As pay-TV slips, broadband in U.S. continues to grow; up 135% in Q3

The number of fixed broadband subscriber in the United States continues to inch closer to the number of pay-TV subscribers, as Internet TV and over-the-top video services continue to gain traction with American consumers.

Leichtman Research Group said telco and cable providers added some 700,000 new subscribers in Q3, and now count more than 86.6 million subscribers, compared to about 95.3 million pay-TV subscribers.

In fact, LRG said, top cable companies now have more broadband customers – more than 51.2 million – than they do pay-TV subs – about 49.5 million.

The largest telco companies have long had more broadband subscribers than pay-TV customers, as they didn’t enter the pay-TV market until 2008. Today, they have 35.4 million broadband subs compared to 11.6 million pay-TV subs.

LRG said 3Q broadband grew 135% compared to Q3 2013.

Cable continues to see strong broadband adds, counting 580,000 new broadband subscribers in the quarter. Comcast (315,000), Time Warner Cable (108,000) and Charter Communications (106,000) saw the top gains.

Among the top cable companies, only Cablevision lost broadband subscribers (down 23,000), a product of intense competition from Time Warner Cable and Verizon in the New York Metro area.

Telcos, meanwhile, fewer adds than their cable rivals, but nonetheless saw stronger growth than a year ago.

In all, the top telcos added 120,000 broadband subscribers in Q3 compared to 80,000 a year ago.

Over the past year, there were about 2.93 million net broadband adds, compared to about 2.54 million a year ago, an increase of 15% Y/Y. The industry added about 2.925 million broadband subscribers in 2012.

“The industry has added subscribers at a faster pace over the past year than it did over the prior year,” said Bruce Leichtman, president and principal analyst for LRG. “Over the past year, cable companies accounted for 86% of the 2.9 million net broadband add.”

Meanwhile, the final quarter has traditionally been a strong quarter for broadband adds.

As to market share, Comcast and TWC with a combined 33.65 million broadband subscribers, own about 39% of the U.S. broadband market, which has been worrisome to regulators looking into a merger of the two companies.

The next largest player in the market, AT&T, has some 16.49 million subs, about 19% of the market, followed by Verizon at 9.15 million (11%), CenturyLink at 6.06 million (7%) and Charter at 4.96 million (6%).

By comparison, the pay-TV industry continues to see subscriber erosion, down some 222,000 subscribers over the first nine months of 2014, and projected to lose about 145,000 for the full year, the second year in a row that it’s lost net video subscribers.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn