As more people continue to work from home and cut the traditional video cord, broadband growth by cable operators and telcos that are increasingly rolling out fiber, continued into the third quarter.
Leichtman Research Group (LRG) found that the largest cable and wireline phone providers in the U.S. – representing about 96 percent of the market – acquired about 630,000 net additional broadband Internet subscribers in the third quarter of 2021, compared to a pro forma gain of approximately 1,525,000 subscribers in the third quarter 2020.
These top broadband providers now account for about 107.9 million subscribers, with leading cable companies having about 75.2 million broadband subscribers and top wireline phone companies having approximately 32.7 million subscribers.
Overall, broadband additions in the third quarter of 2021 were 41 percent of those from the same period a year ago.
Once again, cable continued to be the dominant source of broadband growth. The top cable companies added about 590,000 subscribers in the third quarter – 45 percent of the net additions for the top cable companies in the third quarter of 2020. Meanwhile, the top telcos added about 40,000 total broadband subscribers in the third quarter of 2021 – compared to about 200,000 net adds in the third quarter of 2020.
“Broadband additions returned to pre-pandemic levels in the third quarter of 2021,” said Bruce Leichtman, president, and principal analyst for Leichtman Research Group. “The top broadband providers added significantly fewer subscribers than in last year’s third quarter, but had a similar number of net adds as in third quarter 2019 and third quarter 2018.”
In this report, we track three main metrics:
Total Broadband Subscribers: This looks at the total number of subscribers the top 17 broadband providers had at the end of the first quarter. Although not as high as when the COVID-19 pandemic began, it’s clear that cable continues to maintain the upper hand in the broadband race, controlling a significant market share of the U.S. residential broadband market.
Broadband Additions, Losses: Once again, cable commanded the broadband market during the third quarter, with seven U.S. cable companies signing up residential high-speed internet users.
Broadband Revenues: As the largest cable operators and telcos add more broadband subscribers, they will enhance broadband revenues. Just as they had the highest subscribers, Comcast and Charter had the most significant broadband revenues: $5.8 and $5.4 billion, respectively. AT&T and Verizon reported broadband revenues of $2.3 and $2.89 billion, while Lumen’s consumer broadband revenues were $715 million. Look at the chart below to get a glimpse into how these providers performed.
We calculated these numbers by collecting each service provider’s earnings report.
| Service provider | Total Broadband Subs | Subs Added/Lost | Broadband Revenue |
| Comcast | 31.7M | 300K | $5.8B |
| Charter | 29.9M | 265K | $5.4B |
| AT&T | 14.2M | 289K fiber adds | $2.3B |
| Verizon | 6.8M | 98K Fios | $2.89B |
| Lumen (CenturyLink) | 4.6M | -77,000 | $715M |
| Cox | 5.51M | 25K** | (not reported) |
| Altice USA | 4.4M | -13,000 | $989M |
| Frontier | 2.8M | 29K* | $243M |
| Mediacom | 1.46M | -2,000 | $144M |
| Windstream | 1.15M | 15,200 | (not reported) |
| Cable One | 1.03M | 13,000 | $220M |
| Atlantic Broadband | 717K | 3K | $271M |
| TDS Telecom | 523K*** | 9,200 | $162M |
| WOW! | 510K | 1,600 | $103.3M |
| Cincinnati Bell | 439K | 1,200 | (not reported) |
| Consolidated | 391K | -2819 | $69M |
| Shentel | 116K | 4K | $57.9M |
| * lost 9K legacy broadband customers | |||
| ** LRG estimates | |||
| *** includes cable business results |
Charter, Comcast Gains Narrow, But Still Grow in Q3
The two largest U.S. cable operators – Charter and Comcast – added more broadband subscribers during the third quarter. Still, the number of added subscribers narrowed from the peaks hit during the beginning of the COVID-19 pandemic.
Charter added 265,000 broadband subscribers, missing analysts’ expectations of 343,000.
Tom Rutledge, CEO and chairman of Charter, told investors during the company’s third-quarter earnings call that “market churn remains historically low such that net gains are being driven by much lower transaction activity.”
The cable MSO now expects full-year 2021 growth to be like growth in 2018 rather than 2019. However, Rutledge emphasized that it has plenty of room to expand its subscriber base.
“We have a long and robust runway of customer growth ahead of us,” he said. “Today, our network passes [more than] 54 million homes in businesses, and we’re doing business with approximately 32 million of them, leaving us with [more than] 20 million opportunities to create new customer relationships.”
