While pressure from over-the-top programming distributors has accelerated cord cutting for cable, satellite and telco service providers alike, cable is experiencing little to no threat of consumers trimming their broadband subscriptions en masse.
So says a report from Morgan Stanley, top lined by analyst Benjamin Swinburne. Despite the recent proliferation of unlimited data plans among top U.S. wireless operators, Morgan Stanley found that there remains little interest among consumers in trimming wireline broadband.
The investment bank said more than 90% of consumers with cable broadband surveyed stated that they were “not at all likely” to cancel their service.
Notably, while other bank-tied analysts have recently encouraged cable companies to increase their broadband pricing as video revenues shrink, Morgan Stanley has issued a “yellow warning light” for the cable industry.
“As video revenue growth is increasingly pressured, leaning on data pricing is tempting to sustain earnings,” the report said. “Perhaps related, however, customer satisfaction rates fell for nearly all ISPs. Only Comcast and satellite broadband customers reported higher year-over-year satisfaction.
Overall, Morgan Stanley said, cable broadband pricing is up around 12% year over year to an average price of $66 a month.
As for that OTT pressure, survey respondents indicated an increase in adoption of skinny bundles verses 2016. But it isn’t all about virtual MVPD skinny bundles. Morgan Stanley found that Dish experienced the largest uptick in skinny bundle sales, with the satellite operator’s linear “Flex Pack” being marketed aggressively.
"The survey also highlighted a meaningful shift in broadband subscribers formerly with satellite TV moving out of pay-TV for OTT,” the report said. “Likely related, reported SVOD penetration reached ~60% of the survey in ‘17, with spending on all OTT services up meaningfully to nearly $40 /month (+60% YoY), on average!”