Thursday, August 24, 2017

How Many Consumers Actually buy Gigabit Internet Access?

AT&T says it now markets its fiber-to-home network AT&T Fiber to over 5.5 million locations across 57 metros. AT&T also says that “over two million subscribers choose internet service from AT&T,” in those areas. That implies take rates of about 36 percent.

That does not mean all those consumers buy gigabit service, though. Assume AT&T sells 50 Mbps, 100 Mbps and 1000 Mbps service in those areas. Past experience suggests most consumers actually will buy one of the lower-speed tiers, with buying likely clustered around the 100-Mbps offer.

AT&T executives have in the past said that, where it is available, about 30 percent of customers buy a gigabit per second service, even when other tiers of service are available.

If overall take rates are about 36 percent, then perhaps 11 percent of AT&T Fiber customers buy gigabit levels of service.


Take rates for some other providers such as Comcast might not be as high, in part because Comcast builds its gigabit internet access everywhere across its service territory, and not only in some neighborhoods, because Comcast gigabit service sells for about $160 a month and because most consumers are going to pick speeds in the hundreds of megabits per second ranges, not the fastest or slowest tiers of service.

Comcast internet access average revenue per account tends to range slightly above $40 per month, further suggesting that not too many subscribers buy gigabit tiers of service, or that most consumers do not pay the posted rates.

Longer term, the issue likely revolves around competition between cable TV fixed network connections and mobile/wireless. Already, mobile represents 43 percent of U.S. internet access accounts, while cable represents 39 percent, with telco fixed network access at about 17 percent.

source: NCTA

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