United States Speedtest Market Report

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United States Speedtest Market Report

The data from the first six months of 2016 is in; the internet in the United States has gotten faster. Fixed broadband customers have seen the biggest jump in performance with download speeds achieving an average of over 50 Mbps for the first time ever. This improvement is more than a 40% increase since July 2015. Overall, the fixed broadband industry has seen consolidation, speed upgrades and, thankfully, growth in fiber optic deployments from upstarts like Google Fiber to industry titans like XFINITY and AT&T to other regional internet service providers.

Mobile internet customers have also seen performance gains, improving by more than 30% since last year with an average download speed of 19.27 Mbps in the first six months of 2016. The four major mobile carriers—Verizon Wireless, T-Mobile, AT&T and Sprint—are in a tight race for fastest download speeds. All four are also aggressively competing on price to attract new subscribers.

Competition is a good thing, and while we’re seeing faster performance than ever before, the internet in the U.S. could certainly improve. The U.S. still lags from an international perspective, currently ranking 20th in fixed broadband and 42nd in mobile internet performance globally.

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U.S. Fixed Broadband Speeds

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Faster than ever before

The typical fixed broadband consumer in the U.S. saw average download speeds greater than 50 Mbps for the first time ever during the first six months of 2016, topping out at 54.97 Mbps in June. This laudable milestone is a 42% increase in download speed year-over-year. While this average speed is more than sufficient for typical activities like browsing the web and streaming video content, 50 Mbps is a small fraction of the speed offered from gigabit fiber optic internet. Upload speed saw an even bigger increase, improving by over 50% since last year, with the average consumer receiving an upload speed of 18.88 Mbps.

While the average consumer is doing well enough, not every American is receiving sufficient speeds. In a recent Broadband Progress Report released by the FCC, 10% of Americans lack access to the FCC target speeds of 25 Mbps download and 3 Mbps upload. This number increases to 39% when looking at rural populations. It’s important to note, however, that the largest concentration of the U.S. population resides in urban areas and only 4% of urban Americans lack access to those speeds. It is also worth noting that the FCC goals weigh download speed as a much more important metric than upload speed because download speed has the largest impact on how users experience and consume content on the internet. We agree with this approach and place a higher premium on download speed in our analysis as a result.

Growth in fiber optic

Growth in fiber-to-the-home (FTTH) connectivity continued to increase in the U.S. in 2015. Greater consumer demand for the speeds offered by fiber technology has also pushed providers to offer faster non-fiber speeds. As a result, non-fiber speeds increased in urban and suburban areas. While Verizon Fios, one of the first fiber providers, has been around for years, Google Fiber has undoubtedly been the predominant public face of the rise of fiber in the U.S. Google Fiber initially offered service in Kansas City in September 2012 and has continued to grow its service locations through infrastructure development and acquisition. The fiber trend is also being adopted by municipal and community-owned providers that are able to deliver affordable and extremely high-performing service in urban, suburban and rural areas alike. Smaller ISPs, like Tachus in Houston and PAXIO in the San Francisco Bay Area, are using fiber offerings as a way to differentiate themselves in regional markets.

Market consolidation

The U.S. telecom sector has seen considerable consolidation over the past two years with AT&T’s acquisition of DirecTV and Altice USA’s (parent company of Suddenlink) purchase of Cablevision in 2015. However, 2016’s merger of Charter Communications, Time Warner Cable (TWC) and Bright House Networks has the largest potential impact on customers.

After Comcast’s failed bid to acquire TWC, Charter Communications purchased both TWC and Bright House Networks. The new combined company is known as Spectrum. Spectrum is now the second largest fixed broadband provider in the country (behind Comcast) with control of roughly 30% of the U.S. consumer fixed broadband market. The merger was approved by the FCC and the U.S. Department of Justice after several concessions from Charter to cease overage fees and assure no data caps for 7 years.

Both TWC and Bright House saw marked performance speed increases over the first six months of this year, while Charter showed little to no improvement nationwide. It is currently unclear if Spectrum will push for network performance improvements that follow the model employed by TWC and Bright House, or if it will follow a path more closely aligned to the relatively flat performance employed recently by Charter.

Looking ahead

Market consolidation by large ISPs doesn’t typically bode well for innovation and increased speeds. That said, U.S. consumer appetite for more speed is insatiable. With the growth of municipal and locally-focused fiber deployments, as well as network infrastructure investments from the big ISPs, the U.S. is likely to see continued performance gains in the coming year. Time will tell whether those gains will be incremental or a larger step toward gigabit speeds.



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