Broadband continues to be the top source of growth at Comcast, but the company’s CFO, Mike Cavanagh, told investors the pace of change during the third quarter of 2021 slowed a bit compared with 2019 levels. “What we’re seeing in the most recent past … is a little bit of slowdown in the net adds in the cable business,” he said.
Cavanagh added that totals for the third quarter “will likely fall behind what was a record third quarter of 2019,” but the company still expects full-year 2021 totals to surpass that of full-year 2019 totals.
However, Craig Moffett, an analyst with MoffettNathanson, noted in a research note that Comcast saw fewer customers churn in the third quarter of 2021. He said investors should be looking at the “middle six months,” or the second and third quarters together.
“In total, the ‘middle six months’ delivered 11 percent more subscribers in 2021 than 2020 … hardly a sign of a slowdown,” he said.
Industry analysts say that the broadband growth change in the cable industry is related to a new transformation led by competitive threats and new government stimulus programs like RDOF and the CARES Act.
While cable operators typically would see seasonal gains and declines, the advent of remote work and learning has changed that common trend in the cable industry.
“I don’t think we can speak of cable seasonality anymore,” said Tony Lenoir, senior research analyst at Kagan, a media research group within S&P Global Market Intelligence, in a recent report. “The business has evolved, with broadband now its primary product — a service for which college attendance doesn’t make a difference since students rely on on-campus broadband and their mobile devices for their connectivity needs.”
Tier-1 Fiber Growth Continues
Though telco penetration of fiber-to-the-home (FTTH) subscribers is still dwarfed by cable, it’s hard not to notice the progress Tier-1 and Tier-2 telcos are making with subscriber penetration.
Telcos had about 475,000 net adds via fiber in the third quarter of 2021 and about 435,000 non-fiber net losses.
Consider AT&T and Verizon.
During the company’s earnings call, Pascal Desroches, CFO of AT&T, told investors that most of the fiber customers it added were new to AT&T.
“We had our highest-fiber gross adds ever, and we continue to win share wherever we have fiber,” he said. “We added 289,000 fiber customers in the [third] quarter, and more than 70 percent of fiber net adds are new AT&T broadband customers … this gives us great confidence as we continue to build out our fiber footprint.”
Likewise, Verizon snapped up 98,000 new fiber subscribers.
Another notable move came from Lumen. The telco reached a deal to sell off part of its copper and fiber local business in 20 U.S. states to Apollo Funds in a deal expected to close in the second half of 2022.
Lumen had about 2.5 million locations enabled with FTTH within the 16 states it retained and will continue to operate at the end of the third quarter. Lumen typically enabled 400,000 locations per year, and it expects that pace will continue in the fourth quarter.
Jeff Storey, president and CEO of Lumen said that the company plans to ramp its FTTH build. “As we accelerate our investment in Quantum Fiber, in 2022, we expect to ramp that enablement pace to [more than] 1 million new locations, on our way to hitting a run rate of 1.5 million to 2 million enablements per year as we exit 2022,” he said. “When deploying Quantum Fiber, we typically expect penetration rates of 40 percent or better, with an average build cost of less than $1,000 per location-enabled.”
Frontier also continues to gain momentum in the FTTH race, adding 185,000 new fiber locations during the quarter. This brings year-to-date new homes passed with fiber to nearly 450,000. At the same time, Frontier added 29,000 new FTTH subscribers.
Nick Jeffrey, CEO of Frontier, said the FTTH gains were “nearly a fivefold increase over the same period a year ago.”
He noted that “the overwhelming majority of our fiber broadband at this quarter was new to Frontier, demonstrating our ability to win new customers.”
We track two main types of service providers that provide wireline residential broadband services:
ILECs: Traditional telcos are at a crossroads. As more customers want higher speeds, this group is deploying FTTH across select markets. After a slight pause in 2020, AT&T has committed to building fiber to more than 3 million additional locations across more than 90 metro areas this year. Lumen, via its new brand Quantum Fiber and Frontier, also has significant FTTH commitments.
Cable MSOs: Cable MSOs did their broadband business by delivering broadband over HFC. Apart from deploying FTTH in select greenfield markets, the advent of DOCSIS 3.1 and the upcoming DOCSIS 4.1 standard enables cable MSOs to offer 1 Gbps over their existing hybrid fiber-coax (HFC) plant. However, some providers, such as Altice USA, have opted for an all-FTTH approach.
