Customers want to save money.
It started with people dropping landline phones for mobile phones and then moved to people dropping cable TV for Internet video. Now the phenomenon of cord cutting is increasingly hitting broadband services, as people cut their wired Internet connections and just rely on mobile phones to get online.
“We are now entering the realm of triple cord cutting,” said Kristin Paulin, senior analyst at Ovum.
In the third quarter, AT&T T 2.03% and Windstream WIN -0.91% saw customer losses in wired voice, cable TV and broadband customers, Ovum said in a report this week. CenturyLink CTL -0.04% and Consolidated Communications recorded losses in two out of three categories, and Verizon VZ 1.07% has had low growth or losses recently in video and broadband, Ovum said. Most cable companies fared better although Cablevision CVC 0.00% reported fewer customers for cable TV and fixed voice service with no growth in broadband, according to the analysis.
The evolution of consumer preferences comes as mobile phones are nearly ubiquitous and mobile Internet service is faster than ever. AT&T and Verizon this summer increased the size of monthly data allowances for most customers, while Sprint S -4.07% and T-Mobile TMUS -1.39% cut prices on unlimited data plans (though with some caveats). The carriers have also rolled out upgraded 4G LTE technology to increase download speeds, and the upcoming 5G wireless standard will offer an even larger speed-up.
A top reason for broadband cord cutting is to save money, with 59% of smartphone-only Internet users citing that rationale, Pew Research reported in October. Last year, 13% of adults used only smartphones to connect to the Internet, up from 8% in 2013, Pew said. Meanwhile, 67% of adults had home broadband connections, down from 70% in 2013.
Still, some broadband providers are trying to fight the trend by offering super-fast 1 gigabit per second service. AT&T has rolled out its gigabit service, called GigaPower, in 29 metropolitan areas with another 38 announced to get service in the future. Verizon is expanding its Fios Internet service in Boston, although it eventually plans to rely on 5G wireless connections instead of fiber-optic cables.
Cord cutting is further along in the other two categories. Almost half of all households, 47%, have dropped their landline phones and use only mobile phone connections, up from less than 10% that were mobile-only 10 years earlier, according to surveys by the Centers For Disease Control. And one in five households goes without cable TV, according to Convergence Consulting’s annual “Coach Potato” report.