The broadband market is ripe for change as traditional services fully mature, and participants seek to maximize profitability and new revenue streams. Consumers now value technology more than ever and are increasingly seeking new applications, including wi-fi services and various value-added bundled services. Parks Associates’ industry report “Residential Broadband: State of the Market” evaluates the most significant events and trends that impact the broadband industry, including disruptive technologies, changing consumer trends, and the competitive landscape.
5G home internet poses an existential threat to non-fiber providers but is unlikely to challenge fiber or sufficiently fast hybrid fiber networks. 5G home internet service offers average downlink speeds of 200Mbps or greater, comparable to average consumer-reported download speeds overall. The speed, reliability, and pricing of these plans far exceed that of satellite, DSL, and many competing traditional fixed wireless services. However, it cannot match the performance and reliability of fiber. The research firm reports 20% of home internet households bundle their mobile and home internet services together, while 41% of US home internet households report owning a mesh networking product, and 23% of US internet households report that they have a fiber internet connection.
Consumer attitude towards home internet value remains positive in the face of inflation and a return to the office, but ISPs should still hesitate to raise prices. As a result of the COVID-19 pandemic, consumers have put more value on their home’s internet service. Increases in connected device ownership increased video streaming, and a new remote workforce further strengthened the home internet’s importance. However, with the nationwide rollout of 5G home internet services from Verizon and T-Mobile, ISPs in many US markets have gained two competitors that offer compelling pricing and performance at the low end of the market.
The role of pay TV has shifted among ISPs, now serving as a value-add for home broadband. ISPs report that their pay TV offerings serve to attract and retain home internet customers who expect to receive TV service from their internet provider. Widening pay-tv service appeal and cutting CAPEX and OPEX investments has become an area of focus for ISPs, and a key component for many is an evolution away from legacy distribution models and towards an app-based IPTV infrastructure. The firm also finds that 73% of US internet HHs have a traditional or VAS bundle with their home internet service, and 49% of streaming TV subscribers receive streaming TV from their home internet service provider.
Consumers increasingly seek new bundles and services, including managed Wi-Fi and home and mobile internet bundles. The home internet bundle has changed and evolved over time, with traditional service offerings including home internet, pay TV, home phone, mobile phone, and home security. The declining adoption of pay TV and the home phone has driven declines in traditional bundling offers. However, the rise of new bundles, including broadband value-added services, has more than offset the decline in traditional bundles.
Demand for next-generation networking is falling among consumers but remains elevated compared to pre-pandemic levels. Consumer-reported intentions to purchase home network routers remain elevated compared to 2020 and prior but have declined since 2021. Consumer demand for mesh networking products remains at 2021 levels
Parks Associates will host the fifth annual Future of Video: OTT, Pay TV, and Digital Media on December 12-14 at the Marina del Rey Marriott in Marina del Rey, CA. This executive conference brings together senior leaders to share insights on new trends in the video and connected entertainment industries, with insights on consumer adoption, churn, and spending. Register Now: https://parksassociates.com/events/future-of-video/register