It’s a tough time in the broadband industry.
According to Dell'Oro Group, continued subscriber churn, excess inventory, and high labor costs have driven North American broadband providers to reduce new equipment spending by 25%.
The total global revenue for the Broadband Access equipment market decreased to $4.1 billion in the first quarter of 2024, down 12 percent year-over-year (Y/Y).
"The North American broadband market is in the midst of a fundamental shift in the competitive landscape, which is having a significant impact on broadband equipment purchases," said Jeff Heynen, VP with Dell'Oro Group.
Cable’s competitive struggles
The cable industry struggled during the first quarter as it faced greater competitive challenges from fiber-based broadband and fixed wireless access (FWA).
Comcast and Charter saw broadband subscriber declines of 62,000 and 72,000 subscribers, respectively, in the first quarter. Likewise, regional cable operators like Altice USA lost 31,000 and WOW! lost 3,400 subscribers during the period.
Alternatively, fiber broadband saw some gains during the quarter.
AT&T and Verizon reported that fiber-based broadband subscribers rose during the first quarter. AT&T added 252,000 AT&T Fiber subscribers and 110,000 Internet Air customers. Likewise, Verizon added 389,000 broadband subscribers, including 336,000 FWA and 53,000 Fios Internet net adds.
Lumen and Frontier also saw fiber broadband during the first quarter, adding 36,000 and 88,000 new fiber customers.
"In particular, cable operators are trying to navigate mounting, but predictable, broadband subscriber losses with the need to invest in their networks to keep pace with further encroachment by fiber and fixed wireless providers," explained Heynen.
Equipment ups and downs
As a result of new competitive dynamics, broadband equipment spending dropped during the quarter.
Driven by a 22 percent decline in spending on PON OLTs, Dell’Oro revealed that PON equipment spending was down 9 percent from the first quarter of 2023.
Similarly, spending on DOCSIS infrastructure plummeted 24 percent year over year, with spending on Remote OLTs and vCMTS licenses seeing the biggest declines.
However, FWA CPE and Wi-Fi equipment remained bright spots. Dell’Oro noted that spending on Fixed Wireless CPE increased 29 percent in the first quarter of 2024 due to Heynen saying there was “strong growth in 5G Sub-6 Ghz unit shipments in North America.”
Wi-Fi 6E, Wi-Fi 7 Router, and CPE unit shipments also continue showing “significant Y/Y increases.”
