Fixed Wireless a Broadband Sub Challenge for Regional Cable Operators
Multiple cable operators faced residential broadband struggles in the first half of 2023, with year-over-year residential subscriber declines in Q1 and Q2. They face different issues, but fixed wireless is a major competitive challenge for many, Leichtman Research Group's Bruce Leichtman told us.
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WideOpenWest "continue[s] to be on-track to return to growth this year," CEO Teresa Elder told analysts in a call Tuesday as the company announced its quarterly results. WOW ended Q2 with 507,800 high-speed data revenue generating units, down 9,400 from last year. That followed a reported year-over-year drop of 6,300 in Q1. The company is investing heavily in extending its network, with new homes passed in greenfields and edge-outs this year so far hitting 16,900, nearly six times the number of new homes added all of last year, Elder said. Chief Financial Officer John Rego said it expects Q3 high-speed data net adds to be between a loss of 1,500 and a gain of 500. He said for the year WOW expects to have net adds of 6,000-10,000. "We believe that we are now at a true inflection point in our transition to a broadband-first business. Our market expansion initiatives are now accelerating and delivering results as seen in the strong penetration rates," he said.
Altice's most-recent quarter, announced last week, ended with 4.23 million broadband residential primary service units, down 60,000 from the same quarter a year earlier. Its Q1 results were 110,000 down year over year. CEO Dennis Mathew said the company is facing "aggressive" fixed wireless competition and increased fiber overbuilder competition in its western markets. He said historically, fiber overbuilders have been active in about 25% of its footprint, but now it's 30-35%.
Citing eight consecutive quarters of residential broadband losses, MoffettNathanson's Craig Moffett said there aren't "convincing signs of improvement that can be grown into a companywide turnaround."
Cable One's 960,000 residential data customers in Q2 were down by 3,500 year over year, compared with a 4,000-subscription gain year over year in Q1. CEO Julie Laulis said if Q3 2023 follows traditional Q3 trends, "it should be a good quarter." She said Verizon and T-Mobile, which have fixed wireless coverage of 40% of Cable One's footprint, appear to be losing slight market share, presumably as they lose some DSL customers.
Cogeco’s U.S. Breezeline cable system “continued to face headwinds from the macroeconomic and nationwide competitive environments,” CEO Philippe Jette said last month. He said its Ohio markets are struggling with subscriber losses from an increasingly competitive market, especially from fixed wireless. He said Breezeline held its sub base elsewhere in the U.S.
The fixed wireless subs Verizon and T-Mobile added the last four quarters are coming from people who used to be part of cable's sub growth, Leichtman said. Adding to that fixed wireless competition for WOW and Cable One especially is that both have abandoned the traditional video service bundle and focused on broadband. "We're beginning to see the consequences," he said.