After two years of continued deceleration, broadband subscriber growth improved significantly during the second quarter, according to MoffettNathanson principal and analyst Craig Moffett.
Overall, the broadband subscriber growth rate climbed sequentially from 2.4 percent to 2.7 percent in Q2 of 2018, marking the biggest rise in recent memory, Moffett said in a Tuesday blog post. Operators added an estimated 595,000 net subscribers during the quarter, almost double the gains of 317,000 a year ago.
Moffett pointed out that the year-over-year improvement in net additions could be mostly attributed to a jump in new households, with the number of newly occupied households improving by about 450,000 year-over-year, according to U.S. Census Bureau data.
“But that doesn’t mean the improvement isn’t genuinely good news,” Moffett wrote. “It is.”
The data particularly show a bright spot for cable operators. According to MoffettNathanson estimates, cable operators experienced a year-over-year growth rate improvement from 4.5 percent to 4.7 percent sequentially – the first time growth accelerated since the middle of 2016. Cable operator’s share of broadband net additions in Q2 also remained strong at 114 percent.
Overall cable operators including Comcast, Charter and Altice USA added an estimated 676,000 high-speed internet subscribers during the second quarter, 25.1 percent higher than the 540,000 net additions a year ago.
Estimated telco broadband losses, including AT&T, Verizon, CenturyLink and Frontier, decelerated in Q2, with the year-over-year growth rate improving sequentially from -1.7 percent to -1.4 percent. Combined net subscriber losses for this segment decreased to 114,000 for the quarter, compared to losses of 231,000 a year ago.
“Interestingly, the improvement for the TelCos in Q2 specifically appears to be largely a product of slightly slower declines for DSL, not from an improvement in growth for fiber,” Moffett wrote.
However, if the gains are in fact largely attributable to a boost in the number of new households, than that’s not a model for sustained growth, Moffett noted.
Broadband penetration was 79.8 percent at the end of Q2 and while penetration will keep climbing in the short-term, over the long-term Moffett said the overall broadband growth rate and the growth rate in new households should slowly converge.
“Still, if nothing else, Q2 results show that there is still room for upside surprises,” Moffett wrote.