MediaTalk | Season 3 | Ep. 7 - Broadband's Biggest Questions in 2025: Amazon, Starlink and BEAD

View Full Transcript

Mike Reynolds: Hi, I'm Mike Reynolds, a senior reporter covering the media industry with S&P Global Market Intelligence tech, media, and telecom news team. Welcome to "MediaTalk," a podcast hosted by S&P Global, wherein the news and research staff explore issues in the ever-evolving media landscape. I'm joined today by Mau Rodriguez, a research associate in the Kagan media research group within S&P Global Market Intelligence. Mau digs into information around a number of areas, including the shift from traditional pay TV. She also tracks developments within the broadband arena. And that's where we wanted to tap into expertise, especially when it comes to satellite players there. Welcome, Mau, how are you doing?

 

Mau Rodriguez: I'm good. Thanks for having me.

 

Reynolds: I appreciate you joining us. We've got a decent amount of ground to cover, so let's get started. All the numbers for the fourth quarter of 2024 have yet to be accounted for. But can you give us an overview of where the broadband industry stood in the U.S. through the first three quarters? The market grew a little bit, right?

 

Rodriguez: So there was definitely some growth there. With broadband connectivity being such a staple, total broadband subs grew about 2% year over year.

 

Reynolds: So that's an additional 2 million subscribers and about 57% of those net ads were residential. There's various technologies within this sector; which ones triggered the growth, if you will?

 

Rodriguez: So fiber, for one, is still strong. The telcos are typically the fiber Internet providers in America, but we've been seeing more and more cable operators offer fiber Internet as well. So the uptake for it is going pretty good, and it's pretty lucrative for them. So the ISPs are seeing attractive returns in the long run, but I would say that the hottest sector right now is fixed wireless access. Since the end of 2021 to the present, we estimate that they've added about 10 million subscribers.

 

Reynolds: Really? So that's quite a bit.

 

Rodriguez: That's quite a bit. So that's 10 million subs in less than five years. And we've been seeing consistent sequential additions for fixed wireless, typically counting about a million each quarter.

 

Reynolds: All right. So we've got some growth on the fixed wireless side and in fiber. The cable and the telcos' traditional DSL technologies, though, they didn't fare quite as well.

 

Rodriguez: No, not DSL, not anymore.

 

Reynolds: Okay. And this has been going on for a while, right? The DSL is definitely in retreat.

 

Rodriguez: For sure. Definitely the copper footprints are already being removed. Fiber is now going to replace that.

 

Reynolds: And I guess on the cable side, I think Charter and Comcast, they've reported by now. And I think in both cases the arrow is going down, right?

 

Rodriguez: Right. For broadband.

 

Reynolds: Okay. All right. Let's move over to something. Can you tell us about the Affordable Connectivity Program, which ended last spring? It had a big impact, I think, on Charter and Comcast, as well as other cable players like Altice and CableOne.

 

Rodriguez: Yeah, for the ACP, it's unfortunate that it ended, but Charter was the most vulnerable cable operator, considering how many ACP subscribers they had. That was about 18% of their broadband base. That was on the ACP. Yeah. But of course, other cable operators saw losses as well, but it wasn't as impactful as Charter's. So if you aggregate all the losses for all of the cable MSOs, it's about 1 million through Q3 2024.

 

Reynolds: Wow. Okay. That's a huge number. And I had no idea that Charter was so connected that way, if you will.

 

Rodriguez: Yeah, but it's safe to say that all cable operators were able to retain most of these ACP subs, despite the expiration of the program.

 

Reynolds: Did the ACP program also have an impact on the satellite sector with EchoStar, Viasat, and Starlink?

 

Rodriguez: Definitely with EchoStar and Viasat. There were additional subscriber losses for EchoStar and Viasat, both of which have historically been losing customers on the broadband business for years, but there was an effort to migrate these customers from the expired ACP to other plans that are suitable for low-income customers. EchoStar, the parent of HughesNet, said that the worst of it is now over. And most of that impact was in Q3 of last year, and moving forward, they expect churn to see improvement already.

