Cable MSOs, Telcos Broadband Growth Woes Continued into Q4 2022

As the fourth quarter of 2022 closed, telcos and cable operators saw their broadband additions trail pre-pandemic levels. Meanwhile, T-Mobile and Verizon continued to make headway with broadband wireless customer additions throughout the quarter and the year.

In 2022, the largest broadband providers representing about 95 percent of the market, acquired approximately 3,500,000 net additional broadband Internet subscribers 2022, compared to a pro forma gain of approximately 3,725,000 subscribers in 2021.   

According to Leichtman Group Research (LRG), these top broadband providers account for about 110.5 million subscribers, with top cable companies having 75.6 million broadband subscribers, top wireline phone companies having 30.8 million subscribers, and top fixed wireless services having 4.1 million subscribers.

The broadband race continues to be a battleground for telcos and cable operators. Still, in the fourth quarter, both segments saw cracks in the armor with ongoing legacy losses and continued threats from broadband wireless services.

Cable MSOs added about 515,000 subscribers in 2022 – compared to about 2.8 million net adds in 2021.

The top wireline telcos lost about 180,000 total broadband subscribers in 2022 – compared to about 210,000 net adds in 2021. And while telcos added nearly 2 million fiber broadband customers in 2022, that growth was offset by about 2.2 million lower-speed DSL subscriber losses.

“Top broadband providers added about 3.5 million subscribers in 2022,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group.  “Total broadband net adds in 2022 were slightly lower than last year, down from about 5 million in 2020, but were more than in any year from 2012-2019.”

Interestingly, broadband wireless continues to gain momentum. Fixed wireless/5G home Internet services from T-Mobile and Verizon added about 3,170,000 subscribers in 2022 – compared to about 730,000 net adds in 2021. Both providers also saw gains in the fourth quarter: T-Mobile added 524,000, and Verizon added 117,000 customers. Leichtman said that “fixed wireless services accounted for 90 percent of the net broadband additions in 2022, compared to 20 percent of the net adds in 2021.”

New Street Research signaled that the first quarter of 2023 broadband numbers might also be weak. “Industry adds look to be close to 30 percent below last year and pre-pandemic levels (1Q22 was in line with 1Q19),” said the research firm in a recent research note.

• Total Broadband Subscribers: This looks at the total number of subscribers the top 16 broadband providers had at the end of the fourth quarter. Although not as high as when the COVID-19 pandemic began, cable maintains the upper hand in the broadband race, controlling a significant U.S. residential broadband market share.  
  
  
• Broadband Additions, Losses: AT&T and Lumen saw gains in fiber-based broadband, but that wasn’t enough to offset DSL losses during the fourth quarter. For example, AT&T added net fiber subscribers but still lost 323,000 lower-speed DSL and VDSL customers during the fourth quarter. Total broadband losses, excluding DSL, were 43,000, reflecting AT&T Fiber net adds of 280,000, more than offset by losses in non-fiber services. 

Likewise, Lumen reported it lost 253,000 copper subscribers but only added 19,000 new Quantum Fiber customers. Meanwhile, Frontier added 76,000 new fiber subscribers in the fourth quarter. The telco also built 381,000 recent fiber locations in Q4, ending 2022 with 5.2 million fiber locations. 

Cable continued to lead the commanded broadband market during the fourth quarter. Comcast only added 4,000 new subscribers, and Charter gained 105,000 broadband customers. Meanwhile, regional providers like Altice and Breezeline lost 8,000 and 14,000 subscribers, respectively. Mediacom and Cable One also lost 3,000 and 1,600 subscribers, respectively. Finally, WOW! We lost 7,500 broadband subscribers.

Broadband Revenues: As the largest cable operators and telcos add more broadband subscribers, they will enhance broadband revenues.

Here are the statistics of the top 16 broadband providers in the fourth quarter:

We track two main types of service providers that provide wireline residential broadband services:

ILECs: Traditional telcos are at a crossroads. As more customers want higher speeds, this group has been increasingly transitioning their copper networks to FTTH across select markets.

Cable MSOs: Cable MSOs did their broadband business by delivering broadband over HFC. Apart from deploying FTTH in select greenfield markets, the advent of DOCSIS 3.1 and the upcoming DOCSIS 4.1 standard enables cable MSOs to offer 1 Gbps over their existing hybrid fiber-coax (HFC) plant. Comcast and Mediacom now offer 10G services in various markets leveraging their existing HFC plant.

However, some cable providers, such as Altice USA, have opted for an all-FTTH approach. Meanwhile, other regional cable MSOs like WOW! are aggressively building FTTH in Greenfield markets like  Altamonte Springs, Florida.