New research from Parks Associates finds 22% of US broadband households have a service speed of 100-999 Mbps, the most common service tier, although 39% of US broadband households do not know their broadband speed. Modern Broadband: Competition and Retention at Gigabit Speeds notes only 6% of US broadband households have gigabit-speed services and interest in upgrading to that speed of service has declined over the past two years.
"Interest in gigabit speeds has declined, due partly to limited availability, but also as households prioritize cost over speed," said Craig Leslie, Senior Research Analyst, Parks Associates. "Of the US broadband households that switched services in the past year, 50% did so to get a better price, while 36% switched to get better speeds. Households are not seeing the benefits to speed upgrades, especially as providers have conditioned households to differentiate based on pricing."
The report notes that consumers show interest in gigabit speeds but that interest does not necessarily translate to adoption. Consumers are failing to see a compelling need for gigabit services, as few households require the performance levels of these services, so providers respond by positioning gigabit services as a premium service and part of gigabit-backed bundles that feature broadband, pay-TV, OTT services, and fixed phone components to appeal to the widest audiences.
"Gigabit service can be a retention tool, positioned as an end destination for consumers as their speed needs increase. A provider's success might be better measured in terms of consumer interest and conversion to any service tier, than just on its gigabit bottom line," Leslie said. "As differentiation becomes even more difficult, providers will increasingly add new cloud-based services, such as network control, home security, and smart home applications, to give their subscribers maximum flexibility in finding the right service bundle for their needs."
Modern Broadband: Competition and Retention at Gigabit Speeds examines current competition in gigabit-speed services as well as operator strategies to retain subscribers in the face of such high-speed competition. It also analyzes broadband churn and cord cutting, as well as reasons and likelihood for each, and provides five-year forecasts for fixed-line broadband subscribers.
Additional research includes: