New research from Parks Associates finds that 22 per cent of US broadband households have a service speed of 100-999 Mbps, the most common service tier, although 39 per cent of US broadband households do not know their broadband speed. The report – Modern Broadband: Competition and Retention at Gigabit Speeds – notes that only 6 per cent of US broadband households have gigabit-speed services and 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, Parks Associates. “Of the US broadband households that switched services in the past year, 50 per cent did so to get a better price, while 36 per cent 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.”
The report notes that consumers show interest in gigabit speeds but that interest does not necessarily translate to 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,” advised Leslie. “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. 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.”
Additional research includes: