US INTERNET SERVICE MARKET

INTRODUCTION

Internet Service Providers help customers to get access to the internet and other related services to use and involve themselves with the internet namely, web page designing and hosting, hardware and software consulting, internet transit, registration of domain name.

This is done using a wired infrastructure and many operators (except telecoms) also provide their infrastructure to other companies.

Some of the common organization structures for these providers are private ownership, community ownership, not for profit organization and commercial.

Originally, the internet service started as a link to connect government research laboratories to various departments of universities.

Around 1989, for the first time the internet became a service which was provided to the general public for a monthly rate. Over time, due to the existing wired infrastructure of cable and telecommunication companies they have become prominent in this sector. 

US INTERNET SERVICEMARKET SEGMENTATION

US Internet Service Market By Product Type

Installation service and system integration are two subcategories of this segment. Installation services require no upfront cost and provide an affordable setup which makes the potential for the growth of this segment higher in terms of CAGR.

US Internet Service Market By Broadband Connection

This segment can be divided into fiber optic, wireless, satellite, cable and digital subscriber line. Out of these, wireless technology helps the most in greater digitalization, increase in productivity and is an economic option as well.

The rise in the number of wireless users has helped the market grow at a large scale. The fiber optic division has dominated the global market in the previous years.

US Internet Service Market By End Users

The main categories of end users can be household and businesses. With the adoption of the virtual mode in most sectors during the pandemic, the internet became a necessity for businesses to survive.

Apart from that with the online teaching and learning framework, a need for a stable high-speed internet was recognized the most by students.

The Government's dependence on the internet has also increased for the purpose of spreading information and awareness. For other purposes such as interaction and entertainment, households demand internet services. Fitness business models have shifted to provide online classes during the lockdown.

US Internet Service Market Drivers

The United States of America has one of the largest number of internet users. It ranks 3rd after China and India. In 2019, 312 million people in the US alone had access to the internet which is around 9% more than 2017.

The usage of the internet is high among all age groups. The daily use of the internet via mobile phones is higher as compared to users using other devices due to the greater number of mobile broadband subscriptions available. The increase in the number of users has provided a boost to the internet service providers.

According to the Census Bureau, only 10% of the households lack high speed internet. The government’s plan to provide for internet expansion as subsidized rates and increase in the number of broadband connections in the US has been possible due to the regulatory overhaul in the past few years.

Avenues of revenue growth have also been rural markets and business customers. Private investment in computers and software's are also helping in the growth of this market.

IMPACT OF COVID ON THEUS INTERNET SERVICEMARKET

The impact of Covid on the internet service providers market can be understood as follows :

• Due to the negative impact of Covid for economic activity, the growth in revenue has declined by a small amount.
• Due to lesser investments by businesses during the Covid Era, the demand from corporate offices has declined.
• For residential customers, there is an increase in the demand of internet services as the work from home model had to be adopted compulsorily for most sectors during this period. This increase in demand may help to negate the decrease in demand from offices.

US INTERNET SERVICEMARKETCOMPETITIVE LANDSCAPE

According to the American Customer Satisfaction Index, out of a score of 100 the internet providers were given an overall marking of 62.

Though the companies are working towards improvement every year, the customers believe that the internet speed can be made faster, reliable and more competition can be seen in a few areas currently with less number of providers. The concentration of Internet Service Providers in the US is moderate with a group of large players dominating the market.

The main cable companies that dominated the market are :

1. Comcast
2. Charter
3. Cox

The key players among the traditional phone companies which offer a combination of fiber and copper services are :

1. AT&T
2. Verizon
3. CenturyLink
4. Frontier 

While the cable companies saw a rise in the number of subscribers during 2019, for the phone companies the number was seen declining.

The market share of the cable companies was around 60% while the telephone companies was 40%. In order for the latter segment to be able to surpass the numbers by the cable providers, they need to make more efficient use of the technology available to them.

Phone companies can provide fiber to home services as the copper based DSL networks are losing relevance but they haven’t been seen doing so. The physical and technical infrastructure for providing these services act as a barrier of entry in the United States.

US INTERNET SERVICEMARKETFUTURE OUTLOOK

Though due to the coronavirus pandemic, there is a high degree of uncertainty but trends in private investments to upgrade internet networks along with regulatory overhaul will help this industry to grow in terms of revenue in the period from 2023 to 2030.

There is a constant rise in the number of users and time spent per person. The cable internet providers are promising higher speed and stable networks along with a combination of services such as cable, phone and internet as promotion techniques, however the prices being charged for these services are high as there is limited competition in a particular area.

The rural segment must be tapped for expansion. Overall, there is an expected growth from this industry in the forecasted period.