According to Parks Associates, only 6% of U.S. broadband households have gigabit-speed Internet services, and interest in upgrading to that speed of service has declined over the past two years. The research house says 22% of U.S. broadband households have an Internet service speed of 100-999 Mbps, the most common service tier, although 39% of U.S. broadband households surveyed do not know their broadband speed.
"Interest in gigabit speeds has declined, due partly to limited availability, but also as households prioritize cost over speed," said Craig Leslie, senior research analyst at Parks. "Of the U.S. 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."
Parks says consumers show interest in gigabit Internet 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 such 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."
Other findings indicate:
- By the end of 2023, global broadband adoption is expected to reach almost 1 billion households worldwide. Almost half (48%) are expected to be in the Asia-Pacific region.
- U.S. gigabit adoption is expected to grow at 17% CAGR through 2023, with 13 million subscribers by the end of the period.
