Speeds Trump Fees for Broadband Service Switchers

Study: 9% of U.S. Subs Changed Providers in Past Year
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For ISPs worried about how speeds and pricing are affecting churn, Parks Associates has put out a new study showing that 9% of U.S. broadband homes switched high-speed Internet providers in the last year, and 35% of them selected a new provider to get faster speeds.

Meanwhile, just 18% of those consumers switched because a rival ISP offered a lower price at a comparable speed, the research firm found. As the chart at left shows, a sizable portion of consumers also did so in order to get a “better bundle.” The fewest number selected another ISP because it offered a lower price with a slower speed.

Parks Associates said the trend illustrates how important a good, speedy broadband connection has become for consumers in the age of over-the-top video and digital media, even if almost half of them don’t even realize what kind of speeds they’re actually paying for.

But the findings could likewise spell good news for cable operators as they continue to push faster tiers through their DOCSIS 3.0-powered networks and prepare for the multi-gigabit DOCSIS 3.1 platform. It could also spur more telcos to pursue G.fast, a new standard for DSL technology that can deliver gigabit speeds, or expand the reach of their FTTP networks.

“For many, broadband is a necessity for the home. No one wants slow or spotty service, and consumers are quick to switch if they encounter problems,” Brett Sappington, director of research at Parks Associates, said in a statement. “Operators are promoting broadband speeds of 100 Mbps or more. While 43% of subscribers do not know their current broadband speed, they do know about the experience that they have online, particularly as it relates to digital media.”

He added that “very high speed services, including gigabit-speed offerings, will be the next stage of competition among operators,” even if few consumers actually need that level of speed.

Parks Associates wasn’t alone in sharing broadband-focused findings this week.

Leichtman Research Group said today that 81% of U.S. homes get a broadband service at home, an increase from 26% in 2005. LRG also found that 78% of homes with broadband also access the Internet on a smartphone – up from 52% in 2012.

LRG’s study, based on a phone survey of 1,223 U.S.  homes, also found that the meantime spent online at home per day among broadband subs is 2.9 hours, up from 2.4 hours per day in 2010.

Additionally, 13% of homes get broadband but don’t take a pay TV service, while 68% get both, LRG said.