 

Reynolds: Has the impact already been felt? It's behind them now?

 

Rodriguez: Yeah. So the biggest losses were seen in Q3, we expect to see some in Q4 as well, but in 2025, it should be a lot lighter.

 

Reynolds: Let's focus in, if we can, a bit on satellite broadband. It's by far the smallest of the technologies in play here. As you mentioned, tough sledding of late for EchoStar and Viasat. Can you talk a little bit about their performances?

 

Rodriguez: So for EchoStar and Viasat, historically they haven't been adding subscribers, but with EchoStar, we've been seeing a softer net loss because of their new Jupiter 3 satellite, which has helped them increase speeds and capacity for their consumers.

 

Reynolds: Viasat has not responded in kind.

 

Rodriguez: For Viasat, no, we haven't seen softer losses.

 

Reynolds: How about Starlink? I think that's been the star of the show here in this sector for a while, but I think, if I'm not mistaken, you wrote that things slowed down for them as well in the third quarter.

 

Rodriguez: Yeah, so we estimated the slowdown for Starlink for Q3, but I think it's the natural progression of a business to see some slowdown after the initial rush of customers that it gets. But also, Starlink is focused on accelerating the uptake of its service in international markets. So those markets are the ones seeing more rapid customer growth, but I think that the slowdown was also caused by people taking fixed wireless. So a lot of them would probably subscribe to T-Mobile or Verizon's fixed wireless access service, or maybe even a regional fixed wireless provider, or some households would rather just use their mobile hotspot and think that's enough.

 

Reynolds: I gotcha. So Starlink, I think the business is relatively new. So do you think it's reached a maturity level here in the U.S.?

 

Rodriguez: I think there's still a lot of ground to cover for Starlink. Okay. Okay. Especially in the rural areas.

 

Reynolds: So at this point, they're seeing maybe more growth in international markets than in the U.S.

 

Rodriguez: Yeah, because those are new entries, so yeah.

 

Reynolds: So if I'm not mistaken, they have 4 million subs globally. And most of that's in the States, or is most of that abroad at this juncture? As of Q3, we estimate that they had about 1.42 million users in the U.S., out of 4 million global customers, so that's about 36%. What does Starlink bring to the table? What's its marketplace advantage?

 

Rodriguez: Starlink has a lot of tiers that you can choose from. Aside from the typical residential tier, they offer plans for RVs and boats.

 

Reynolds: Oh, really? Okay.

 

Rodriguez: And even in international markets, they have this plan called Residential Light, which is a cheaper option versus the normal residential plan for low-income customers. And they're able to do that because of their LEO tech, which also allows them to offer internet with no data caps. And not to mention, from a business perspective, Starlink belongs to a spacecraft company, so they have SpaceX to launch their satellites from a reusable rocket, which makes things a lot easier for them. And not to mention Starship, it's coming up, so that will be a huge factor in launching more Starlink satellites in the future.

 

Reynolds: So they're going to keep going. I think they launched some new satellites back at the end of January, but it sounds like there's much more to come.

 

Rodriguez: Definitely. Yep.

 

Reynolds: Speaking of satellite launches, I think Amazon is, I guess they've been nibbling around here with something called Project Kuiper. Are they, Mau, are they getting ready to get into the game commercially?

 

Rodriguez: Yeah. If I'm not mistaken, Project Kuiper was founded in 2019, and they were granted licenses to deploy in 2020. So they've been toiling over it for a while now. But I think in the first half of this year, we expect Amazon to begin launching the first satellites of the constellation. They have about 3,000 planned to be launched on a staggered basis, but that constellation could grow even bigger, assuming that they get approval. But the exact dates of it being commercially available are unclear, although it's projected to be around the second half of this year.

 

Reynolds: Okay, so we might see them in the game, so to speak, before we move into 2026.

 

Rodriguez: Yeah, that's right.

 

Reynolds: Any sense for what kind of speed or data availability that Amazon will launch here with Project Kuiper?

