Broadband Survival in a Saturated Market

• • Broadband, ftth, industry trends, Smart Home

As a cable installer, you’ve probably seen changes over the course of your career. Maybe you started installing copper and now you’re working with fiber optic cable. Maybe you now install a wider range of services and equipment than you used to. The housings and enclosures you use have greatly improved and are made from more durable materials.

To put these changes into context and to gain an insight into the future for telcos, you need to know how the industry has handled and will continue to handle market saturation.

Market saturation is a state in which there is no new demand for a product or service. By some estimates, the internet market in North America is at 89% penetration. That means 89% of the population is paying an internet service provider (ISP) or mobile operator for access to the internet.

That leaves little room for growth. Factor in demographics, and it’s obvious that saturation is an important topic. According to PEW Research Center, 76% of older baby boomers and 83% of younger baby boomers are internet users. By comparison, 97% of millennials are using the internet. Boomers and the generation older than boomers account for a good chunk of the 11% of the population that is not paying for internet.

Boomers and Bandwidth

Baby boomers are often early technology adopters, so when they have internet, they are heavy users. Retiring boomers will consume more bandwidth as they buy wearables and opt into digital health tools. ISPs will see fewer opportunities for new subscribers accompanied by an increase in bandwidth use.

Billing for the increased bandwidth is not a realistic way to address the situation, because consumers don’t like data caps and bandwidth limits, and customer retention is key to survival in a saturated market.

Fortunately, telcos have other ways to address market saturation. Many firms are rethinking business models, improving customers service, diversifying product offerings or amping up marketing efforts.

Rethinking Business Models

Historically, the household consumer market has been more profitable for telcos. While growth in consumer internet is expected to be as low as 0.6% in the coming years, B2B market growth is predicted to hit about 2.6%. As a result, telcos are paying more attention to the business market.

Telcos are generating revenue by offering customers a better service at a higher price, a practice known as up-selling. Replacing copper cable with fiber optic cable is an example of this. By adding fiber infrastructure, ISPs can offer customers a substantial upgrade. Many ISPs are installing fiber to the home that can scale to meet growing demand for bandwidth, ensuring they can up-sell well into the future.

Customer Service

Telcos are trying to keep customers happy by simplifying the buying and customer support processes. Bundled internet, telephone and television services are now a common offering because they appeal to consumers. Forward-thinking telcos offer even more to their customers, like Smart Home features.

Diversification

Diversification is tied to customer service, because telcos need to understand their customers to reach as many niches as possible. For one firm, reaching out to the B2B market may be the way to diversify, and another may start selling applications and cloud services or adding smart home features to their suite of products.

Amping Up Marketing

You’ve probably noticed that ISPs have been investing more in advertising and inbound marketing efforts. Marketing is critical in a saturated market, and it makes no sense to invest in diversification or new infrastructure without getting the word out.

Market saturation is a powerful force that drives change in the industry. If you are still installing copper, you can expect that to change as ISPs turn to fiber to improve service and retain customers. You may see an increase in Smart Home installations or find yourself learning the ins and outs of home security that require high-quality media enclosures and other advanced equipment.