Few US households attracted to gigabit service | Media Analysis | Business
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About a fifth (22%) of US broadband households have an internet service speed of 100-999 Mbps, the most common service tier, although 39% of US broadband households do not know their broadband speed.

Parks 18April2019That’s according to Parks Associates’ Modern Broadband: Competition and Retention at Gigabit Speeds report, which noted that only 6% of US broadband households have gigabit-speed services. Meanwhile, interest in upgrading to that speed of service has declined over the past two years.

"Interest in gigabit speeds has declined, due partly to limited availability, but also as households prioritise cost over speed," said Craig Leslie, senior research analyst at Parks Associates. "Of the US broadband households that switched services in the past year, 50% did so to get a better price, while 36% switched to get better speeds. Households are not seeing the benefits to speed upgrades, especially as providers have conditioned households to differentiate based on pricing."

US gigabit adoption will grow at 17% CAGR through 2023, with 13 million subscribers by the end of the period, the firm said – so, consumers do show interest in gigabit speeds, but that interest does not necessarily translate to mass adoption. Consumers are failing to see a compelling need for gigabit services, as few households require the performance levels of these services, so providers respond by positioning gigabit services as a premium service and part of gigabit-backed bundles that feature broadband, pay-TV, OTT services and fixed phone components, to appeal to the widest audiences.

"Gigabit service can be a retention tool, positioned as an end destination for consumers as their speed needs increase. A provider's success might be better measured in terms of consumer interest and conversion to any service tier, than just on its gigabit bottom line," Leslie said. "As differentiation becomes even more difficult, providers will increasingly add new cloud-based services, such as network control, home security, and smart home applications, to give their subscribers maximum flexibility in finding the right service bundle for their needs."

The report also found that by the end of 2023, global broadband adoption will reach almost 1 billion households worldwide. Almost half (48%) of these will be in the Asia-Pacific regions.