Residential broadband subscriptions are expected to top 122 million by the end of this year, according to Kagan, a research unit of S&P Global Market Intelligence. Cable companies, which still carry most of the residential broadband market, will likely account for 61.9% of occupied households by 2026.
Further breaking down the market share, Kagan predicts in 2026 telecom companies will make up 24.5% of the market, fixed wireless shares to jump from 8% to 12.6% and residential satellite broadband to maintain a 1% hold.
As cable operators continue expanding their footprint, telcos are pouring money into fiber, Kagan Research Director Ian Olgeirson told Fierce. Telcos are seeking to upgrade their legacy copper infrastructure that delivers broadband via DSL or fiber-to-the-node, while cable operators mainly run hybrid-fiber coax networks – combining optical fiber and Ethernet cables.
Revenue-wise, Kagan predicts cable residential broadband revenue will total around $63.7 billion by the end of 2022 – and expected to rise to $76.7 billion by 2026. Whereas telco broadband revenue is expected to end this year with $21.2 billion, moving up to $26.2 billion in the next four years.
Despite telco investment efforts and a variety of broadband federal subsidies available, Kagan estimates telco broadband market share will slide below 25% by 2026. This prediction is impacted by long lead times for fiber-to-the-home upgrades as well as DSL overhang.
That said, Olgeirson thinks most telecom companies have set a course to upgrade a portion of their networks within the next five years. Indeed, Kagan predicts fiber subscriptions will account for nearly three-quarters of telco residential broadband subscriptions by 2026.
“It’s a labor-intensive process upgrading landline and wireline networks – they certainly can’t flip the switch and upgrade to fiber,” he said. “It takes a while and that certainly will limit some of the growth prospects in the near-term.”
With nearly 93% of U.S. households connected to broadband, the Kagan report highlights the number of new broadband subscribers shrinking while market competition continues to heat up. The amount of competitive pressure on such a mature and saturated market “certainly stands out,” Olgeirson noted.
Cable-side, Olgeirson said operators like Comcast, Charter Communications and Altice USA are expected to maintain a dominant market share. Charter anticipates it will increase its broadband homes passed by one million over the next five years, with Altice seeking to grow its fiber footprint to seven million homes in that same timeframe.
As for Comcast, although its broadband net adds dropped 43% year-over-year, as reported in Q1 2022 earnings, CEO Dave Watson said on the earnings call Comcast is holding its own in the market despite competition from fiber and fixed wireless players.
The activity from these three operators will likely drive cable broadband residential subscriptions up to 83.2 million by 2026. Olgeirson also noted AT&T and Verizon, with their fiber network enhancements, will likely continue being key telco players in the market.
Satellite and wireless broadband lie at the tail end in market share. Kagan estimates satellite broadband will maintain a 1% hold on the market in the next four years, due to high costs and capacity constraints from incumbents like Hughesnet and Viasat.
Fixed wireless, on the other hand, is growing the fastest out of Kagan’s four categories, due to more homes choosing to use LTE and 5G mobile networks as their primary internet. Verizon Wireless and T-Mobile lead the fray, and Kagan expects wireless home broadband subscribers to grow to 9.5 million households by year-end, penetrating 7.2% of the U.S. broadband market.