 

Rodriguez: I think it will be competitive with Starlink for sure, considering that they will also use LEO tech to provide broadband. If you're looking to get Project Kuiper as your provider, you'll probably be able to choose between 100 megs to 400 megs. And in comparison, Starlink offers 250 megs as its fastest advertised speed for residential users.

 

Reynolds: Wow. Interesting. Obviously, it hasn't launched yet, but your sensibility, will it become a significant player? Will Project Kuiper or whatever they're going to wind up calling it become a significant player in this space?

 

Rodriguez: It will definitely pose a threat to Starlink, EchoStar, and Viasat, but how much bigger of a threat remains to be seen.

 

Reynolds: We'll touch base on that next year when you have some early reads.

 

Rodriguez: That's right, yeah. But I think if it competes with price and if they offer more affordability, then I do see it taking some market share from the top 3 guys. But just like how Starlink can rely on SpaceX, Project Kuiper can rely on Blue Origin to put its satellites into space because both are Amazon subsidiaries.

 

Reynolds: We've got two giant companies going to be fighting it out. So it'll be very interesting to see how that plays through. Okay. We're getting to the end here, Mau. If you could talk about Broadband Equity Access and Deployment, or BEAD, it's a seemingly complex initiative from the federal government here in the States. Ultimately, it's supposed to help cross U.S. broadband deserts. Can you talk us through that a little bit in layperson's language here to give us a sense of what it's supposed to do?

 

Rodriguez: Yeah, so simply put, BEAD is a federal subsidy program that can connect millions of Americans to the internet by providing states with a grant, and those states can choose who to give that money to so they can build out broadband infrastructure to areas where reliable internet is hard to come by.

 

Reynolds: And this was originally signed by the former president, Biden, back in 2021, but now BEAD can look slightly different under the new Trump administration. Has he weighed in yet, or is that something that has not been on his radar under his first few weeks in office?

 

Rodriguez: How smooth BEAD will be from now on will largely depend on the new NTIA Administrator that Trump will appoint, and before then, states will have to wait for their final proposal to be approved, and that final proposal will contain the winners of the BEAD funds.

 

Reynolds: So that, again, with the new administration is going to wind up maybe delaying BEAD's enactment or the use of BEAD funds again. Is that a safe bet at this juncture?

 

Rodriguez: It could, it's very possible, right?

 

Reynolds: Are any of the states ready to go? I've been reading about this for a while, and it always seems like it's the next step, but is progress being made?

 

Rodriguez: We know three states that have announced their BEAD winners that were approved by the NTIA. Those were Louisiana, Delaware, and Nevada. So those states can proceed to distribute the funds and begin broadband construction.

 

Reynolds: So do you think that will happen, that they will wind up working with some companies and we'll see some introductions in 2025?

 

Rodriguez: Yeah. Some of the companies, the common winners that won among those three states were AT&T, Comcast, Charter, and Verizon. And there were a lot of smaller, more locally targeted ISPs as well. Interestingly, I remember seeing Kuiper, Project Kuiper, winning BEAD money in Nevada for its commercial unit. So that was interesting.

 

Reynolds: That's definitely interesting. Okay. Haven't even launched yet commercially, but getting ready to go. That's a good deal. All right. Let's get back to 2024 and this year. Your sense, as Viasat and Starlink close their books on calendar 2024, expectations overall in terms of their performance for the year that was?

 

Rodriguez: For 2024, I expect continued subscriber losses for EchoStar and Viasat, although EchoStar could probably see softer losses given that it's benefiting from the launch of the Jupiter 3 satellite. Meanwhile, Starlink will likely grow again, but its American subscriber base will be a smaller part of its global subscriber base, especially with the service expanding to new markets every quarter.

 

Reynolds: That concludes this episode of "MediaTalk." I wanted to thank our guest, Mau Rodriguez, for taking us on a deep dive into the satellite broadband orbit, if you will. Thanks very much for joining us.

 

Rodriguez: Thanks, Mike. It was great talking to you.

 

Reynolds: All right. This is Mike Reynolds, and I wanted to thank all of you for listening. We'll catch up soon on the next episode of "MediaTalk."