(Bloomberg) — Cable companies have long contended with consumers who drop their TV bundles for streaming. But Comcast Corp. and Charter Communications Inc. are also losing subscribers on another front: broadband.
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Cable providers may lose up to 481,000 internet customers in the third quarter, according to estimates from SNL Kagan and Bloomberg Intelligence, the worst ever decline for the industry. The expiration of a government subsidy program and phone companies signing up home internet customers for wireless connections help explain the losses.
“The risk to cable is unlikely to ease anytime soon,” Bloomberg Intelligence analyst Geetha Ranganathan wrote in an Oct. 10 note. Verizon Communications Inc., T-Mobile US Inc. and AT&T Inc. are expected to report they added more than 900,000 broadband customers in the third quarter, including wireless home service and fiber, according to according to estimates compiled by Bloomberg.
The winners have been telephone companies selling fiber connections and home wireless service powered by their 5G networks. T-Mobile sells wireless internet plans for the home at $50 a month, compared with the average cable internet bill of $65 to $70 — an attractive proposition buoying the carriers as they get set to report third-quarter results next week.
T-Mobile added 406,000 home broadband subscribers last quarter and is projected to report another gain of 401,000 in the third quarter, the average of estimates compiled by Bloomberg. Analysts project Verizon will add 223,000 home wireless customers. AT&T, which got into the fixed wireless game a little later, is projected to sign up 147,000 fixed wireless subscribers in the third quarter.
Cable companies like Charter, the largest pay-TV provider, rely on three main lines of business for their revenue: video service, internet access and wireless phone service. Subscribers to two of those businesses, video and broadband, are shrinking. Comcast also gets revenue from NBCUniversal, its film, TV and theme-park operation.
Charter is the most vulnerable to the end of the government’s Affordable Connectivity Program, which offered subsidized internet access during the pandemic. The Stamford, Connecticut-based company had about 5 million such subscribers, according to Bloomberg Intelligence. It’s forecast to lose 248,000 internet customers when it reports quarterly results on Nov. 1, the fourth straight decline. Comcast, based in Philadelphia, is expected to shrink by about 128,000 customers, marking a year and a half of losses.
The good news for cable providers is that their broadband losses are expected to begin leveling off next year alongside slowing growth for fixed wireless. Wireless carriers know they’ll eventually have to contend with capacity limits on their networks. Some, like AT&T, are focused on building a temporary subscriber base with fixed wireless while they invest in fiber optic lines.
Speaking at Mobile World Congress Las Vegas last week, US Cellular Corp. Chief Executive Officer Laurent Therivel said residential wireless offerings won’t be profitable on their own in the long term, unless carriers change their business models and use their networks more efficiently. That’s because home fixed-wireless users consume more than 20 times the amount of data than the average mobile customer, he said.
Acquiring more spectrum could give carriers room to grow the fixed-wireless business, but availability is scarce. They’ve already snapped up as many licenses as they could in several spectrum auctions from 2020 to 2022, and more can’t be sold until Congress renews the Federal Communications Commission’s authority to conduct spectrum auctions.
Spectrum access is holding back Dish Network from joining the fixed-wireless fray, but it has a proposal that doesn’t require an auction: The company already has access to bandwidth that it uses to provide satellite-TV service. It’s seeking regulatory approval to also use those frequencies to power home broadband.
“We really hope to see the FCC take up this proceeding and hopefully meet the growing demand for fixed wireless,” Svetlana Matt, director of public policy at Dish Network, said at Mobile World Congress. “Fixed broadband is one of the solutions” for filling gaps in service, she said.
Although major carriers are all expanding their fiber footprints, the infrastructure remains far short of what their cable counterparts offer. AT&T reaches roughly a third of the country with fiber, while T-Mobile is at barely 2%, according to MoffettNathanson analyst Craig Moffett.
“The only conceivable way you could get to meaningful scale is to buy Charter,” he said of the wireless companies. “They seem to be leading the market in a direction that’s, for them, a cul-de-sac.”
Cable companies, meanwhile, say they’re well-prepared for more competition from carriers.
“We have the nation’s most connected broadband customers,” Comcast CEO Brian Roberts said last week at the Bloomberg Screentime conference. “We’re going to have a great year this year, by all the analysts’ accounts. Maybe even the best year in the company’s history.”
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