Major providers’ broadband subs exceed TV subs for first time

The number of Canadian broadband subscribers among the major publicly traded telecom service providers exceeded television subscribers for the first time in 2014. Data compiled by The Wire Report shows the overall number of TV subscribers at these companies, as recorded at the end of their last fiscal years, fell by almost 32,000 in the year to 11.11 million, while broadband customers were up by more than 389,000 customers to end the year at 11.15 million. The 0.3 per cent drop in TV subscribers is the first on record, according the latest figures. A previously reported drop in 2013 was adjusted to a gain of 24,252, or 0.2 per cent. The data, for BCE Inc., Rogers Communications Inc., Shaw Communications Inc., Quebecor Inc.,Telus Corp., Cogeco Cable Inc. and Manitoba Telecom Services Inc., showed broadband subscriber growth of 3.6 per cent in 2014, compared with 3.3 per cent in 2013 and 3.1 per cent in 2012. A revision to the combined number TV customers of Bell and Bell Aliant TV, following the purchase of all outstanding Bell Aliant shares by BCE last year, resulted in the overall gain in TV subscribers in 2013, rather than the previously reported loss of less than 0.1 per cent. Gerry Wall, president of Ottawa telecommunications consulting company Wall Communications Inc., said in a phone interview the number of TV subscribers has reached a plateau as more streaming video becomes available via the Internet. “Your broadband gives you a lot more avenues, choices, ways of doing things,” he said. “You'd certainly expect that the greater comprehensiveness of the broadband service would lead to, ultimately, more people wanting that than a strict television service.” Wall said his research has shown that a growing number of people younger than 30 are opting to go without a TV subscription. Gartner Inc. analyst Bill Menezes, based in Denver, said in a phone interview that the default choice for many young consumers is now a broadband connection with over-the-top services from companies such as Netflix Inc., rather than a TV subscription. "It's a big shift from as recently as five years ago when a lot of the cable industry was downplaying this idea of cord cutters," he said. "Newer subscribers are opting for that, given that they're already going to have a broadband connection. If they can get their network subscriptions through a broadcast antenna, they don't see a reason to pay for a full cable subscription." Menezes compared the trend in television subscriptions to wireline phones, where subscriptions have dropped precipitously as many adopt to go wireless-only. "There are people in their 20s who have never had a wired telephone," he said. "It's the same thing for television. There are so many devices that they're using that are mobile, between the availability of mobile broadband and WiFi connections, they're seeing less of a need to get that wired hookup." Wall said the move away from traditional TV subscriptions doesn’t necessarily carry over as consumers age. He added that data shows many people still choose to add TV service once they begin a family. “Younger generations may convert once they get married and start to have kids," he said. "That’s when tends to gain more importance in the household.” The impact of the CRTC’s upcoming decision on TV-channel bundling in the Let’s Talk TV process, expected to be released this week, could actually help companies add subscribers if it makes a cheaper basic option available, Wall said. “If they're looking to retain subscriptions and in fact increase it, that kind of new alternative would help maintain subscribers, reduce cord-cutting to the extent it's taking place and maybe even draw in new people,” he said. Growth in wireless subscriptions accelerated to nearly 2.2 per cent in the year, up from 1.6 per cent in 2013, as the companies added 567,000 customers to end the year at an overall total of 26.8 million. Wall said consumers are also using wireless broadband to watch more video, reducing the importance of traditional TV subscriptions. “Wireless broadband products are certainly increasing in scope, availability, pricing and speed,” he said. “The types of services you can get over a mobile platform are increasing as well. I certainly see that growing all the time, and that would exacerbate the trend away from TV.” Wall added that, even if television subscriptions are down, the major telecom companies still control the competing services. “It's kind of a closed house,” he said. “For them it's more a question of looking at the overall picture. If they're losing in one area, they can make it up in another service.” As traditional TV subscriptions become less important, broadband subscriptions become more valuable to consumers, according to International Data Corp. senior analyst Emily Taylor. Taylor said in a phone interview that the television providers want to keep up with the changing market and make their TV offerings as "sticky" as possible through discounted bundles with broadband service and add-ons such as Rogers and Shaw's Shomi, and Bell Media's CraveTV. "There are more ways than ever to push that content to different screens," she said. "And that definitely is an objective of the communication services providers in what they're offering." As broadband becomes more valuable, she added, the telecom companies that offer both services may choose to increase the cost of Internet access or mobile broadband. “The more revenue they can push across those different devices, the happier they’ll be,” she said. Taylor said that there are still downsides to cutting the cord, and that the cost of data to streaming services can quickly add up and end up with users paying almost as much as they did to their cable provider. "Price is certainly a driver," she said. "And right now there's a lot of hunting around. TV, especially long-form content, is a lean-back experience. You don't want to think too much, you want to be entertained. If you have to put too much effort into finding things, that could dissuade a lot of consumers." — With reporting by Peter Henderson at phenderson@thewirereport.ca and reporting and editing by Derek Abma at dabma@thewirereport.ca

Major providers’ broadband subs exceed TV subs for first time

Broadcast | March 16, 2015

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