Cable’s Hold on the Broadband Market Slipped in Q3

Cable still may have the lead over telcos, but it was clear in the third quarter that the industry saw greater challenges from not only fiber broadband, but also fixed wireless access. 

The top cable operators added about 40,000 subscribers in the third quarter of 2022 – down from about 590,000 net adds the industry reported in the third quarter of 2021.

Bruce Leichtman, the principal analyst for Leichtman Research Group, noted in a recent report that there was a “minor gain for cable” during the third quarter.

Look at the chart below to see how the cable MSOs performed during the quarter. Broadband Communities developed these rankings from the information in service providers’ earnings reports. 

Comcast and Charter Loom Large

While the largest cable operators, led by Comcast and Charter, continued to hold onto their broadband lead, the gains weren’t as significant as seen in earlier quarters.

Comcast ended the third quarter with 14,000 net new broadband customers, improving over flat growth in the second quarter. Driven by 3.7 percent year-over-year ARPU growth, broadband revenue rose 5.7 percent to $6.1 billion.

“While we are still in a challenging environment regarding depressed move activity and increased competition from new entrants, we were pleased to see that back-to-school provided a tailwind. We ended the third quarter with 14,000 net new broadband subscribers,” said Brian Roberts, CEO of Comcast.

However, the company warned investors that the recent Hurricane Ian would affect its fourth-quarter broadband subscriber results. “While the storm did not impact our third quarter results, we expect to report an impact in the fourth quarter, including net losses of broadband customers,”

Likewise, Charter saw a subscriber boost during the third quarter. The cable MSO added another 75,000 new broadband customers, bouncing back from a loss of 21,000 in the second quarter.

Thomas Rutledge, Chairman and CEO of Charter told investors that it has plenty of room to grow the broadband business in both the consumer and business segments.

“We have a long and robust runway of customer growth ahead of us,” he said. “Today, our network passes over 54 million homes in businesses, and we're doing business with approximately 32 million of them, leaving us with over 20 million opportunities to create new customer relationships.”

He added that there’s also an opportunity to bring broadband to more customers that subscribe to wireless services. “There are also approximately 120 million mobile broadband lines in our footprint, and we currently serve 3.2 million. We're currently very under-penetrated,” Rutledge said.

Finally, Cox saw flat growth in the third quarter. It ended the period with 5.6 million broadband subscribers.

Regional Providers Mixed Bag Results

In the regional cable MSO arena, the results of this group were a mixed bag as some providers saw some slight gains while others reported losses or flat growth.

At the top of the second tier of cable operators, Altice USA lost 43,000 subscribers, while Mediacom remained flat in the third quarter, holding onto 1.5 million customers total.

Altice reported that residential revenue declined 4.4 percent year-over-year to $1.88 billion. Also, Altice USA’s residential revenue per customer relationship declined 1.9 percent year-over-year to $138.12, primarily due to what it said was the loss of higher ARPU video customers.

Despite the losses, Altice USA said it remains on track with its Optimum fiber broadband strategy.

 “We saw a further acceleration in our fiber network deployment, achieving our highest level of incremental fiber passings and reaching 1.9 million total fiber passings. With fiber broadband net additions of 31k, we reached 135k fiber customers at the end of the quarter,” said Dexter Goei, Altice USA Executive Chairman. “Our multi-gig speed tiers continued to roll out across our Optimum Fiber footprint, offering faster fiber speeds to more customers across the Tri-State.”

Breezeline, formerly Atlantic Broadband, lost 10,000 broadband customers during the quarter, while Cable One saw a slight gain of 3,000 new broadband customers. Altice USA, Breezeline, and Cable One have pursued an FTTH plan in some markets. Breezeline has been rolling out fiber broadband in parts of Maryland, New Hampshire, Ohio and West Virginia.

Finally, WOW! saw a slight gain of 1,500 new high-speed customers. However, it reported that high-speed data (HSD) Revenue from continuing operations was $102.3 million, down $1 million, or 1 percent, from the same period a year ago.

Like Altice USA and Breezeline, WOW! has also set forth a Greenfield FTTH expansion plan. In May, the cable MSO announced that it plans to invest $400 million in Greenfield FTTH expansions. As part of that plan, WOW! said it will double its Greenfield expansion plans to 400,000 homes passed by 2027, a 21 percent increase in the company's total homes passed.

The company noted that total subscription revenue from continuing operations for the quarter that ended September 30, 2022, was $160.4 million, down $9.9 million, or 6 percent, as compared to the corresponding period in 2021.

The company said the decrease was “primarily driven by a shift in service offering mix as we continue to experience a reduction in Video and Telephony RGUs, partially offset by an increase in average revenue per unit ("ARPU") as HSD customers continue to purchase higher speed tiers coupled with HSD and Video rate increases issued in the first quarter of 2022 and an increase in volume attributable exclusively to the addition of HSD subscribers.”