Broadband subscribers numbers in the U.S. are likely to grow at a slower rate in the coming years as increasing market penetration confronts the limits of the number of households that can afford broadband service, according to new research from Wells Fargo Securities LLC.
In a research report for subscribers, Wells Fargo analysts said that while the U.S. broadband industry continued to add subscribers in 2020, and has some apparent market runway left among the 24% of U.S. households that still don’t have service. However, the industry already is reaching around 92% of homes that report at least $25,000 annual income -- those seen as households which reasonably can afford to pay for monthly broadband service.
“Population growth is helping, but we think broadband industry subscriber growth will be modestly decelerating in the years ahead to ~2% by 2022,” stated the Wells Fargo report, which goes into greater detail about how and why this will happen. Average revenue per user also is likely to grow at a slower rate for broadband providers, following the example already witnessed in the mobile data market when market penetration and service acceptance neared their limits.
Among other findings, the analysts noted that broadband subscriber additions last year for the four cable TV operators it covers in its equities research were strong amid the Covid-19 pandemic, and that the cable TV industry has made good progress transitioning from a video-centric business to a broadband-centric business. This has limited their risk among growing pay TV competition.
Other research firms also have noted that cable players’ broadband numbers appeared to benefit greatly from remote working and learning trends and stay-at-home orders that kept consumers online more over the last year. Leichtman Research recently stated that those firms added more than 4.8 million net new subscribers last year, compared to around 3.1 million the year before, marking the biggest annual increase since 2006.