Broadband Subscriptions Are Up...But What's Behind the Numbers?

Benton Institute for Broadband & Society

Friday, May 29, 2020

Weekly Digest

Broadband Subscriptions Are Up...But What's Behind the Numbers?

 You’re reading the Benton Institute for Broadband & Society’s Weekly Digest, a recap of the biggest (or most overlooked) broadband stories of the week. The digest is delivered via e-mail each Friday.

Round-Up for the Week of May 25-29

Kevin Taglang

Back in April, a Pew Research Center survey found that 53% of U.S. adults say the internet has been essential for them personally during the pandemic. Another 34% say it has been important. Those attitudes are reflected in increased traffic over home broadband networks. More people and more devices are connecting to do more things while sheltered at home. 

With millions of people not yet connected to broadband networks -- either because they are unavailable or unaffordable -- many a public interest policy wonk (including me) have been rooting for a massive upswing in internet subscriptions. As a Washington Post editorial highlighted this week, for students who can’t access live-streamed classes, for the ill who can’t virtually consult with a doctor, for isolated individuals who can’t find human connection on their laptop screens, we all need broadband and we need it now.

Broadband Subscriptions on the Rise For Now

Earlier this month, Leichtman Research Group found that the largest broadband service providers -- the cable and telephone companies that serve about 96% of the total broadband market -- added 1,165,000 new subscribers in the first quarter of this year. To put that number into perspective, just over 42% of all new broadband subscribers who signed up in the last year did so in January, February, and March. In fact, the first quarter of 2020 saw more new broadband subscribers than in any quarter since 2015. In comparison, there were just 955,000 new subscribers in the first quarter of 2019.

But please don't immediately think of this as COVID-19's silver lining. You see, as a new report from communications industry financial analyst MoffettNathanson points out, new additions in broadband subscribership are tightly related to increases in new household formation (not new home sales, but additional, financially independent families and/or individuals with their own dwellings). "How tightly?" you ask? MoffettNathanson reports "to the tune of 70% of industry net additions over the last twelve months." MoffettNathanson estimates that U.S. broadband penetration rose only modestly, to just over 82% of occupied households.

So, unfortunately, the gains seen in the past quarter, may soon be wiped out as 40 million people have lost jobs. We're likely to see more young adults staying with or returning to their parents' homes and more independent adults adding roommates to ease the pressure to make rent. In coming months, we may see overall broadband subscriptions stay flat -- or even decline.

And, keep in mind, even though broadband providers added over a million new subscribers, we need to connect tens of millions more so they can safely participate in economic and social life.

A Need for Speed for Families at Home

In April, Benton Senior Fellow Jonathan Sallet warned that we are facing a digital chasm. While many struggle to get or stay connected, others are adopting broadband that's significantly faster than the minimum benchmarks for broadband first adopted by the Federal Communications Commission five years ago and reaffirmed just last month. A family with two working-from-home adults and online students probably can't rely on broadband speeds of 25 Mbps download and 3 Mbps upload during this time. And that's not likely to change as 30% to 40% of the workforce are expected to continue to work from home even after the pandemic plays out. For these households, upload speeds are at least as big a concern as download speeds since upstream traffic during peak hours has risen 35%.

With this in mind, consumers are overwhelmingly picking cable's hybrid-fiber-coax broadband architecture over telephone companies' dated digital subscriber line (DSL) services. Legacy DSL can't deliver service much past 10 Mbps. Even telephone companies' fiber-to-the-neighborhood or "very high speed digital subscriber line" (vDSL) services generally offer speeds between 10-25 Mbps. By contrast, MoffettNathanson points out, cable operators don’t advertise speeds below 40 Mbps anymore (except, of course, for low-cost offerings to low-income families). Shopping for service from a cable operator, you'll more likely be directed to a 100 or 200 Mbps service. 

Leichtman and MoffettNathanson found that the pandemic is simply accelerating existing trends in the U.S. broadband marketplace. Increasingly, traditional telephone companies like AT&T and Frontier are losing broadband subscribers while cable companies like Comcast and Charter are adding customers. Just this year, wireline telephone companies have lost nearly 65,500 broadband subscribers while cable companies have added over 1.2 million. Cable broadband's subscriber adds this past quarter were their best since 2007 while telephone companies had their worst year-over-year decline ever. 

The market trends highlight the need for the FCC to update its broadband benchmark. As FCC Commissioner Jessica Rosneworcel said in April:

The FCC is also using a broadband standard that is too low for a nation that has moved so much of life online. Many households with multiple users are video calling, streaming entertainment, and searching online at the same time. Yet the FCC’s report uses a download standard of 25 megabits per second that it adopted more than five years ago. We need to set audacious goals if we want to do big things. With so many of our nation’s providers rolling out gigabit service, it’s time for the FCC to adjust its baseline upward, too. We need to reset this standard to 100 megabits per second. While we’re at it we need to revisit our thinking about upload speeds. At present, our standard is 3 megabits per second. But this asymmetrical approach is dated. We need to recognize that with extraordinary changes in data processing and cloud storage, upload speeds should be rethought.

Moving Forward

The vast majority of Americans agree that the internet is important, if not essential, for weathering the pandemic. Without access, students are shut out from online classes, employees are cut off from telework, and we are all less connected. To better enable our nation’s resilience in the face of this and future crises, we must make access to broadband for all a national priority.

And we can't afford to shortchange anyone with a definition of broadband that doesn't meet today's needs. The bandwidth needs of remote learning, mass telework, and streaming entertainment are here to stay. It is time for the FCC to reset its broadband benchmark to reflect the world we live in today.

Quick Bits

Weekend Reads (resist tl;dr)

ICYMI from Benton

Upcoming Events

June 3 -- What will it take to bridge gaps in federal privacy legislation? (Brookings)

June 4 -- Technological Advisory Council (FCC)

June 4 -- Facilitating Online Learning with Open Educational Resources in Uncertain Times (New America)

June 9 -- June 2020 Open Federal Communications Commission Meeting (FCC)

June 10 -- Disinformation, Digital Hate, and Big Media (NetGain Partnership)

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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Kevin Taglang

Kevin Taglang
Executive Editor, Communications-related Headlines
Benton Institute
for Broadband & Society
727 Chicago Avenue
Evanston, IL 60202
headlines AT benton DOT org

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Broadband Delivers Opportunities and Strengthens Communities

By Kevin Taglang.