Cable operators may have seen their collective broadband growth slow a bit in the third quarter, but the segment continued to add subscribers.
During the quarter, the top cable companies added about 590,000 subscribers–a figure that Leichtman Research Group said is 45 percent of the net additions for the top cable companies.
By contrast, the wireline phone companies added about 40,000 total broadband subscribers in 3Q 2021 – compared to about 200,000 net adds in the third quarter of 2020.
Jonathan Chaplin, New Street Research, said in a recent webinar that broadband growth is still thriving, but the “change has come in the market share shift between ILECs and cable where net adds are down by 230,000.”
He added that while telcos fiber network builds are growing, it wasn’t the main factor in the growth patterns.
“Fiber nets are up in the third quarter, but only by 22,000,” Chaplin said. “The real change in the trends at the ILECs is that DSL losses were down by 168,000.”
| Cable Operator | Total Broadband Subs | Subs added/lost | Broadband Revenue |
| Comcast | 31.7M | 300K | $5.8B |
| Charter | 29.9M | 265K | $5.4B |
| Cox | 5.51M | 25K | (not reported) |
| Altice USA | 4.4M | -13,000 | $989M |
| Mediacom | 1.46M | -2,000 | $144M |
| Cable One | 1.03M | 13K | $220M |
| Atlantic Broadband | 717K | 3K | $271M |
| WOW! | 510K | 1.6K | $103.3M |
Charter, Comcast Gains Narrow, But Still Grow
The two largest U.S. cable operators – Charter and Comcast – added more broadband subscribers during the third quarter, but the number of added subscribers narrowed from the peaks hit during the beginning of the COVID-19 pandemic.
Charter added 265,000 broadband subscribers, missing analysts’ expectations of 343,000.
Tom Rutledge, CEO and chairman of Charter, told investors during the company’s third-quarter earnings call that “market churn remains historically low such that net gains are being driven by much lower transaction activity.”
The cable MSO now expects full-year 2021 growth to be similar to growth in 2018 rather than 2019. However, Rutledge emphasized that it has plenty of room to expand its subscriber base.
“We have a long and robust runway of customer growth ahead of us,” he said. “Today, our network passes [more than] 54 million homes in businesses, and we're doing business with approximately 32 million of them, leaving us with [more than] 20 million opportunities to create new customer relationships.”
Broadband continues to be the top source of growth at Comcast, but the company’s CFO, Mike Cavanagh, told investors the pace of growth during the third quarter of 2021 slowed a bit compared with 2019 levels. "What we're seeing in the most recent past … is a little bit of slowdown in the net adds in the cable business," he said.
Cavanagh added that totals for the third quarter “will likely fall behind what was a record third quarter of 2019,” but the company still expects full-year 2021 totals to surpass that of full-year 2019 totals.
Changing Dynamics
Craig Moffett, an analyst with MoffettNathanson, noted in a research note that Comcast saw fewer customers churn in the third quarter of 2021. He said investors should be looking at the "middle six months," or the second and third quarters together.
"In total, the 'middle six months' delivered 11 percent more subscribers in 2021 than 2020 … hardly a sign of a slowdown,” he said.
Industry analysts say that the broadband growth change in the cable industry is related to a new transformation that is being led by competitive threats and new government stimulus programs like RDOF and the CARES Act.
While cable operators typically would see seasonal gains and declines, the advent of remote work and learning has changed that trend that was common in the cable industry.
"I don't think we can speak of cable seasonality anymore," said Tony Lenoir, senior research analyst at Kagan, a media research group within S&P Global Market Intelligence, in a recent report. "The business has evolved, with broadband now its primary product — a service for which college attendance doesn't really make a difference since students rely on campus broadband and their mobile devices for their connectivity needs."
Regional Providers Look to Stimulus Bills, New Builds
Regional cable operators Mediacom, Cable One, and WOW! saw various transitions during the third quarter.
Mediacom, which reported that it lost 2,000 subscribers, ended the quarter with a total of 1.46 million broadband customers.
Cable One reported that residential data revenues rose to $220 million. The cable MSO has enhanced its broadband footprint with targeted acquisitions, including Hargray and earlier ValueNet Fiber.
WideOpenWest, which continues to place emphasis on its "broadband-first" strategy, ended the third quarter with approximately 509,500 internet customers, compared to about 496,600 in the same quarter of last year. WideOpenWest CEO Teresa Elder told investors that the company has about 8,000 customers benefiting from the Emergency Broadband Benefit Program. She said the company plans to take advantage of the infrastructure bill to retain customers.
About $65 billion of the $1.2 trillion bill is allotted to strengthening broadband infrastructure and investing in rural connectivity. It is likely that states will be unable to utilize this funding for at least a few more months.
Another MSO to pay attention to more is Atlantic Broadband.
To complement its sizeable HFC footprint, Atlantic Broadband announced in November that it will invest $82 million in its current fiscal year to extend its reach to nearly 70,000 additional homes and businesses, providing Gig internet, home WiFi, Internet Protocol TV (IPTV) and voice services via advanced Fiber-to-the-Home (FTTH) technology. The first customer activations are expected in early 2022. As construction is completed throughout the year in each of the locations, Atlantic Broadband will notify residents of its planned schedule for activation by neighborhood.
The fiber expansion initiative follows Atlantic Broadband’s acquisition in September of the cable systems of Wide Open West (WOW!) in Cleveland and Columbus, Ohio, which added nearly 690,000 serviceable households and businesses to the company’s footprint.
Franchise agreements have been obtained or are underway in multiple communities in New Hampshire and West Virginia, including the cities of Concord, Dover and Somersworth and the towns of Durham and Madbury in New Hampshire, as well as the cities of Westover and Morgantown, and the towns of Granville and Star City in West Virginia.
Robin Comstock, Economic Development Manager for the City of Somersworth, New Hampshire, which in June approved the grant of franchise for Atlantic Broadband to begin providing service in the city, praised Atlantic Broadband’s plans.
“The state-of-the-art fiber infrastructure will provide a new option for residential and business members of our community, help drive economic vitality and keep us ahead of the technological curve,” Comstock said in a release.
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