Driven by the COVID-19 pandemic and demand for reliable high speed data, consumers spent $118 billion on new communications services, (voice, video and data) — a massive spending increase over the 2020 estimate of $91 billion, according to a report from BroadbandNow.
The firm arrived at its estimates by anonymizing data from millions of users and conducting a complementary survey. It came to some conclusions that jived with other research and conventional wisdom that people reacted to the pandemic by buying more services. However, other findings tended to push against these assumptions.
The new purchases data fit with the profile of consumers relying more on telecommunications services. The firm found that almost 38 million households purchased new Internet service in 2020, an increase of more than 46% over 2020. The speeds were collectively faster as well: Twenty-nine percent of new Internet purchases were 300 Mbps or greater. Only 9% reached these speeds in 2020.
The communications spending report also found that consumers more than doubled mobile phone service purchases compared to the previous year. BroadbandNow suggests that aggressive pricing competition between providers aimed at getting consumers to switch and new phones drove the increase.
Landline phone purchases increased slightly year-over-year. BroadbandNow believes this is due to consumers wanting ultra-reliable phone service during COVID and that it was purchased as part of a bundle.
However, the communications spending report contained a couple of surprises, at least as far as new purchases go:
- Purchase of new streaming services declined slightly year-over-year. The report said that “[E]xcitement peaked at the end of 2019 with the release of Disney+ and Apple TV+ and may represent the high water-mark for this type of content.”
- Cable/Satellite TV had slightly fewer new purchases year-over-year. The report said that this may in part be due to a slower moving season in 2020, which drives many new purchases combined with continued momentum for “cord-cutting.”
In January, BroadbandNow reported that 94 ISPs added wired broadband plans costing $60 per month or less during the fourth quarter of 2020. The researchers said that as of that point 70% of Americans had access to low priced wired broadband plans. That was an increase of 18% compared to the fourth quarter of 2019.
