Residential broadband growth is set to slow by over 50% over the next few years, with much of the new subscriber growth going to new provider types such as MNO fixed wireless providers. The residential internet space will be more competitive, as fiber rollouts and 5G network buildouts pressure the market from the high and the low ends. ISPs increasingly need to differentiate based on the reliability of their networks, the usability of their apps and websites, and the additional services offered.
Bundling is increasingly important to attract and retain subscribers but also allows ISPs to grow their share of the $340B+ home services market, including home internet, mobile, phone, security, and pay-TV and OTT video services. While the importance of broadband to consumers has not decreased, inflation and a potential recession could trigger consumers to downgrade their plans or switch providers.
There is a growing convergence in network technologies and between provider types. ISPs are increasingly finding success with bundles of home and mobile broadband, launching MVNO services to their customer bases. At the same time, 5G mobile networks are leveraged now for home internet service. Low penetration of fiber (~23M out of 114.5M internet households) is creating a market opportunity for fixed wireless. Currently, three US MNOs – T-Mobile USA, Verizon Wireless, and US Cellular – are targeting widespread fixed wireless rollouts. Home security providers, many of which provide security and smart home services through 5G connections, may likewise have an opportunity to enter this market.
Internet service providers must prepare themselves for an increasingly competitive market through increased fiber rollouts, partnerships with a diverse lineup of companies, and an understanding of their customer bases’ wants and needs. Remote work continues with 36% of US internet households, or 51% of the employed population, working remotely at least one day per week. With housing and transportation costs rising, the prevalence of remote work likely will grow – creating additional demand for premium internet services.
Brownfield: a market that has already been commercially exploited. In the context of internet services, this would be a market that a provider already operates in and has already deployed existing and oftentimes legacy infrastructure in.
FWA: Fixed wireless access. A method of delivering internet access using a wireless connection, typically over the last mile connection. However, FWA providers may use both point-to-point and point-to-multipoint solutions. FWA commonly makes high-frequency bands such as mmWave or even microwave connections. 5G is an emerging FWA technology.
Greenfield: a market that has not yet been commercially exploited. In the context of internet services, this would be a new market that a provider has not previously deployed in.
Internet household: a household that has a subscription to high-speed internet in their home, defined as any speed faster than dial-up. This may be delivered directly to their home or to a mobile device such as a smartphone.
Home internet household: a household that has a subscription to high-speed internet delivered directly to their home, over either a wired or wireless network. This includes fiber internet, coaxial cable, DSL, satellite, and fixed wireless from traditional players or MNOs.
Mobile-only internet household: a household that has a subscription to a mobile broadband plan on one or more mobile devices such as a smartphone, tablet, or hotspot device, but lacks a home internet connection.
ISP: Internet service provider. Offers internet service to individuals and businesses.
MNO: Mobile Network Operator, also known as a wireless service provider, wireless carrier, or cellular company. Provides wireless communications services and owns or controls all the elements necessary to sell and deliver services to end users.
MVNO: Mobile Virtual Network Operator. A wireless communications service provider that does not own the wireless infrastructure it uses to deliver services to end users; a MVNO leases infrastructure from MNOs.
Network edge-out: a strategy whereby an ISP extends the reach of its networks by growing them at the periphery or its “edges.”
Network passing: a location that has network access, but has not necessarily subscribed to an ISP. That is a location that is capable of subscribing to an ISP’s service regardless of if it has done so or not.
Pay TV: a subscription to a bundle of live, linear channels of video content.
Traditional Pay TV: a traditional set-top box TV service from a traditional provider such as an internet service provider or a satellite company
Streaming TV: pay TV is distributed via internet protocol, typically via an app distribution model. It is provided by traditional providers or vMVPDs.
vMVPD: Virtual Multi-Channel Video Programming Distributor. vMVPDs are companies that offer streaming TV on a nationwide basis over the top of other companies’ networks. vMVPDs typically support BYOD models, using app and/or web-based distribution. Examples include YouTube TV, Philo, and fuboTV, among others.
