The full rebranding by year-end of Altice USA’s Suddenlink systems to the core Optimum brand it inherited from Cablevision in 2016 offers a window into how much the broadband world has changed in the last few years. It’s not that Altice wouldn’t have eventually consolidated branding across the company. The move makes sense no matter the competitive environment. But there was a time when distributors felt content to let acquired systems exist under local or regional branding, partly out of convenience but also because sometimes that can be a selling point. “We’re not some faceless corporation based somewhere else. We’re the local company. You see us in the grocery store.” That remains advantageous, and cable operators clustered within regions and metro areas still use that angle in their marketing. The difference is that it’s no longer about local cable vs. DBS, whose star long ago fell and now loses video subscribers at triple the rate of cable. These days, it’s all about broadband, and the encroachment of the big three boogeymen, AT&T, T-Mobile, and Verizon, as well as smaller overbuilders with boogeyman-like ambitions.
Not to be overly dramatic. After all, telcos have long competed for broadband subscribers. But DSL long ago became so non-competitive with DOCSIS-charged cable broadband that the entire telco industry has pivoted to a two-pronged fiber and 5G fixed-wireless overbuild strategy that offers speeds and reliability that approach or exceed that of hybrid fiber-coaxial systems, even as DOCSIS 4.0 clears the way for multi-gigabit speeds. Some operators, like Altice and Cox Communications, are already overbuilding themselves with fiber while others, like Charter Communications, feel more comfortable riding DOCSIS 4.0 for now. But everyone is trying to figure out the best long-term strategy because, like it or not, the game has changed.
Next? The shift in focus from video to broadband can be illusory in one respect: People are still watching more video than ever. In fact, Nielsen’s new “State of Play” report out this week found that people are streaming 18% more today than a year ago. That’s a whopping 169.4 billion minutes of streaming fun over the last year, in case you’re counting, and roughly 41% of the estimated 817,000 programs available to stream are shared across multiple streaming services ranging from SVOD to AVOD to FAST-live and on and on. People are not only streaming more, but they are easily able to find lots of what they want pretty much everywhere. That’s an exceedingly nice situation for anyone putting fiber in the ground or terrestrial 5G fixed-wireless equipment down to the neighborhood level.
In the old days, overbuilding any existing system was a loss leader (just ask the scores of municipal systems that tried and failed to compete with existing local providers throughout cable’s history). But now it’s different. Now people seem willing to pay more for super-fast broadband access, making the economics exceedingly good for giants like AT&T, T-Mobile, and Verizon. And better yet, no one even needs to offer a linear TV product anymore. A broadband pipe is enough. Consumers can just add Hulu+Live or YouTube TV (or even a FAST-live channel), to access a world of entertainment, not to mention a fast pipe for remote work, which is now more standard than ever in the post-COVID world.
The telcos are also just getting started with fiber. According to OTI’s GIGTRAK+® intelligence service, AT&T and Verizon have only signed up 6 million and 6.9 million fiber customers, respectively, with dozens of nimble new providers like Frontier, Lumen, Ziply, Bluepeak, and others on aggressive fiber deployment schedules that will start to intersect with the federal government handing out $65 billion in broadband funds later this year from the Infrastructure bill. T-Mobile, meanwhile, is going gangbusters with 5G fixed wireless and snapping up spectrum with gusto. Same deal with Verizon, which also sees 5G fixed wireless as a big part of its future. Remember those big barriers to entry, as well as natural economic factors that challenged ROI for new entrants? That’s fading away. Maybe local broadband is becoming local broadBRAND. Do consumers want a big national brand or a local one? Or a bit of both? Or do they even care as long as they can get their streaming fix? We may soon find out.
