U.S. operators – especially telcos – are facing a triple cord-cutting threat as subscribers are dropping their landlines, traditional pay-TV subscriptions and, increasingly, broadband plans, as consumers look to mobile as their one-source supplier.
Researcher Ovum’s World Broadband Information Service says the trend is “looming” over U.S. operators, but adds that other regions also are potentially facing disruption on all three fronts.
“Cord-cutting started in landlines and gave way to cord-cutting in pay TV in the U.S.,” said Ovum Sr. Analyst Kamalini Ganguly. “We are now entering the realm of triple cord-cutting. The decline of subscribers in telco core services is by no means a U.S.-only trend. Fixed voice subscribers are declining in multiple countries tracked by Ovum worldwide. Fixed broadband and pay-TV declines are also beginning to make an appearance.”
In Q3, AT&T and Windstream saw declines in all three services, while Frontier posted a decline in the two services it does offer. CenturyLink and Consolidated Communications saw declines in two out of three services and Verizon, which has aggressively been selling properties in a number of markets to Frontier, also fits in the at-risk category with a couple of quarters of decline in fixed broadband – in 2Q15 and 1Q16 – and very low pay-TV subscriber growth.
Cable companies, in general, have seen massive growth in broadband and in fixed voice, although that’s usually part of a bundled service that often goes overlooked.
Charter, Comcast, and Mediacom all saw fixed broadband growth, as well as improved subscriber numbers in their fixed voice businesses.
But Charter and Mediacom aren’t immune from the decay of pay-TV services being experienced by telcos.
Cablevision, which recently was acquired by Altice, meanwhile, falls into the triple cord-cutting category, with declines in pay TV and fixed voice and no growth in fixed broadband.
The trend is prompting providers to diversity their businesses, moving away from their core services toward a more digital future. It’s also a major factor behind the rash of M&A activity in the U.S. service provider space, something that is likely to continue.
Operators also are beginning to dabble in offering their own OTT service. AT&T, for example, just launched its streaming service, DirecTV Now, to much fanfare, while Charter has rolled out its own streaming service – one available currently only to homes already using its broadband service – more quietly. AT&T’s service also differs in that it has a significant mobile value proposition, allowing subscribers to stream to their mobile devices for free (to a limit).
“The triple cord-cutting trend also shows why it is important to have a relationship with mobile – whether owned or as an MVNO – for future services,” Ovum said.