Q 2019
Net Adds 2Q 2019

Cable Companies


Comcast
21,641,000
(224,000)
Charter
16,320,000
(141,000)
Cox*
3,940,000
(40,000)
Altice
3,276,500
(20,800)
Mediacom
747,000
(17,000)
Cable ONE
308,493
(12,118)
Atlantic Broadband**
307,261
(345)

Total Top Cable
46,540,254
(455,263)

Satellite


DirecTV
17,901,000
(778,000)
DISH TV
9,560,000
(79,000)

Total DBS
27,461,000
(857,000)

Phone Companies


Verizon FiOS
4,346,000
(52,000)
AT&T U-verse^
3,704,000
0
Frontier
738,000
(46,000)

Total Top Phone
8,788,000
(98,000)

Internet-Delivered (vMVPD)


Sling TV
2,472,000
48,000
DIRECTV NOW
1,340,000
(168,000)

Total Top vMVPD^^
3,812,000
(120,000)

Total Top Providers
86,601,254
(1,530,263)

The direction of change is not unexpected, by virtually anyone. Perhaps the magnitude of change is not surprising, either. Virtually every legacy product sold by service providers is diminishing in volume, creating a need for creation of new products and revenue streams.

Sunday, August 4, 2019

Could 5G Fixed Wireless be a Killer App?

Whether 5G ever will have a “killer app” remains an open question, though one can argue that each successive new mobile generation has had use modes characteristic to itself that were not seen in the prior generation. Voice was the first generation killer app. Text messaging was added in 2G. Mobile internet access was big in the 3G era. The first generation to feature widespread video consumption was 4G. 

Most would agree internet of things could be among the potential killer apps for 5G. But a few believe 5G also “could take significant market share away from traditional cable broadband providers,” says Hoya Capital. 

“We believe that the true killer app for 5G will be fixed wireless broadband internet, as dense small cell networks will allow carriers to deliver fiber-like speeds without the wires,” Hoya says. The threat arguably is highest for cable TV operators, given their dominance of the fixed network internet access market. 


At this point, close to 100 percent of net new internet access account additions accrue to cable TV companies in the U.S. market, a trend that has been obvious for some time.

It is unclear what percentage of that growth represents net new subscribers;  how much represents market share taken from telcos, satellite or third-party providers; or what percentage of net new adds are business accounts.

Still, fixed wireless substitution would, at the margin, represent a significant threat to cable TV operator market share growth, possibly removing virtually all the incremental account growth. 

Nor is it clear how close we are to saturation of the home internet access market, which might already be close to a point that it is mostly new home construction that drives additional growth of the market.

Not every U.S. home buys fixed network internet access service. By some estimates, there are a total of about 97 million U.S. internet access connections supplied by fixed networks (not including mobile internet access connections to phones and other devices). Other estimates suggest there could be 110 million accounts in service. 

Perhaps 10 percent of U.S. homes use the internet, but exclusively from mobile devices. U.S. housing locations number somewhere between 129 million and perhaps 135 million, so the number of connected households (mobile only plus fixed) is probably in the range of 107 million to 117 million homes. 

No all units are occupied. Vacancy rates can range from more than one percent for owned housing and up to seven percent for rental units. Some “homes” are not used all year. The point is that the percentage of connected homes--as a function of the potential buyer base-- is higher than one generally supposes. 

The point is that less potential growth exists than the base of unconnected homes would suggest. 


The question is whether fixed wireless might eventually represent 15 percent to 20 percent of active subscriptions supplied by fixed network ISPs.

Friday, August 2, 2019

Table Stakes Not the Same Thing as "Delighting the Customer or Employee"

There is, in organizational theory, vast difference between employee or customer happiness and unhappiness; satisfaction and dissatisfaction; reasons to leave or stay. There is a difference between product or job attributes that are necessary, and those which create commitment, motivation, loyalty, differentiation, value, joy or happiness.

Motivators include such attributes as challenging work, recognition for one's achievement, responsibility, opportunity to do something meaningful, involvement in decision making, sense of importance to an organization, other forms of recognition, achievement, or personal growth.

Hygiene factors are different. These are attributes whose absence causes customer or employee churn or unhappiness on the job. These include attributes of job security, salary, fringe benefits, working conditions, vacations and so forth whose absence or insufficiency cause people to want to leave.

The important observation Herzberg made is that hygiene factors can cause people to leave, but they cannot make people “motivated,” loyal, committed or enthusiastic.

Those outcomes are on a different scale, entirely. “Hygiene” (maintaining health) inputs only prevent your customers and employees from wanting to leave you.

But hygiene does not--and cannot--lead to “delight” with a product or commitment to an organization. Put another way, some categories of customer or employee benefits--pay, working conditions, fringe benefits--can keep employees or customers from deserting. But those inputs cannot create the motivation to excel on the job or create “moments of joy” for consumers.

