The broadband apocalypse is not near

Charter Communications’ dismal Q3 broadband subscriber performance — it missed analysts’ consensus growth estimates by nearly 30 percent — may seem like the harbinger of bad things to come, but influential analyst Craig Moffett believes that the real culprit in the slowdown may be sluggish household formation. Moffett said that while the quick reaction is that the growth phase has ended for cable’s most important product, he believes it is tied to declining new household formation. The analyst noted that Comcast “missed” its broadband subscriber growth targets by about 80,000 customers in Q3, adding that would work out to around 250,000 for the full year 2021. Charter’s deceleration, he wrote, is about the same. Considering Comcast passes 60 million homes and Charter passes 54 million, those “misses” work out to about 0.4 percent of total broadband subscribers for both companies. At the same time, new household formation, once increasing at about 1 percent per year pre-pandemic, actually fell during the past year, the result of a combination of supply chain and labor shortages that have reduced additions to housing stock. According to Moffett, “supply is simply not keeping up with demand.” Given that new housing formation has accounted for up to one-third of all broadband additions over the past few years, “When new household growth is zero, of course broadband growth will slow,” Moffett said. Add to the mix that broadband penetration is about 85 percent of the country and the slowdown in subscriber additions looks all the more inevitable.