Where we often think of satisfaction and dissatisfaction as opposite ends of a single scale, theorists argue that there are two separate dimensions of experience.

On one scale are practices that make employees or customers more or less unhappy. On the separate scale are practices that delight customers. In other words, dissatisfaction and happiness are orthogonal.

At a high level, there are four possible combinations of hygiene and motivational factors:

1. High Hygiene + High Motivation: The ideal situation where employees are highly motivated and have few complaints; customers absolutely love a product

2. High Hygiene + Low Motivation: Employees have few complaints but are not highly motivated. The job is viewed as a paycheck; customers use a product, but do not love it

3. Low Hygiene + High Motivation: Employees are motivated but have a lot of complaints. Perhaps a job is exciting and challenging but salaries and work conditions are not up to par. In the consumer realm, In the consumer realm, this might include any number of apps, devices or services that are highly desired, but too costly, in terms of value, compared to price.

4. Low Hygiene + Low Motivation: This is the worst situation where employees are not motivated and have many complaints. In a consumer context, this is a product, app or service that does not work, provides little value, is hard to buy and use, is unreliable and also expensive.

In other words, in either a work setting or a consumer products setting, one ideally would remove sources of dissatisfaction, while at the same time increasing sources of delightfulness, commitment, loyalty and value.

This ”two factor theory, associated with Frederick Herzberg, is among the few insights from organization theory I’ve ever actually used in business life.

Thursday, August 1, 2019

SubTel Cable Map



STF Analytics has published a new map of subsea cable routes, data centers and landing points. Here is the site. The tutorial might be useful, before you start poking around on the app. 

What is More Important: Speed or Consistency?

Few customers enjoy “slow” internet connections. On the other hand, speed, at some point, becomes a matter of “hygiene” (health), not a driver of satisfaction or value. In fact, according to a recent survey conducted on behalf of Nominet, consistency of experience (“reliability”) is equally important as “speed.”

In fact, forced to choose between reliability and speed, a majority would choose reliability over speed. Of the 2,080 U.K. adults polled on their home internet connectivity, 60 percent would opt for reliability over speed, if one or the other had to be prioritized, the new research indicates.

Still, some 77 percent of respondents said they are satisfied with their home internet connection speed. Nearly the same percentage--76 percent--indicated they are satisfied with service reliability.

Indoor reception issues are probably largely the driver of the concern over consistency of experience, the actual issue often being Wi-Fi performance inside the home, rather than the actual access connection. 


Beyond a fairly reasonable point, most consumers will not actually have better experience as speeds climb beyond about 10 Mbps, the exceptions being 4K or 8K video, or downloading of large files. 

Cable Says Fixed Wireless Not a Threat. Really?

With the proviso that a great divergence of opinion exists on the ultimate market share fixed wireless services might get, it does at least make sense to consider what could be possible. Assuming the T-Mobile US merger with Sprint is approved, one of the likely conditions is that new T-Mobile works to gain roughly 10 million new U.S. fixed wireless accounts in rural areas.


Verizon at the moment believes it will eventually gain some eight million fixed wireless accounts, eventually. Throw in some hundreds to thousands of new fixed wireless accounts by independent ISPs and maybe a million AT&T accounts and one could conceivably imagine 20 million U.S. “fixed” internet connections. 

By some estimates, there are a total of about 97 million U.S. internet access connections supplied by fixed networks (not including mobile internet access connections to phones and other devices). Other estimates suggest there could be 110 million accounts in service. 

No all units are occupied. Vacancy rates can range from more than one percent for owned housing and up to seven percent for rental units. Some “homes” are not used all year. 

U.S. housing locations number somewhere between 129 million and perhaps 135 million

If so, fixed wireless might eventually represent 15 percent to 20 percent of active subscriptions supplied by fixed network ISPs. 

Fixed wireless would represent a smaller proportion of “homes,” as not all homes buy fixed network internet access, not all homes are occupied (and therefore candidates to buy) and some homes cannot easily be wired (they are boats, mobile vehicles or can be rooms inside other homes). 

How that changes market share statistics would depend on how many subscriptions replace existing accounts, and what percentage represent incremental new accounts. But it is reasonable to suggest that most of the changes represent market share shifts, not incremental growth, as the U.S. market is nearly saturated. 

Most people who want to use the internet already do so. And most people that want to buy fixed network internet access already do so, as well. In the future, mobile substitution also will continue to limit the size of the market for fixed network internet access, as mobile access will become more attractive for some customers. 

Behaviorally, it already is correct to note that mobile access to the internet is a growing portion of total internet access. That especially is true for lower-income households



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